Few would be willing to admit to that of their own company perhaps, but we are often happy to recognise this condition in our competitors or other companies. I wonder though if we are being completely honest about our own operations and decision-making.
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For instance, it is easy enough to explain away inaction by citing cautious security management and bringing to mind examples of where it has gone wrong for others. Aren’t Sainsbury’s still mired in the troubles caused by trying to bring western-style supermarket shopping to the Egyptians? How about Tullow Oil’s forays into the DRC and Uganda, and Diageo’s acquisition of United Spirits in India? We can all quote examples of when it has gone wrong.
It becomes more difficult to think of events from the other perspective, although in fact there are many more examples. This is due to something known as the Availability Bias; those ideas that come easily to mind and tend to dominate our thought processes, perhaps even to the exclusion of our normal rational views. The media are leading practitioners of this bias, although terrorists are certainly also in this game, by peddling persistently certain messages: ‘All NHS care is poor’, ‘The UK is overrun with migrants’ and ‘The risk of harm or death from terrorism is high’, for example. It is particularly effective with standpoints that are negative.
When we stand back and take time to consider these statements, it is of course relatively easy to use our wider knowledge and personal experience to win through to see a more accurate representation, particularly if we are in a familiar situation. But, this becomes increasing challenging as business operations grow and progress into complex operating environments. This is where many reflex and conscious biases come into play to skew the true picture and these issues are compounded as information sourcing becomes more difficult. Companies in these situations need to consider carefully the information they are using to make their key decisions.
Uncertainty deters businesses from driving their strategies forward, and can lead to a localised, worst-case and reactive stance to risk. Ambiguity turns into the real enemy here. If risks, threats and disincentives are not understood, then they cannot be managed or mitigated.
On a positive note to finish, think of Genel Energy successfully producing oil in the Kurdistan Region of Iraq, or Victoria Oil & Gas boosting the supply of gas to the local market in Douala, Cameroon; both in really challenging areas of the world – I’m just guessing that these companies are supplied with accurate, timely, quantified information, and that contributes significantly to their ability to deal with risks, threats and disincentives.
Further thoughts on this subject:
http://qro-global.co.uk/understanding-your-business-risk/
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