Friday, May 21, 2010

Risk, Playing to Win or Playing Not to Lose

There's a big difference between playing to win, and playing not to lose.

In my work, I come across businesses all the time that are content to play it safe, playing not to lose.

They did 68% occupancy last year, they’re headed for 68% again this year, their market share is flat year over year, their RevPar is virtually the same as it was last year, or maybe it’s gone up enough to match CPI, and they’re happy with that.

Meanwhile, their costs, expenses and wage costs in particular, are going up by an average of 5% and 3% respectively, and needless to say, their bottom line is shrinking, but somehow, they have convinced themselves that they are doing well, weathering the storm.

In return, I try to introduce the concept of risk, calculated risk. Sure, we’ve all heard the saying; “with great risk, comes great reward.” True enough, but that usually scares the hell out of people, and let’s face it, you need to help people to walk before they can run.

That said, I do have a couple of favourite quotes, that I associate with risk:

- If you’re not living on the edge, you’re taking up too much space, and,

- In order to succeed you must fail, so that you know what not to do the next time.

An interesting point on failure, and that’s what people are really worried about, looking bad. That’s why it is so imperative to create an environment where risk is encouraged and failed attempts are used as positive examples of the effort that has been made.

If you can create that environment, and encourage people to step out of their comfort zones, then you can create a winning environment, where employees feel truly engaged and empowered.

When people start to feel too comfortable, complacency creeps in, and none of us can afford to have that happen, unless you too, are satisfied with the status quo.

To be clear, I’m not suggesting that you create an environment where people don’t feel that their job is safe, quite the contrary, but I am suggesting that you have to find a way to build risk into your business, and, encourage it from everyone that works for you.

Whether it’s as simple as building in a brainstorming, idea sharing session at the end of your department head meeting meetings, so your people come to expect this from you, or better yet, organize a strategy session built around the scenario of what you would do if you were opening a new Hotel in your market. Ask the tough questions; what business would you go after? From which of your competitors? Where are they vulnerable? Where are you vulnerable? Where are the opportunities?

And don’t get caught up in the “how” yet, just create a good list of ideas and opportunities. Once you’ve got your list, then you can create a gap analysis by examining where you are right now, enter that on the left, and the corresponding opportunity or idea on the right. Now, what will it take to close the gap?

Figure that out, and you’re on your way.

Obviously, I have simplified this process here in the interest of not turning this into a 10 page article on risk analysis, but my point remains the same. As someone once said to me; “okay is not okay.”

Quit playing it safe and introduce an element of risk into your business.

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