Faculty publications Risky Strategy by Jamie MacAlister Hult Blog

This month’s faculty  publications spotlight is on Risky Strategy: Understanding Risk to Improve Strategic Decisions by Hult faculty Jamie MacAlister. A note from the  author What is risk? Is it danger or opportunity? Can it be managed or is it something to be embraced and tried? When companies are developing their business strategies, risk is often mentioned in passing (and frequently misunderstood), but is rarely seen as a core part of the strategic decision-making process. This can lead to unforeseen complications, as strategy is all about making decisions that concern an uncertain future, and therefore risk should play a significant role in this process. The handling or understanding of risk is often delegated to specialists and much of what is written about risk is, due to its complexity, inaccessible to the majority of senior managers involved in making strategic decisions. This book aims to make the consideration of risk more accessible and understandable to those managers and, in doing so, develop a common language and understanding for talking about it. Based on research carried out by Ashridge Exective Education at Hult International Business School, as well as case studies †¨of the strategic decision-making process in action, Jamie MacAlister takes the subject out of the textbooks and brings it engagingly to life. Drawing on lessons from Apple to Procter Gamble, from Napoleon to Nelson, from Roger Federer to Sir Alex Ferguson, †¨and from Pythagorus to Sir Isaac Newton, Risky Strategy provides a new and dynamic perspective on risk, demonstrating how and when to take the right risk. Endorsements â€Å"An important and stimulating read for any leader faced with deciding between a bold â€Å"knock-out† strategy and one that is less risky but less ambitious†Ã‚  Vic Luck, Director of The Foundation for Leadership through Sport; previously Senior Partner, PwC Consulting â€Å"A breath of fresh air†¦ combines analogies from the Graeco-Roman world and military strategy, along with real-life examples from Jamie’s time as a management consultant and senior manager, to re-interpret a variety of strategic tools†Ã‚  Kriss Akabusi MBE, former Olympic athlete and CEO of The Akabusi Company â€Å"MacAlister has a knack for making you think differently about risk and encouraging an open mind †¦ a risk, some may say, in itself†Ã‚  Martin Reason, Chief Executive, Melton Mowbray Building Society â€Å"An incredibly helpful and clear book that gets to the heart of what strategy is all about†Ã‚  Francesca Brosan, Chairman and Co-Founder of digital agency, Omobono Book excerpt: From Chapter 6 Tigers and informal risk Steve Jobs has been quoted as saying: â€Å"Don’t let the noise of others’ opinions drown out your inner voice.   Have the courage to follow your heart and intuition†Ã¢â‚¬ ¦ The tiger in us struggles with the idea that you need to minimise risk. Why?   Because it represents the land of opportunity much more so than the land of danger and harm.   And the problem is that as soon as you stop to analyse or calculate, you are already engaged in minimising risk, whether you like it or not. Tigers are intuitive instead of calculating. There tends to be more emotion involved in the decision making process.   Passion has a role to play.   There is a belief that the best way to learn about risk is not to study it or analyse it but to take it. Some colleagues at Ashridge recently ran an expo trip to Silicon Valley, for a client group from the Middle East.   The aim was to learn something about how Silicon Valley championed innovation. They visited companies like Google, Apple, Tesla, Intel, Facebook, HP and Singularity University. One thing they discovered was that risk taking is a basic part of the culture, and failure is the seal of approval. It’s almost a rite of initiation into the community.   If you haven’t failed, you haven’t tried hard enough.   The skill is not in avoiding failure, but in failing fast and learning fast. Perfection is not as highly valued by tigers as it is by elephants . As an executive coach, this is probably the single biggest issue that my clients wrestle with as they take on more senior roles and strive to become better leaders.   Often, they have achieved higher levels of responsibility by being technically good at what they do. They have experienced working in well-defined processes where attention to detail is important – where being right more often than wrong has been part of the basis of recognition.   They have built on the experience of their education, where getting the most right answers or putting together the most rationally persuasive arguments has been the basis for the best grades. One of the things we look at as coaches is the underlying motivation that drives the behaviour of the people we are coaching.   The point is that these are often sources of stress, and can therefore undermine the resilience of leaders. †¦.For prospective leaders who are likely to experience increased levels of uncertainty in making decisions, letting go of their ‘Be perfect’ drivers is often one of the biggest challenges. ..What’s interesting when we talk to tigers about drivers is that they do appear to have a driver – the ‘Hurry up’ driver.  Ã‚   Tigers move quickly, because they move intuitively;   they are not waiting for more evidence to support their case.   So they are particularly useful where speed is critical. †¦.This has proven to be largely the case in Silicon Valley †¦Tigers seem to try, fail, try, fail, try, fail, try and succeed, but once they do succeed, they appear to emerge ahead of other animal life. Speed is often important in combat.   Military strategy is primarily focused on beating the enemy†¦..   Being faster to act not only increases the chances of seizing important strategic assets, but also creates increased uncertainty, and thence fear, on the part of the enemy.   And this can be key to success.   Tigers are highly selective about their use of information.   They tend to scan it rather than analyse it.   They have a natural inclination to look for short cuts and signals.   They have a phobia against paralysis by analysis. †¦ As we have seen, variability is at the heart of risk.   We also know that the world would be a dull place without variability.   And we are somehow conditioned to want to do something about that variability – to work with it and, at the same time, against it. Imagine a game of tennis where the ball bounced in exactly the same place and to the same height before you hit it.   You would master the game very quickly by playing pretty much the same shot every time. You might become very good at it, but how interesting would it be? †¦While the elephant mindset is, to some extent, that variability is an annoying distraction, for tigers it’s part their reason to exist.   In fact, tigers are naturally anti-fragile, according to Taleb’s view of risk. (Taleb, 2012). It’s a kind of working with the variability and risk, rather than against it.   Ã¢â‚¬Å"The best way to verify that you are alive is by checking if you like variations †¦. Food would not taste if not for hunger; results are meaningless without effort, joy without sadness, convictions without uncertainty;   and an ethical life isn’t so when stripped of personal risks† (Taleb, 2012) Our human bodies are built to be anti-fragile – clearly designed to deal at least as much with the consequences of risk as to be able to avoid it.   Wounds heal themselves with relatively minimal outside help, and white blood corpuscles fight off unwelcome bugs which are part of the risky external environment that our bodies inhabit.  Ã‚   Our health systems seek to create robustness which is a pale comparison to the anti-fragility that is part of our human make-up. †¦ We learn from John Coates in his intriguing book on the â€Å"Hour between Dog and Wolf†Ã‚  (Coates, 2012) that risk is a ‘whole body’ experience.  Ã‚   Coates was formerly a financial trader in New York, and then switched careers to become a medical practitioner based in Cambridge in the UK.  Ã‚   His extensive research looks at how humans respond to risk physiologically, ie through the production and delivery of hormones. It appears that three hormones play slightly different roles when we are confronted with situations involving some element of risk: cortisol, adrenaline and testosterone.   These hormones respond to variable inputs to the body:   visual input through the eyes, a sound, a smell or even some kind of impact to our skin’s sensory nerve endings.  Ã‚   What is interesting then is the role that the brain has in processing this information, and how the hormonal system is tied into that response. Coates observes that in sport, for example, the speed of response needed by a player reacting to an approaching tennis or cricket ball, and making a skilful connection with that ball suggests that normal brain-based analytical processes can’t be too heavily involved.   There isn’t the theoretical time for the information to be sent to the brain, processed and sent back to the muscles that need then to respond.  Ã‚   It would appear that some kinds of pre-conscious and rapid communication between brain and muscles are what actually keeps us alive in fast-moving situations.   Hormones have some kind of role in facilitating this, even though the hormones themselves don’t move that fast.   Separately, conscious reflection shows up later, to analyse what has happened. From this, we have the concept of muscle memory.  Ã‚   †¦ Coates observed something very similar, and quite mystifying, on the financial trading floor. Traders, it would appear, seem to develop muscle memory for responding to situations, even before they have very much information, and certainly before they have much time to analyse it.  Ã‚   He tells stories of traders sensing a buzz on the trading floor, or even change of tone of voice here and there, or the speed at which information was appearing on the screen †¦ and issuing a â€Å"buy† or â€Å"sell† order immediately. Speed, once again, in financial trading is of the essence.   Being even a couple of minutes slower in executing a trade can make huge differences in financial returns.   The trading floor is really a place for tigers – elephants need not apply! What is even more intriguing to the interplay between risk and strategy is what Coates calls the winner effect.   And it’s all down to testosterone. This is based on the study of animals, where winning a fight increases the likelihood of winning again, independent of any other variables such natural strength or size. †¦Coates believes this same winner effect is evident in humans, having run tests at sporting events such as tennis competitions.   Wins will raise testosterone levels, which in turn increases some of the attributes needed to improve the chances of winning again. So we see in another way why winning brings risk into the heart of strategy making.   If and when risk is a whole body experience, and strategy is about addressing a winning aspiration, one clearly must feed the other.   The tigers in the team, or even the tiger within us, not only can feed us with helpful intuition, but also bring a winning physiology to improve our chances of winning again. Excerpted from Risky Strategy: Understanding Risks to Improve Strategic Decisions, published by Bloomsbury Publishing PLC.  Purchase a copy here. About the  author Jamie MacAlister (MBA, MA) is a Professor of Practice at Hult International Business School, London, where he has been teaching courses in Global Strategy, Leadership, Coaching and Consultancy. He is also an experienced executive coach, facilitator, strategist, and commercial manager, having previously been Commercial Director at Ashridge Executive Education. He is in the process of helping to set up a business school in Uganda, and supporting a health products agri-business venture. He specializes in Strategic Risk Taking and has also been part of a team publishing research on corporate leadership in addressing the issue of modern slavery, with a focus on risk in the global supply chain. He has founded and run three small businesses, all still operating, and has previous professional experience with PricewaterhouseCoopers and Procter Gamble. He holds Masters degrees from Cambridge University and Wharton Business School, and is an Ashridge-accredited executive coach. Find out more Visit Jamies  blog:   www.riskystrategy.co.uk Kickstart your career with Hults undergraduate business school. To find out more, take a look at our blog 5 top tips for a standout undergraduate application. Download a brochure or get in touch today to find out how Hult can help you to learn about the business world, the future, and yourself. Mel Cloney Mel is a staff blogger working in London, and is passionate about the Hult journey. Her writing focuses on faculty, academics, and student and alumni experiences. She’s a food, scuba, and running junkie with a penchant for all things French. Related posts Academics Beyond (narrow) business concepts: â€Å"Soft† skills turn out to be critical skills News Building success: Dual Degree students win at USASBE Community How going beyond business at Hult helped me launch my company Admissions Accepted Students Weekend: A weekend to remember Careers Career mapping: How to become an executive in the next 5 years 0 Thought leadership How to prepare for an uncertain future in a world of AI Instagram Hult Rotation offers you a chance to study in a truly global way. Our rotation program allows you to study and be immersed in some of the finest cities in the world. 📠¸: @jasminmanzano . Hult Rotation offers you a chance to study in a truly global way. Our rotation program allows you to study and be immersed in some of the finest cities in the world. 📠¸: @jasminmanzano . Each year, Hult seeks to enroll a talented and ambitious incoming class from all over the world. We look for diverse students with a wide range of experiences, perspectives, and interests—students who will thrive in our unique educational atmosphere. Are you ready for a truly global experience? 📠¸: @iambrunadiniz . Each year, Hult seeks to enroll a talented and ambitious incoming class from all over the world. We look for diverse students with a wide range of experiences, perspectives, and interests—students who will thrive in our unique educational atmosphere. Are you ready for a truly global experience? 📠¸: @iambrunadiniz . We’re excited to start 2020 on a ranking high! Hult is proud to have been placed #28 in Poets Quants 2020 rankings for Best Undergraduate Business Schools in the US. Taking a huge leap of 32 places from our 2019 position, we’re also very happy to have secured top positions in key categories like: life-changing experience, practicality of the degree, and global immersion. . With five global campuses, a student body of over 130 nationalities, and a learn-by-doing approach—Hult offers a student experience like no other. . We’re excited to start 2020 on a ranking high! Hult is proud to have been placed #28 in Poets Quants 2020 rankings for Best Undergraduate Business Schools in the US. Taking a huge leap of 32 places from our 2019 position, we’re also very happy to have secured top positions in key categories like: life-changing experience, practicality of the degree, and global immersion. . With five global campuses, a student body of over 130 nationalities, and a learn-by-doing approach—Hult offers a student experience like no other. . â€Å"I’m from an engineering background and needed a whole new skill set for the industry I wanted to switch to. I learned a lot about myself and how I deal with being out of my comfort zone. I learned both soft and hard skills, from how to work in very diverse teams to key accounting metrics and strategy. I was surprised by how weak I was at certain tasks in English or how strong I actually was in other areas. Hult gave me opportunities to try new things and meet people from places I never thought I would have friends. . My internship experiences gave me the chance to broaden my view of different cultures and different companies. I had the opportunity to work and live with people whose values differed from people in my home country. I thought that this would be difficult, but it gave me the chance to reflect on my own values and assess if they were a result of my home country environment or if they were intrinsically mine. . Diederick ter Kulve (@diederick.terkulve) Netherlands Masters in International Business . â€Å"I’m from an engineering background and needed a whole new skill set for the industry I wanted to switch to. I learned a lot about myself and how I deal with being out of my comfort zone. I learned both soft and hard skills, from how to work in very diverse teams to key accounting metrics and strategy. I was surprised by how weak I was at certain tasks in English or how strong I actually was in other areas. Hult gave me opportunities to try new things and meet people from places I never thought I would have friends. . My internship experiences gave me the chance to broaden my view of different cultures and different companies. I had the opportunity to work and live with people whose values differed from people in my home country. I thought that this would be difficult, but it gave me the chance to reflect on my own values and assess if they were a result of my home country environment or if they were intrinsically mine. . Diederick ter Kulve (@diederick.terkulve) Netherlands Masters in International Business . Say a big hello to our Bachelor of Business Administration program cover star, Elisa Orus Plana âÅ" ¨ . â€Å"I’m excited for the future—especially that I cant predict whats going to happen. Maybe Ill end up in Mexico working for a trading company or maybe in Africa, developing my own business. Everything is possible, and the options are constantly changing. I love the idea that Im never going to be stuck doing the same job until the end of my life if I dont want it to be like this. . Hult really supports me and my ambitions and truly believes that we deserve to be considered as professionals as well as students. Here, I get to express not just my opinions but all elements of myself. From my creative side with the Fashion Society to my finance and business sides in Trading Club and the Management Consulting Club. We get a different type of learning here. Not just essential knowledge and theory, but practical skills and mindset. The school is always evolving. We’re encouraged to innovate and to always look for new ways of doing traditional things. We learn how to be more confident and become aware of how we can impact our environment. The school aims to help you become a better version of yourself and to stand out from the crowd.â€Å" . Elisa Orus Plana French Bachelor of Business Administration Class of 2021 Say a big hello to our Bachelor of Business Administration program cover star, Elisa Orus Plana âÅ" ¨ . â€Å"I’m excited for the future—especially that I cant predict whats going to happen. Maybe Ill end up in Mexico working for a trading company or maybe in Africa, developing my own business. Everything is possible, and the options are constantly changing. I love the idea that Im never going to be stuck doing the same job until the end of my life if I dont want it to be like this. . Hult really supports me and my ambitions and truly believes that we deserve to be considered as professionals as well as students. Here, I get to express not just my opinions but all elements of myself. From my creative side with the Fashion Society to my finance and business sides in Trading Club and the Management Consulting Club. We get a different type of learning here. Not just essential knowledge and theory, but practical skills and mindset. The school is always evolving. We’re encouraged to innovate and to always look for new ways of doing traditional things. We learn how to be more confident and become aware of how we can impact our environment. The school aims to help you become a better version of yourself and to stand out from the crowd.â€Å" . Elisa Orus Plana French Bachelor of Business Administration Class of 2021"> During the final days of 2019, you probably reflected on what you’ve accomplished this year—and even this decade—and what you’d like to achieve in 2020. Let us know in the comments below. During the final days of 2019, you probably reflected on what you’ve accomplished this year—and even this decade—and what you’d like to achieve in 2020. Let us know in the comments below. â€Å"The first time we did group work on the program, I went head-to-head with a colleague. It taught me a lot about how I see people, how people see me, and how conflict can be resolved in a kind and productive way. The best feedback you get, when delivered constructively, is the most critical because it really feeds into how you lead. I’ve completely reversed my leadership style—the result is so much richer and more powerful when you lead from behind and lead with strength. . Studying in tandem with working, whilst challenging, gave me the perfect platform to directly apply learning concepts into my business environment, the competitive landscape, and the real-estate industry as a whole. When I started the program, I was very happy in my corporate role. But my courage and aspirations grew to the point that I took on a whole new direction. Having my career coach, Joanna, as a sounding board allowed me to really be strategic and get to know myself. She coached me thro ugh all the interviews, the research, and the questions. It went in parallel with what I was doing academically and after six months everything just clicked. . I went into the EMBA knowing I had nothing to lose and I’ve come out with everything. Great strength, global friends, amazing learning, mentors from professors, a job I love, and the knowledge that I can set my mind to achieve anything and with the right support and resources I’ll get there.† . Kashani Wijetunga British, New Zealand Sri Lankan Associate Director Senior Strategy Consultant CBRE EMBA Class of 2019 . â€Å"The first time we did group work on the program, I went head-to-head with a colleague. It taught me a lot about how I see people, how people see me, and how conflict can be resolved in a kind and productive way. The best feedback you get, when delivered constructively, is the most critical because it really feeds into how you lead. I’ve completely reversed my leadership style—the result is so much richer and more powerful when you lead from behind and lead with strength. . Studying in tandem with working, whilst challenging, gave me the perfect platform to directly apply learning concepts into my business environment, the competitive landscape, and the real-estate industry as a whole. When I started the program, I was very happy in my corporate role. But my courage and aspirations grew to the point that I took on a whole new direction. Having my career coach, Joanna, as a sounding board allowed me to really be strategic and get to know myself. She coached me thro ugh all the interviews, the research, and the questions. It went in parallel with what I was doing academically and after six months everything just clicked. . I went into the EMBA knowing I had nothing to lose and I’ve come out with everything. Great strength, global friends, amazing learning, mentors from professors, a job I love, and the knowledge that I can set my mind to achieve anything and with the right support and resources I’ll get there.† . Kashani Wijetunga British, New Zealand Sri Lankan Associate Director Senior Strategy Consultant CBRE EMBA Class of 2019 . â€Å"It was now or never. I knew that I’d have likely stayed in my neighborhood for years to come if I didn’t take this opportunity. I’d not lived or studied outside of the U.S. before. So I left my job as a global strategist at an advertising agency and moved halfway around the world. I’ve come back a more culturally aware, well-versed person. I’ve realized that everything is a learning experience and an opportunity for growth. Ill definitely carry this mindset with me into the future. Technology and social media allow us to be different people in several places at once. Im excited to see how I can establish myself in whatever city Ill be lucky enough to call home and still maintain deep connections with people all over the world. I’m inspired by my classmates every day. Hearing some of their life stories and how getting this degree fits into their greater mission has been very humbling. My biggest challenge has been finding the ‘right’ path for me. There have been rooms Ive felt like I shouldnt be in, but now Im proud to feel as though I truly belong, wherever I am.† . Dwayne Logan, Jnr. American MBA Class of 2019 . â€Å"It was now or never. I knew that I’d have likely stayed in my neighborhood for years to come if I didn’t take this opportunity. I’d not lived or studied outside of the U.S. before. So I left my job as a global strategist at an advertising agency and moved halfway around the world. I’ve come back a more culturally aware, well-versed person. I’ve realized that everything is a learning experience and an opportunity for growth. Ill definitely carry this mindset with me into the future. Technology and social media allow us to be different people in several places at once. Im excited to see how I can establish myself in whatever city Ill be lucky enough to call home and still maintain deep connections with people all over the world. I’m inspired by my classmates every day. Hearing some of their life stories and how getting this degree fits into their greater mission has been very humbling. My biggest challenge has been finding the ‘right’ path for me. There have been rooms Ive felt like I shouldnt be in, but now Im proud to feel as though I truly belong, wherever I am.† . Dwayne Logan, Jnr. American MBA Class of 2019 . Happy New Year, Hultians! . Happy New Year, Hultians! .