Navigating organisational risk and uncertainty through heightened collective self awareness
Over recent years, we have been very fortunate to have worked, or continue to be working with, many of the world’s leading aviation organisations. These are all businesses facing enormous uncertainty, with a need for a dynamic ability to manage the effect of uncertainty on their strategic objectives.
Time and again the conversation with the senior leaders in aviation turns to that of the risk culture of their organisation:
- how flexible, informed and just it is;
- whether the organisation has integrated the need to be adaptive, embrace learning into its fabric and avoided the trap of making the same mistakes decade after decade (following the wisdom of the late Peter Senge); and
- whether the reporting of errors and deviation is encouraged, expected and yes, even rewarded?
Often the reality of the cultural response is characterised by the reaction of the leadership, or a member of it, to brave whistleblowers. In the era of 24 hour media and social media, the scrutiny is immediate and rapidly shared. ‘Nimble’, ‘fleet-footed’ and ‘agility’ are the watchwords countering legacy and encumbrance.
We have been advocating a back-to-basics understanding of the complexity of risk culture – peeling back the layers one at a time to truly and deeply understand :
Beginning with the prevailing aviation sector culture within the regional business culture in which the organisation operates; through any specific national culture with its own often deeply complex strata;
Locating and articulating the organisation’s own specific culture as well as overlaying risk culture as a fundamental element within it.
- Individual Leaders
The impact of the individual and their collective contribution to culture in teams, departments, divisions or business units are next, all drawn from a much deeper understanding of the individual at the core.
We like the analogy of the layers of an onion; peeling those layers back without proper understanding as well as careful consideration of each layer, can cause avoidable tears and concerns. The consequence of ignoring them is frustrated implementation of risk-related change efforts and potentially dramatic under-achievement of organisational objectives.
So, Aretai advocates starting with the individual to ensure heightened risk self awareness, then the contribution of individuals to the subsequent layers of culture already discussed is more readily apparent. We apply a number of tools to give you and your organisation a more robust starting point on this journey. These tools are directly pertinent to risk, change, and innovation as well as individual behaviour and culture.
- Individual mindset for uncertainty
We help you ensure individuals in an organisational context have considered how they approach innovation, change and new ways of doing things. The model, adapted from Diffusion of Innovation Theory, considers individuals’ reaction to innovation over time, represented as a normal distribution (bell-shaped curve) in one of five broad categories: innovators, early adopters, early majority, late majority and laggards. There are clearly defined characteristics for each that provide insight into how people will respond to the efforts in your organisation to change approaches to risk management and risk-based decision making.
- Individual risk predisposition
A key to effective risk management is understanding individual risk predisposition and how individuals will react to unexpected events or outcomes regardless of the organisational context in which they find themselves. Aretai helps organisations to identify the risk predispositions that individuals bring into the workplace. These predispositions direct our behaviours and influence our mental models towards taking risk-based decisions.
We utilise The Risk Type Compass, a diagnostic assessment tool, based on extensive psychological research, that focuses on differences in the way individuals perceive, react to and manage risk, as well as how they make decisions. The tool identifies individuals as aligned to one of nine distinct categories, with a personalised report for each individual that has completed the assessment and an optional group report that explores collective impacts.
By identifying differences in risk appetite, organisations can maximise potential and balance the contributions of risk-takers and more risk-averse individuals. This proves a significant enabler of the final critical element necessary for navigating through to success: namely a common language.
- The importance of creating a common language
Our clients who work with these models and tools, report positively about the creation of an acceptable common language by which leaders are able to frame conversations with each other and their colleagues in their teams regarding how risk-based decisions are approached and made. This language finds it way into board rooms, everyday meeting rooms, and corridor conversations! We know that nothing impacts risk culture quicker than the foundation stone of a common language!
The knowledge and understanding enabled by our approach brings about greater individual risk perception and facilitates a common risk language by which individuals can approach risk-based decision-making. The impact is to strengthen informed decisions based on a communicated understanding of each others’ personal and collective approach to risk as well as decision making in relation to applying scarce resources to priorities, as well as overall risk culture.
The lessons from the success of this approach in aviation can be applied to other sectors, please do get in touch if you want to discuss best practice in your business.
Brett Dorney & Grant Organ, Directors, Aretai Risk Management Consulting
- Risk Management