Managing Risk By Building Stronger Relationships: Classic Jack from 1998

The following business insights, originally published in my 1998 book, Reconnecting with Customers: Building Brands and Profits in The Relationship Age™, are more relevant in many ways today, although 2010 would have been a more accurate target year than 2005. Jack Myers

Originally published in 1998: The changes that businesspeople are facing between today and 2005 are not simple paradigm shifts. They are isoquantic. A paradigm shift is a restructuring of the patterns we rely on for decision-making. For example, the transition of audiences from broadcast to cable TV has been a paradigm shift -- a slow change in patterned behavior. It has not been isoquantic. The microprocessor that led to the development of the personal computer and a new way of life for millions of individuals and businesses was an isoquantic change. The Internet is also an isoquantic shift.

Almost every aspect of our lives, and especially our business lives, is progressing at a faster pace that ever before. We once described the impact of change by conjuring up the image of a pebble dropping on a pond and generating waves of ripples. Now the realities of business are more like the impact of a wind and rain storm on the pond, with turmoil and overlapping waves. As the winds of change whip into a hurricane-like force, the traditional processes of decision-making accelerate.

The average manager today makes as many major decisions each and every month as a manager in a similar position made in the course of a full year in 1975. By the year 2005, the demands on management for critical decision-making will increase four-fold again. The same managers who made ten important decisions in 1975 that could alter the course of their companies' successes or failures will, in 2005, make nearly 500 equally important decisions. In the past, when every decision was critical, managers were taught to practice risk avoidance. In response to the number of decisions they must make, today's successful executives must be risk-takers.

Risk acceleration describes a new business reality. Executives must manage in an environment of constant change, in which the risk of failure is great, and choices are more difficult to assess. Companies that have been intolerant of failure must now adjust to a sports and entertainment industry mentality that accepts failure as a reality, and rewards players who have excellent instincts. These key instincts are:

• Understanding the relationships that contribute to their success and failure;
• Expecting a higher than average ratio of success while accepting and managing failure;
• Possessing the ability to adjust to change with agility and intelligence.

I believe that the most important objectives for businesses today are to manage their changing environment by having a clear vision for the future and by building stronger relationships with their customers.

Jack Myers advises media companies, agencies and marketers on transformative business models. He can be reached at jm@jackmyers.com