Managing the Five Risks you face at all stages of your business development:

1. growth risk

2. innovation risk

3. market risk

4. financial risk

5. team & management risk

Turn Risks into Opportunities!

7.

Maturity

– the company is established on the market; needs to innovate continuously to stay competitive

Organization: Decentralized

Management:  Professional

Technology: Integrated Systems

Funding stage: Asset-based

pp.

Problem

Solution

Action

7.1

Growth Risk

• Stagnation of operations and the complacency that naturally occurs as firms age

• Mature companies often forget or forsake the thing that made them successful in the first place: a customer-centric business model They lose focus on the customer and start focusing on the bottom line and quarterly results. They look for ways to cut costs or increase revenues, often at the expense of the customer. They forget that satisfying customer needs and continuous value innovation is the only path to sustainable growth. This creates opportunities for new, smaller companies to emulate and improve upon what made their bigger competitors successful in the first place and steal their customers.

• Resistance to change at both individual and organizational level

• Detailed long term planning is difficult due to volatility of the market situation

• Management left with little space for innovation due to the need to achieve short-term, yearly and quarterly results

• Unbalanced approach to corporate strategy favoring efficiency and productivity at the expense of venture strategies

• Believing in and acting on the idea that there's no such thing as a mature business

• Focusing on building value, not profits

• Establishing institutional excellence

• Reinventing your business model, experimenting extensively to find a successful new model

• Exploring continuously your organizational options for change

• Continuous innovation process as the lifeblood of your corporation, a part of its culture and the business-building strategy

• Developing a flexible, responsive and Innovation-friendly organization adaptable to changing internal and external conditions

• Developing effective and flexible production systems responsive to change

• Building strategic partnerships: tapping into complementary resources of others

• Build an inclusive company

• Develop constructive competition and build a no-blame culture

• Spend at least one full day each month out of the office working not for your business, but on your business – anticipate changes, analyze what else is happening, or may happen, or what you might be able to make happen

• Explore all the three main growth routes: 1. organic growth; 2. acquisitions, and 3. venture creation

• Master the balanced business systems approach

• Focus on strategy – not operations; reinvent your sustainable growth, competitive and differentiation strategies

• Master opportunity-driven business development and dynamic strategy approach to respond quickly to external and internal change

• Organize periodic readministration (every one or two years) of the Organizational Fitness Profile (OFP) for the business as a whole

• Build a fast company

• Establish the relentless growth attitude in your company to keep new ideas flowing; devise catalytic mechanisms

• Develop an industry roadmap that reflects your and competitors' migration patterns and helps you develop your project portfolio

• Develop venture strategies to expand your capacity for speed.

• Concentrate on your key competence area and develop strategic alliances with companies providing complementary services

• Maintain a purposeful and organized search for new opportunities

• Do bottom up planning; define strategic focus of your company and develop a strategic business plan enabling continuous innovation processes. Treat your business plan as a work in progress.

7.2

Innovation Risk

• Shortening life cycle of technologies and products

• Incremental features of product improvements add less and less value

• Difficult, if not impossible, to predict the next major trend in any industry

• Rejecting an emerging technology as it may be viewed as inferior to the corporate dominant technology

• Elaborate approval processes favoring slowed product development cycles

• Continuous innovation system

• Intellectual property management system

• Management of project portfolio and prioritization between projects

• Top management participation

• Ability to adapt quickly to changes in the marketplace

• Culture incorporating respect for company researchers, who should be linked to the company's business objectives.

• Develop a systems roadmap that shows technology breakthroughs needed in short- and long-term products/services to meet customer needs.

• Establish corporate guiding principles to make the decision-making process much faster.

• Establish a technology intelligence and a technology forecasting system; conduct regular technology audits

• Maintain a purposeful and organized search for new opportunities and ventures

• Divest from the low priority segments of your business to concentrate on the areas of your core competence

• Develop a continuous and systemic innovation culture; involve cross-functional teams at every stage of the innovation process and provide them with access to every technology and resource that is needed for a new project success.

• Reinvent your intellectual property management system, your IP strategy and licensing strategy

• Conduct both short-focused and strategic R&D; explore benefits of new technology commercialization through in-company ventures or external spinouts

• Set strategic priorities and actions and develop a corporate strategy supporting continuous innovation

• Identify competitive factors and critical technologies and and formulate a technology strategy

• Introduce modern techniques to motivate your staff be innovative on a continuous basis

• Adopt business systems approach to managing projects aimed at development of new projects/services, or manage innovation separately through spinouts

• Establish strategic alliances and joint ventures to conduct together and share the cost of strategic research

• Acquire new technologies and enhance strategic technology development partnerships

• Study opportunities for mergers and acquisitions with strategic partners that have the required infrastructure, global sales, marketing and distribution opportunities

• Develop flexible lean production and continuous improvement systems responsive to change

• Develop innovative value chain management system

7.3

Marketing & Competing Risk

• Growth rates and margins decline as markets mature

• Competitor's fierce reaction to your global marketing campaign

• Focusing attention to market standing relative to the competition's only narrows the definition of the market, leading the organization to ignore valuable market segments

• Poor assessment of effectiveness and profitability of various marketing channels

• Continuous market watch; anticipating the market needs

• Maintaining and defending market position

• Developing new market niches: seeking, expanding, global penetration

• Reinventing market development strategy

• Marketing partnerships

• Develop your competitive strategy – defend your markets from competitors, explore new markets to penetrate

• Revisit continuously the laws of marketing and reinvent your marketing strategy

• Establish in-house market watch and information system; develop business intelligence about actual and potential competitors worldwide

• Revise critically your marketing approach

• Develop realistic marketing concept

• Reinvent your marketing, advertising and selling strategy

• Develop strategic marketing plan

• Unleash the power of your service-profit chain to gain more loyal customers

• Develop innovative product selling customer relationship chain

• Partner with your customers to create a future for both parties that is better than either could have developed alone

• Access new markets through exporting your technology, joint ventures, or franchising.

• Reinvent your global sales network

• Use the competitive war games approach to simulate the competitive environment, identify weaknesses, and make critical changes that produce a more complete and effective competitive strategy

7.4

Financial Risk

• Sustained periods of negative cash flow

• No formal investment strategy

• High risk of investment in strategic research and venturing into new areas

• High cost of building competitive barriers

• Operating costs reduction through  optimization of production systems

• Shift from venture capital towards asset based financing

• Strategic research cost sharing with alliances

• Divesture of segments

• Look at several measures of capital employment - not just one

• Balance your risk capital investments based on technology area, industry concentration, geography, and other criteria

• Work back to costs from what customers are prepared to pay

• Reduce inventory costs by developing lean production systems

• Explore opportunities for attracting international financing and raising funds from public stock markets

• Explore opportunities for managing projects as spinouts

• Raise additional cash from divesting from the low priority segments of your business

• Enhance shareholder value by adopting a leading-edge reporting model

• Upgrade you expense control system

7.5

Team & Management Risk:

• Reduced communication & cooperation among functional units; poor teamwork and coordination across various functions of the company

• Absence of integration for business and systems plans

• Turbulence due to expansion of the managerial team

• Changing focus; unclear strategy or many conflicting priorities concerning what's going on in various departments of the organization

• A top-down or laissez-fair style of leadership on the part of management that is either too autocratic or too hands-off

• Unhealthy competition for power; a relative lack of leadership or managerial skills in the organization

• Control systems poorly documented

• Management fails to engage the organization effectively

• Measurements not related to success factors

• Reporting not tied to management incentives

• Poor vertical and horizontal communication: employees don't know what top managers are thinking; middle-level managers don't know what's going on in other departments

• Highly structured reward schemes do not motivate employees to be more innovative

• Establishment of management systems enabling better control, transparency, and customer relationships

• Development of employee empowerment mechanisms

• Development of decentralized management structures, with managers operating within a shared context that encompasses anticipation of future events that might have an impact on the industry.

• Create the mindset of growth and establish the relentless growth attitude in your organization

• Establish cross-functional management system

• Build a process-managed enterprise and establish a business process management system

• Develop a holistic performance management system

• Practice results-based leadership

• Start with yourself, know your own values, strengths, weaknesses and use them effectively; practice effective self-management, systems thinking and process thinking

• Empower employees, vendors, customers, and peers to measure your management performance

• Delegate authority; define duties and responsibilities according to current and future organizational needs

• To be a successful manager, learn how to innovate; you have only two options – to manage change or to change management

• Build an innovation-friendly organization; devise catalytic mechanisms and lead cycles of reinvention

• Model core values; base your decisions on the values; and hold everyone accountable to values

• Find, develop and manage people partnerships

• Reinvent or reengineer your organizational structure and your methods of motivating people

• Do the feedback  analysis as a matter of course to build on your strengths

• Gain really effective control by measuring performance and conducting a comprehensive business audit

• Redeploy management talents; share strategic leadership with the team and hold your management team accountable for strategic leadership

• Be creative; nurture/champion new ideas

• Look for trends and opportunities

• Never stop learning; build a learning, teaching, and coaching organization

• Lead others to achieve the corporate vision, re-plan, act and measure results; be proactive; seek timely feedback

• Help every individual to find the right fit within the business

• Make sure you communicate clearly and often with colleagues, superiors, and subordinates

• Play the role of the team builder, coach, strategic planner and communicator; take relationship responsibility

• Be explicit about what you expect and what you won't tolerate

• Design reward system to reflect values