- Risk Averse – The risk averse want to avoid or ignore risk. Their main strategy is to get an expert to manage the risk for them.
- Risk Neutral – The risk neutral are flat risk, they buy and sell and aim to keep their position flat or neutral. They often act as intermediaries in deals or use their superior expertise to break complicated problems into simple ones.
- Risk Takers – These people seek to understand risk and manage it. Their goal is to make risk free profits through arbitrage.
In finance, behaviour of the people with the intention of being risk averse is to assume massive risk due to their ignorance. The behaviour of risk takers is to understand risk and only take it on when they are adequately compensated, often making profit with no risk.
When attempting to transform an IT function, most executives are risk averse. They seek to hire experts who will manage the risk for them. The problem with hiring experts is that you really need to be an expert to hire them otherwise you will not know whether they are an expert or a smart person reading one chapter ahead of you. As a result, executives tend to appoint big name consultancies so they cannot be blamed as an individual if things do not work out. Robyn Dymond has written an excellent article on the subject. The reality is that most big name consultancies have little or no depth of Agile experience. The big name consultancies are buying in experts themselves.
So what is needed for an executive to adopt the agile value of courage?
- The whole executive needs to work as a team to solve the problems that an Agile Transformation throws up. The CEO needs to act as the product owner and the CFO, COO, CPeopleO, CProductO, CMO, Business Heads need to act as a team rather than compete. They need to empower and support whichever executive is leading the transformation and help them remove impediments where ever they arise. This will allow the executive leading the transformation to manage the risk rather than go risk averse and appoint a big name consultancy. In other words, the executive team needs to model the behaviours that they want to organisation to adopt.
- The entire executive team need to engage in deep learning. Each executive should engage a number of coaches and commit several hours a week to learning about the new way of running the business. After all, they are transform their organisation and need to know how to run it when it has changed. This will mean new behaviours and patterns of working. It will almost certainly mean that all executives will need to “go to the Gemba” (Go to the place where work happens) rather than receive the majority of their intelligence through carefully manicured and filtered powerpoint decks.
- Executive will need to visit companies that are touted as successful. However, that is not enough. They need to use their existing employees and coaches to manage context risk. Get their team to attend conferences and find out the real stories behind the success. Understand if the solution they are looking to adopt will fit with their context. Most importantly, they should know what failures have been experienced by organisations adopting approaches.
- The executive leading the transformation should engage in several “safe to fail” experiments to try out different methods and approaches. They should try out one or two big name consultancies, as well as small niche Agile consultancies, and groups of independent experts. The only measure of success for these projects is real business benefit and not the production of paper or software “deliverables”. The IT Risk Management Framework might be useful for this.
- The executives need to understand that an Agile Transformation is hard and that some of the sacred cows of cost cutting need to be slain along the way.
- Any consultancy proposing a big bang, one size fits all approach should be shown to the door. That is exactly the reason the IT Risk Management Framework was created, so that teams and departments could adopt the most appropriate method for their context in the knowledge that the IT investment risk was managed if they operated within the constraints of the framework.
- Finally, executives need to understand that context is the most important thing for them to consider. They should become experts at managing risk and spotting when a solution does not map well to the context.
So whenever you are thinking that your executive is not acting with courage, understand that it is probably the team they are working with and the reward system they operate within that forces them to be risk averse. Its really hard to go back and learn a new way of thinking and doing, and it is something that will only really happen when you have the support of your team.