Consider these competitors:
- Toyota vs. Ford
- Coach vs. LVMH
- Target vs. Sears
- Tsutaya vs. Blockbuster
- Apple vs. Sony
- Samsung vs. Motorola
In each case, the first company has achieved standout returns and higher growth with lower risk than its major rival. It’s possible to achieve stunning business success while reducing the level of risk you assume.
The Upside: The 7 Strategies for Turning Big Threats into Growth Breakthroughs, the book by Adrian Slywotzky, shows you how to do this. It brings strategy from 50,000 feet down to the trenches, moving from broad, eye-opening ideas about risk to specifics about how to win in your industry by employing the full repertoire of countermeasures for managing strategic risk and transforming it into opportunity.
Traditional risk management focuses on hazard risks (fire, flood), financial risks (bad loans, interest rate swings), and operating risks (the computer system goes down, an employee steals). While these kinds of risk are important, strategic risks can be even more dangerous and pervasive. We’ve identified seven categories of strategic risk you need to anticipate:
The very common risk that a costly investment in a new product, an acquisition, or a systems overhaul will fail
Your customer base is decimated by shifts in needs and priorities that make your product or service offerings less appealing or irrelevant
The value of your brand collapses suddenly, or gradually shrinks in the wake of competitive assaults, economic changes, disastrous publicity, or long-term failure to invest
Your market gets so saturated and competitive that the entire industry becomes a no-profit zone
Your company gets overwhelmed by an unforeseen change in technology or business model
Unique competitor risk
The sudden emergence of an especially powerful rival decimates your business
Your business achieves a level of maturity that makes further sales and profit growth very difficult
There’s no way to eliminate strategic risk altogether. But understanding it, mastering it, and implementing specific countermeasures allow your company to dramatically reduce the threats it faces. There are specific tools with which to build a shock-resistant business model.
Adrian J. Slywotzky was cited by Industry Week as promising “to be what Peter Drucker was to much of the 20th century, the management guru against whom all others are measured” is a director of Oliver Wyman. He is the author of the bestselling The Profit Zone (selected by BusinessWeek as one of the ten best books of 1998), Value Migration, and How to Grow When Markets Don’t. He has also been published in the Harvard Business Review and the Wall Street Journal and has been a featured speaker at the Davos World Economic Forum, the Microsoft CEO Summit, the Forbes CEO Forum, and the Fortune CEO Conference.