Avoid business disasters

Read time: 4 minutes

Hey there 👋 - it's Brian.

When I first joined consulting, I was almost kicked off the project for not thinking about all the possible ways a decision could go wrong.

I wasn't ready to face embarrassment so I studied everyday for 2 hours. Frameworks, mental models, anything to solve problems before they happened.

Fast forward a few years and my peers came to me as the expert on thinking through complex business problems.

Today, I'll give you 1 story, 1 strategy, and 1 tactic to help you avoid disastrous outcomes in your business.

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1 Story: Would you rather be the firefighter or the person who unplugged the toaster?

The smoke from the burning room fills Dave's lungs as he kicks down the bedroom door to save his son. He has 3 minutes before the smoke ends his life. He picks up his 7-year old son trapped under a collapsed beam. Then, he crashes out the 3rd story window onto the trampoline below.

The suburban home engulfs in flames. The identical home next door, untouched.

Dave makes the front page of the New York Times for risking his life and saving his family in a burning building. The article rightfully celebrates him as a hero. A toaster oven ignited the fire.

But there was another hero that day the article didn't mention.

You see, Dave's brother lived in the identical home next door. He also had the same toaster. He also used it to cook that night. The difference? Just before he went to bed he thought "huh. I should probably unplug the toaster."

Dave became a hero without a home. Dave's brother has a home, but not a hero.

Now, let's imagine that home is your business. If it's your business, you'd much rather have a business fully in tact, than to near-destroy the business, then save it. But employees are incentivized to wait until there's a problem to fix it.

Shreyas Doshi calls this the "Preventable Problem Paradox":

1 Strategy: Solve business challenges before they happen

Decision's been made. You're launching your product into a new market.

Let's walk through how you prepare for the ways your launch could go wrong:

1. Brainstorm RisksHere's where you think through all the project risks.

It's hard to come up with every risk (did anyone see COVID coming?), but the more thoughtful we are the more likely we are to dodge disaster. Here are 2 risk categories to get you started:

Internal Risks:

• Execution risk (ex: teams take too long to make it happen or costs reduce your returns)

• Socialization risk (ex: employees aren't fired up to do it)

External Risks:

• Competitor reaction (ex: competitors launch an initiative to take your customers)

• Market reaction (ex: customers, suppliers, and partners react negatively)

• Regulatory risk (ex: laws change to make your solution harder to adopt)

Look at each bullet and come up multiple risks for each bullet. Create a list of 10 - 15 possibilities (use slide 2 in this template).

2. For each risk, determine likelihood + impact

For each risk you've listed ask two questions:

1) How likely is it that this risk will occur?2) If it does occur, how much will this impact your goal?

We won't know exactly so this is just an estimate. Mark it as "low" or "high."

3. Prepare plan for impact

Now, plot each risk on the likelihood / impact chart (slide 3).

Determine which risks you need:• No prevention plan• Light prevention plan (what you'll do)• Detailed prevention plan (what you'll do & how)

Use the chart below to identify which you need a prevention plan for.

1 Tactic: Assume the project fails. Why did we fail?

Another way to find disaster before it strikes is a "Pre-Mortem."

Pull your team together and ask the team to assume the project fails.

Why does it fail? List out the reasons and adjust your plan to prevent the causes ahead of time.

Here's Shreyas on pre-mortems:

That's a wrap!

If you have any questions, reply to this email and I'm happy to guide you.

If you found this helpful, please forward this email to 1 friend or colleague. They'll appreciate you and you'll help grow the community.

See you next Thursday 👋

Brian

Clickworthy Resources

• A guide to project risk mitigation

• More frameworks to problem solve business challenges

• How to perform a project pre-mortem

Let me know what you think of the format 👇