17 May Design Thinking: A Tool to Stay Ahead of Risk
Last year I wrote about the importance of getting ahead of the next emerging risk. As I said then (and it’s worth repeating now), the ability to detect risks as early as possible, measure their potential impact, evaluate options, agree on a course of action, and closely monitor and course-correct can separate the most successful companies from the most spectacular disasters.
I shared a number of actionable steps a risk manager can take to bring a stronger focus to emerging risks, one of which was to apply Design Thinking. This innovative framework can play an integral role in risk management – and it’s central to our consulting approach here at Navigate, so I wanted to give it the attention it deserves.
What is Design Thinking?
This is the obvious place to start – you can’t employ the framework if you aren’t familiar with it! My colleague wrote a great overview of it here, but essentially, Design Thinking is an approach to problem solving. What makes it different is that it uses creative strategies to deeply consider the pain points of end users in order to drive innovation, value, and market opportunity.
What excites me about Design Thinking is its potential to bring innovation to an area of the business that has been lacking it these past few years. Some of the most simple-yet-elegant principles of Design Thinking that can be weaved into risk management processes include the following:
– Challenge basic assumptions. Force unconventional thinking, even in the face of long-held beliefs. Some companies fail for years because they won’t let go of the past. It’s impossible to evaluate the future – and any risks that may be headed your way – if you’re only looking backwards.
– Ask why. Even when you think you know the answer, ask “why.” Consider why certain decisions were made, why you have the processes in place that you do, why your system is set up in the way that is. Ask why, again and again, because the answers may surprise you and expose uncertainties ahead.
– Apply empathy. Empathy is an integral part of the Design Thinking framework. In this case, it forces the risk identifier to “walk a mile in someone else’s shoes,” considering the concerns and challenges faced by customers, shareholders, regulators, etc.
– Encourage stories. The stories people tell may not be true predictors of future risk, but they reveal diverse views of the world in which we operate. Similar to applying an empathetic approach, storytelling can uncover perspectives that may not have been considered yet.
– Look for inconsistencies. Sometimes what people say and what they do are different. Pay attention! Observe behaviors of those around you (internal and external stakeholders) to flag inconsistencies that may provide insight into potential risks.
– Stay neutral. If you want to know someone’s true opinion, you can’t reveal any bias. Instead of asking, “Don’t you think the new program is great?” it’s better to ask, “What do you think about our new strategic initiative?” The second question removes the implication of a right answer and will be more likely to result in the truth – and the truth may lead you to uncover insightful risk-related information.
Risk management succeeds when it is creative and predictive; it fails when leaders dwell on what worked yesterday. I look forward to talking more about the broad role that Design Thinking can play in identifying and mitigating risks. If you’d like to chat about it, you can email me directly at email@example.com.