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Mastering Strategic Risk: A Framework for Leading and Transforming Organizations

Mastering Strategic Risk: A Framework for Leading and Transforming Organizations

Joel E. McPhee Jr.

ISBN: 978-1-118-77286-7 April 2014 256 Pages




The modern business climate demands a new risk management strategy

Mastering Strategic Risk: A Framework for Leading and Transforming Organizations is a comprehensive guide to redesigning organizational systems to better manage the risks and complexities of the modern world. Based on the notion of "Create, Facilitate, and Support," the book provides a roadmap to ensuring optimum performance in even the most challenging circumstances. Whether applied to a system or an entire organization, the ideas presented can help unlock a business's potential and ensure a sustainable advantage.

Modern business leaders face unprecedented challenges, and risk management has become a strategic priority. Traditional management frameworks are outdated, and cannot be re-tooled to effectively account for the demands and complexities of the 21st century. Instead of adjusting old, ineffective models, businesses are better served by implementing an entirely new model custom-built to lead organizations through today's business environment. Mastering Strategic Risk describes this brand new framework, and provides the tools and background leaders need to remain effective in this new age. Topics include:

  • The three forces behind customer behavior, competitive advantage, and a culture of discipline
  • New major change agents that drive complexity and intensity
  • Tools that help identify and mitigate the biggest risks to operations
  • A new HR model to drive peak performance and galvanize employees

The book contains well-known real-world examples from Wachovia, Toyota, World-Com, and Citrix, that illustrate key concepts within the new framework and demonstrate the core elements of modern risk management. For the savvy leader looking to push an organization to the next level, Mastering Strategic Risk: A Framework for Leading and Transforming Organizations provides a brand new model for effective management.

Preface xiii

Acknowledgments xv


Mastering the Complexities of a New Age 1

CHAPTER 1 The Round World, the Square Pegs: Redesigning Organizations to Manage the Risks of a Different World 5

Righting the Ship: Managing the Complexities of a New Age 5

The Untold Story of Wachovia’s Demise: The Rise and Fall of an Industry Giant 7

A Symptom of a Much Larger Challenge 12

The Burning Platform: Why the Need for Change 14

Leveraging the Power of People 15

A World of Patterns: Does Nature Hold the Answers? 16

References 17

CHAPTER 2 The Three Elements: Creating, Facilitating, and Supporting Your Competitive Advantage 19

A Framework Taken from Nature 19

The Human Body as an Example 22

Ecosystems 25

The Three Elements and Our Marketplace 26

The Three Elements and the Auto Industry 31

The Three Elements and Organizations 32

The Creative Element in Organizations 34

Information Technology as an Example 36

Everything Old Is New Again 36

Summary 38

Questions 38

Note 39

References 39

CHAPTER 3 The Three Forces: Mastering Strategic Risk with Repetition, Balance, and Movement 41

Anticipating Change: Toyota 41

Three Forces that Dictate Performance in Systems 43

Movement and Change in Nature 44

Movement, Balance, and Repetition in Our Marketplace 48

Change, Balance, and Repetition in Organizations 51

The Three Elements and Forces and Our System of Government 54

The Federal Government Supports, Facilitates, and Creates: A Fractal View 57

The Federal Government and Oversight 58

A Holistic Approach 59

Summary 60

Questions 60

References 61

CHAPTER 4 Transforming the Corporate Agenda: Applying the New Learning to Master Strategic Risk 63

Aligning the Three Elements and Forces for Impactful Results 63

The Three Elements as Key Drivers of Organizational Performance 65

Creativity and Innovation through the Lens of Industry Leaders 67

Identifying Additional Centers of Creativity and Growth in the Most Unlikely of Places 71

Growth through Facilitative

Functions and Capabilities 74

Growth through Supportive

Functions and Capabilities 76

Repetition and Operational Excellence 78

Wachovia and Merger Integration 78

Managing Movement and Change 81

The Value of a Transformation and Change COE 81

The Importance of Measuring Key Controls and Activities 83

Assessing Key Drivers through the Universal Guide 85

Summary 88

Questions 89

References 89

CHAPTER 5 Risky Business: Why the Environment Should Matter to You 91

Our Self-Centered Interests 91

The Truth about Systems 94

Our Commercial Ecosystem 94

Driving Growth and Shareholder Value through Sustainability 98

Demystifying the Myth . . . What Really Is a Corporation? 100

A Lesson on the Environment and Sustainability 101

Other Factors Driving Commerce 104

Improving Our Interaction with the Planet 105

Making the Case for the Environment 110

The Corporation and the Community 110

The Realities of Life Downstream 111

In the End, It’s About the Individual 112

Summary 113

Questions 114

References 114

CHAPTER 6 Governance, the Cornerstone of Risk: The True Role of Accountability in Organizational Systems 115

Governance in Natural Systems: The Human Brain as an Example 115

WorldCom and the Bernie Ebbers Story 117

Strategy and Governance 120

Complacency and Governance 123

The Role of Accountability in Systems 123

Accountability at Adulant Technologies 124

The Importance of Roles and Responsibilities 125

A Crisis of Corporate Culture: The Story of News Corp. 127

The Independent Board of Directors 130

Summary 132

Questions 133

Notes 133

CHAPTER 7 The Game Changer: Stewardship—Taming the Land Grabbers, Passive Aggressors, and the Mighty Ogre 135

The Coup d’État 135

It’s Time for Change 137

A Profi le in Leadership 144

Summary 151

Questions 152

References 152

CHAPTER 8 The Risks of Human Capital: Unleashing the Conceivers, Deal Makers, and Sustainers 153

A New Human Resources Model 153

The Internet Example 164

A New Model for Evaluating Teams 165

The Diversity Trap 169

The Three Forces and the New HR Model 170

Summary 173

Questions 174

CHAPTER 9 Waking Sleeping Giants: The Importance of Empowering Employees 175

The Empowered Employee: The Key to Driving Peak Performance 175

Citrix Systems Inc.: Cultivating a Culture of Empowerment 178

Adapting to a Mobile Workforce 180

Employee Engagement and Its Linkage to Empowerment 181

A Professional Development Journey 183

Reinvention and the Individual 185

The Learning Organization’s Connection to Movement and Change 186

The Importance of Infusing New Blood into Your Organization 189

Employees Driving Shareholder Value 190

Tapping Employee Resources to Enhance Value 191

Do They Have a Dog in the Fight? Engagement through Creating a Compelling Vision 192

Seizing the Opportunity at Hand: A Message to Employees 196

Summary 198

Questions 199

References 199

CHAPTER 10 The Shining Moment: Unlocking the Potential and Promise of the Twenty-First Century 201

Henry Ford: Riding the Wave of Converging Forces 201

Our World Then and Our World Now 203

The Call for Transformation 204

Mastering Change Matters More Now than Ever Before 205

Enhanced Capabilities Driving Change 207

Human Beings: Our Greatest Natural Resource 208

Man’s Coming of Age 210

What Will Be Our Lasting Legacy? 213

The Way of the World: Revisiting the Core Elements and Forces 215

The Emerging Steward: Why Organizations Must Lead from the Edge 217

The Masters of Our Fate 218

Summary 220

References 221

About the Author 223

About the Companion Web Site 225

Index 227