The Anticipation Advantage

June 2008 Issue

By Diana Del Bel Belluz, M.A.Sc., P.Eng.

“Skate where the puck’s going, not where it’s been.”  Walter Gretzky

That’s the advice hockey great Wayne Gretzky got from his dad. It encapsulates a central objective of risk management, i.e., to anticipate your future circumstances (both threats and opportunities) so that you can position yourself advantageously.

The importance of anticipation and positioning is even more dramatic in a sport like car racing which is a better sports metaphor for how organizations (rather than individual players) behave. Think of your organization as a racecar, with your CEO as the driver, the business units as the car’s major components (e.g., engine, wheels, brakes), and the functional areas (human resources, finance, risk management) of the company as the pit crew that keep the car running smoothly. The car is a sophisticated machine, not an inanimate puck.

The driver and pit crew have an instrument panel with gauges that provide critical data on performance, e.g. the oil gauge, tachometer, thermometer. If the pit crew tracks the car’s oil use, and analyzes it, they will know how much oil the engine is burning under various operating conditions and how far they can they can push the engine.

Tracking and analyzing the basic data enables the driver and the pit crew to anticipate the future and make informed decisions such as: how far they can push the engine, the optimal time to service it, and what modifications to it could improve overall performance.

The ability to anticipate enables you to compete. Christiane Bergevin, President, SNC-Lavalin Capital Inc. in an interview with The Globe and Mail explained it this way. “If you can anticipate [trends] in the business world you are ahead of the crowd … you can have more time to think and you can innovate.”

To anticipate, you need to understand both:

1)     How internal factors influence the achievement of your objectives. This means tracking the contributions that your key resources (people, business processes, and systems) make to your performance.  For the racecar, this would include converting the data from the instrument panel into information to decide how best to operate the car.

2)     How factors in your business environment can affect your ability to achieve your objectives. This means keeping a lookout for trends and disruptive events. In the racecar example, this would include looking at steady trends such as air and pavement temperature to determine optimal tire inflation. And it would require identifying and preparing for disruptive events, e.g., collisions.

Here are 5 tips to build your anticipation capability.

1) LOOK AT TRENDS.

Most organizations collect a great deal of basic data but fail to transform it into information about trends, and relegating it to what I call the ‘data cemetery’.

If a trend shows that a key indicator is veering off track, you can dig deeper to understand why and know how best to address it. It’s like the difference between knowing how much gas your car consumed last week versus knowing that your gas consumption has been steadily rising week over week. Different root causes will demand different solutions. For example, is your gas consumption going up because:

  • you are doing more driving? If so, you may have to find money for the extra gas or reduce your mileage;
  • you are doing more city than highway driving? If so, you may want to optimize your routing;
  • your engine isn’t operating efficiently? If so, you’ll want to schedule a tune-up.

Start with the data you are already collecting on key performance drivers. (For example, in a health care facility wanting to reduce wait-times, performance drivers could include: number of qualified professionals; number of tests conducted in a timely; operating room capacity; etc.)

Track how changes in your indicators affect the achievement of your objectives. When you have observed the trends for a while, you will be able to:

  • Account for your ultimate outcomes by linking them to the underlying performance drivers. When you know what exactly is driving performance, you’ll know how best to address gaps and opportunities.
  • Establish trigger points, i.e., the threshold at which you need to start planning an optimal action strategy.  In the healthcare example, if it becomes difficult to attract new staff, it’s time to develop a strategy to address the potential drop in qualified professionals before it affects wait times.

2) KEEP IT SIMPLE.

Most people will tell you that their job, their business, their sector is already complicated. Choose analytical tools that are simple to understand and easy to apply, such as the trending approach described above, influence diagrams, environmental scans, etc. The tools you provide your people must bring clarity to their decision-making and reporting processes. If not, go back to the drawing board.

3) USE A MODULAR APPROACH.

Start small and build the analytics piece by piece. Adapt and modify the pieces based on ‘user’ feedback and analysis of results.

Don’t try to develop an analytical model that replicates your entire business. Trying to roll-out a comprehensive risk management analytic system right out of the gate is a recipe for failure. Begin by focusing on a single key objective and the most significant factors that contribute to it. Like wait-times in healthcare.

4) BEWARE OF ASSUMPTIONS.

Whenever you make predictions about the future, assumptions are a necessary evil. This is particularly true when you are extrapolating trends of past data. Be careful that your assumptions are valid. Ask yourself questions such as:

  • Do we have evidence showing that our past is a robust predictor of future performance?
  • Is it reasonable to expect that the conditions that created our past performance will persist unchanged in the future?

For more on assumptions, see this month’s Bonus Resource: The Achilles’ Heel of Risk Management.

5) WORK WITHIN YOUR CULTURE.

If your organization’s values are contrary to the principles of risk management, it will be impossible for risk analytics to gain traction. Principals that form the foundation of a strong risk management culture include:

  • a balanced approach to risk-taking (versus gambling or risk aversion),
  • a proactive and disciplined approach to management (versus ad hoc or reactive),
  • accountability (versus buck-passing or blame),
  • evidence-based decision-making (versus authoritarian or personality-driven).

The Risk Wise bottom line…

To compete well, you need to anticipate. As a risk management professional, you are positioned to play a major role in building your organization’s analytical tools and capabilities. With the right information and interpretation skills, decision makers across your organization will be able to consistently ‘skate to where the puck is going’. Think of what that could do for your organization in terms of improving your performance and reaching new heights of success.

Tell me how you’ve built your people's analytical capabilities to help your organization to anticipate and compete.

I appreciate receiving emails with your tips and success stories at This email address is being protected from spambots. You need JavaScript enabled to view it.

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Diana's Pick

Neuroscience and the Nonprofit Manager (written by Andy  Segedin and published in the NonProfit Times) shares some of the tips on how to counteract common biases and habits that impede effective decisions.

The article is based on a workshop that Diana Del Bel Belluz of Risk Wise presented at the 2015 Risk Summit organized by the Nonprofit Risk Management Center.