Author Archives: Jared Wade

About Jared Wade

Jared Wade is a freelance writer and former editor of the Risk Management Monitor and senior editor of Risk Management magazine. You can find more of his writing at JaredWade.com.
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Managing Strategic Risk: Yahoo’s Crisis

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All the major tech sector firms have their issues. Apple just lost its transcendent leader. Google’s sprawl, some fear, may be leading it down the same path that Microsoft took as it lost its crown as king of the tech mountain. Facebook, well, really, doesn’t have many real problems considering that its rumored-to-be-coming-soon IPO is expected to take in $100 billion. But privacy concerns persist — so much so that an FTC investigation led the agency to mandate the social network to undergo 20 years of privacy audits and obtain consent from users before sharing their personal information.

But such issues pale in comparison to the crisis Yahoo faces, something that is enticing some firms to make a bid for the former tech giant.

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Primarily, the company is suffering from a lack of diversification of its revenue stream. To remain healthy, it likely needs to find ways to make money that aren’t related to email, as the chart above from Business Insider shows. As the publication notes, “For all of its success, at its core, Yahoo is still an email business. People use Yahoo email and then from there land on its other properties. The rise of smartphones and iPads is a problem for Yahoo. On those devices, email is a native application that doesn’t encourage people to checkout Yahoo’s pages.”

We highlighted this threat — which, at least in part, prompted the company to fire CEO Carol Bertz in September — in our annual “Year in Risk” look-back at previous 12 months.

The CEO of Yahoo, a company that helped define the internet as a revolutionary means of communication, found out the old-fashioned way that she had been fired: over the phone. Carol Bartz’s uninspiring two-year reign atop the firm came to end as the company showed little ability to adapt its business model to thrive in either advertising or content creation after partnering with Microsoft in hopes of preserving its original core business — internet search. Yahoo’s stock has yet to recover after cratering in late 2008, leaving many tech analysts to wonder if the company has a future.

It’s hard to say what the company will do to revamp its long-term strategy.

But it is becoming increasingly clear that the current route may be a path to nowhere.

Managing Strategic Risk: It All Starts With a Plan

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There are many ways a company’s long-term strategy can fail.

The problem may be execution. Or perhaps continually shifting the plan aka moving the goal posts (*cough* … Hewlett-Packard). Another common downfall is expanding too fast (*cough* … Toyota). Sometimes companies fall victim to their own success, deluding themselves into believing they can thrive in areas in which they aren’t suited to succeed (*cough* … Bank of America buying Countrywide) or emerging areas they simply don’t understand (*cough* … AIG insuring mortgage-backed securities). Or companies can fail via the inverse: resting on their laurels and failing to change as the world around the does (*cough* … Blockbuster).

In short, there are eight millions ways to die.

There may only be one, however, that predestines a company to fail: starting with a flawed plan. Or, to play on the cliché: failing to plan may be planning to fail — but planning poorly might be just as bad.

To that end, Forbes has compiled a “top ten ways strategic plans fail.” Head over there for the full list but these are the five I consider to be the most insightful lessons.

1. Having a plan simply for plans sake. Some organizations go through the motions of developing a plan simply because common sense says every good organization must have a plan. Don’t do this. Just like most everything in life, you get out of a plan what you put in. If you’re going to take the time to do it, do it right.

3. Partial commitment. Business owners/CEOs/presidents must be fully committed and fully understand how a strategic plan can improve their enterprise. Without this knowledge, it’s tough to stay committed to the process.

7. Having the wrong people in leadership positions. Management must be willing to make the tough decisions to ensure the right individuals are in the right leadership positions. The “right” individuals include those who will advocate for and champion the strategic plan and keep the company on track.

8. Ignoring marketplace reality, facts, and assumptions. Don’t bury your head in the sand when it comes to marketplace realities, and don’t discount potential problems because they have not had an immediate impact on your business yet. Plan in advance and you’ll be ready when the tide comes in.

10. Unrealistic goals or lack of focus and resources.

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 Strategic plans must be focused and include a manageable number of goals, objectives, and programs.

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Fewer and focused is better than numerous and nebulous. Also be prepared to assign adequate resources to accomplish those goals and objectives outlined in the plan.

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The Risk of Email: Lost Productivity

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When we think of email-related risks, we generally think of malware. What if some unscrupulous cybercriminal sends an employee a message containing a virus, Trojan horse or botnet? Organizations implement spam filters and firewalls to prevent such threats, but there is always a fear that those protections will fail.

Well, now, one company is addressing an altogether different risk of email: lost productivity.

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The tech firm Atos seems to believe that its employees face threats from internal spam, meaning those pointless messages we all get from co-workers that achieve little more than distracting us from real work. So rather than let its workers decide which emails actually have value and are worth distributing, Atos came us with a simple solution: banning internal email.

CEO Thierry Breton of the French information technology company said only 10 percent of the 200 messages employees receive per day are useful and 18 percent is spam.  That’s why he hopes the company can eradicate internal emails in 18 months, forcing the company’s 74,000 employees to communicate with each other via instant messaging and a Facebook-style interface.

Oddly enough, Breton isn’t some rags-to-riches maverick from Silicon Valley who has gone bonkers. He has led several high-profile, traditional companies in France before becoming CEO of Atos.

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But it is he who is leading the charge to end the most prominent method of communication used in business today.

Breton,  the French finance minister from 2005 to 2007, told the Wall Street Journal he has not sent an email in the three years since he became chairman and CEO of Atos in November 2008.

“We are producing data on a massive scale that is fast polluting our working environments and also encroaching into our personal lives,” he said in a statement when first announcing the policy in Feburary. “At [Atos] we are taking action now to reverse this trend, just as organizations took measures to reduce environmental pollution after the industrial revolution.”

I would add some additional insightful commentary but, excuse me, I just received a pop-up in the right corner of my screen telling me that my co-worker has sent me a message containing a particularly funny edition of Dilbert …

The Risks of Social Media: How Insurance Companies Are Benefitting Despite the Potential Perils

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It’s been quite awhile since we last added to our Risks of Social Media series. There has of course been many developments and discussions of the risks involved over the past year, but more so than the downsides, companies should now be focusing on the upside. Twitter, Facebook, YouTube and now, perhaps, Google+ all present vast marketing, reputation, customer service and sales benefits so it would be foolish to continue ignoring the social media revolution just due to the downsides.

For a recap of the perils, however, let’s look at the below slide from the Insurance Industry Charitable Foundation’s presentation “Social Media 2.0 for Insurance Professionals.”

These issues are real concerns. They must be dealt with. And anyone in your company who is tasked with managing any aspect of the firm’s social media platform must undergo training that highlights the risks just as much as the opportunities.

But just look at how even these — theoretically — risk-averse companies are leveraging social media for their own gains. Insurers are generally not going to jump into something if the threat outweighs the upside. So if they’re doing it, chances are you should be, too. (all slides courtesy of Dewey & LeBoeuf’s presentation for IICF)

State Farm

 

Farmers

 

Progressive

 

Allstate