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Strategy
ATD Blog

Growing Talent Management Firms: Managing Risk

Tuesday, December 29, 2015
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As with any company, whether a small start-up or huge multi-national conglomerate, ultimate success depends almost exclusively on the decisions leaders make to advance the business. Although we can’t dismiss that some luck is involved (think: being at the right place at the right time), hoping that the stars align isn’t a very wise strategy. 

With multiple employees making a myriad of daily decisions, chance alone suggests that our businesses are always exposed to potential negative consequences of a devastating decision. This reality demands organizations follow some protocols designed to minimize serious risk. 

There is a difference between taking risks and taking chances—particularly if the former are well-calculated. Indeed, taking a chance on the hope that “all will work out” has leveled a number of companies over the years. The solution to taking unnecessary risks is figuring out how to effectively manage them. The challenge, of course, is making risky decisions that have a chance to pay off versus playing it safe all the time and, thereby, minimizing a big payoff. 

As we think about the talent development industry, risks have been somewhat predictable over the long haul, whether we contemplated them or not. Take online learning, for example, which most of us saw coming as early as 25 years ago. But how many of our businesses are still slow to admit this reality—and are suffering by not staying up-to-date with our products and services? 

Times are rapidly changing, and disruptions we can’t fully anticipate can be devastating to a business if they are not at least recognized at some level today. What is the Black Swan that hasn’t appeared yet? We all know it is out there, but no one knows what it is until it presents itself. 

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Case in point: Who thought that MOOCs would exist and threaten the corporate learning business as we know it? Of course, the jury is still out on their overall impact, and some data are beginning to suggest that their threat to at least university learning and matriculation is less than anticipated. But we don’t quite know what the future holds. 

 So, as we look at managing risks, we have two basic decision-making options: 

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  1. proactively anticipate the future
  2. wait for the future and then react and adapt.

It’s not hard to argue for either approach—depending on your level of risk tolerance. Indeed, perhaps a little of both will cover the bases. Here are 10 general guidelines for managing risk. 

  1. Create a long-term strategy that anticipates the eventualities of change. Use this plan as a guidepost against which the BIG decisions can be evaluated. 
  2. Ensure and embrace diversity of thought among all employees--not only senior management. This will open everyone’s eyes to that which not all necessarily see. 
  3. Develop a strong banking relationship by frequent interactions and updates to ensure your loan covenants are within stipulations. Will your bank or other lenders continue to provide needed capital for your growth? 
  4. Comply with all government laws that impact the business. Certainly, those related to safety, the environment, immigration, customs, health and human services, and taxes require constant vigilance.
  5. Manage your customer concentration by not having too great a percent of your business with just a few customers. Ideally, no one customer should have more than 10 percent of your business to avoid becoming too overly dependent on them. 
  6. Protect your proprietary intellectual capital and your engine for differentiation. Ensure that all legal actions are taken to copyright and trademark what you own to keep others from illegally using it. Monitor its use as feasible as possible. 
  7. 7) Manage your distribution network, whether in-house or contracted out, so that your business (not the sales person) owns the customer relationship. Admittedly, this is not always possible to control if using external sales resources, but managing the appropriate use of your products and services is your job. 
  8. Manage your “inventory” so that you don’t run out of capabilities to serve your customers. In today’s digital world, we don’t think much about running out of program materials since reproduction is a click away. But, how readily available are these sources and more importantly what about the availability of people fully capable to deliver them? 
  9. Ensure supplier compatibility. Single-source suppliers, or at least a minimal number, are fast becoming the best practice these days, because both parties benefit when true interdependent partnerships are established. But be sure you aren’t at risk if your suppliers’ business is at risk. 
  10. While none of us can control the occurrence of a natural catastrophe, we should all have plans in place in the event one occurs, or at least proper insurance. Unfortunately, fires, floods, power outages, hurricanes, earthquakes, and so forth will take place at some time. How will you guard against these negatively impacting your business? 

These are just the headlines for managing the risk in your business. What are some others that might impact you specifically? Which of the above needs immediate attention?

About the Author

Steve Cohen is founder and principal of the Strategic Leadership Collaborative, a private consulting practice focused on business strategy and development. A 40+ year veteran of the talent development industry, largely on the supplier side, he has demonstrated a proven track record for building equity by growing top and bottom-line performance for eight different consulting enterprises in the education and training industry he has either founded and/or led. He has been called on to consult with numerous firms needing strategic planning guidance, business coaching, and board advisory services.

His first book, The Complete Guide to Building and Growing a Talent Development Firm, was published by ATD in 2017. His recent follow-up, 12 Winning Strategies for Building a Talent Development Firm is now available on Amazon.

He can be reached at: 952.942.7291 or [email protected].

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