Will your strategy follow the valley or a ridge?

Risk versus pace

Business strategy can seem complicated – there are many decisions to make – on markets, products and operations. At a high level most of these boil down to trade-offs between pace and risk. If we accept more uncertainty, we can often make progress faster. But if we play safe then we might take longer to achieve our strategic goals.

Real and perceived risks

As a keen hill walker, I’m familiar with choosing a route. Most mountains have several paths which lead to the summit. Some will look easier, and others may be harder. But appearances often deceive, and risks may be less obvious in planning than in practice.

Seeing a path on the map gives us confidence this is a known route. This is reinforced when we find it on the ground in front of us. Even better if there’s a sign confirming our chosen direction. But visible paths and signs don’t always indicate an easy way ahead.

Valleys and ridges

Most mountain paths will follow one of the valleys or up a ridge between them. A valley usually makes an easy way to start – the path will begin gently, often alongside a river or stream. There could be many offshoots – different ways to cross the stream or view a waterfall. Generally, these will converge as the valley rises so navigation is usually easier.

Ridge routes typically ascend sooner and faster than the valley paths. They are often not paths at all. You may need to ‘scramble’ – using your hands to climb the rock. Often there is a preferred way up, revealed on rock polished by many hands and feet. Finding a ‘tourist route’ can make the ascent much easier than it looked from below. But if you take a wrong turn, you may find yourself on a more challenging ‘route sportif’ or even a rock climb requiring ropes. Care must be taken to stay ‘within your grade’ and manage your risks.

Choices and consequences

When choosing your company’s strategy, your decision often rests on partial information. You cannot know all the consequences of each option. But the worst-case scenario is clear – your business could fail. Keeping this in mind helps to focus your attention on the most severe risks and stay aware of any change in the situation.

Sometimes it seems easier to follow a safer strategy – building your business incrementally and organically. But this can slow your progress and could allow competitors to overtake you. Companies funded by venture capital often choose a more aggressive strategy, taking greater risks to progress faster. These uncertainties can be managed by taking advice from those who’ve done this before. Mentors and Consultants can be the ‘Mountain Guides’ for your company’s strategy.

Summits and goals

As your path approaches the summit, it will merge with many others. Whether you chose the safer-looking route or the steeper climb, the final goal is the same. But if you have the courage, the knowledge and experienced support then the ridge may get you to the top sooner. It might be scary at times but also a lot more fun!

If you’d like to discuss how to balance risk and progress in your strategy, then please get in touch!