This month’s faculty publications spotlight is on Risky Strategy: Understanding Risk to Improve Strategic Decisions by Hult faculty Jamie MacAlister.

A note from the author

What is risk? Is it danger or opportunity? Can it be managed or is it something to be embraced and tried?

When companies are developing their business strategies, risk is often mentioned in passing (and frequently misunderstood), but is rarely seen as a core part of the strategic decision-making process. This can lead to unforeseen complications, as strategy is all about making decisions that concern an uncertain future, and therefore risk should play a significant role in this process.

The handling or understanding of risk is often delegated to specialists and much of what is written about risk is, due to its complexity, inaccessible to the majority of senior managers involved in making strategic decisions. This book aims to make the consideration of risk more accessible and understandable to those managers and, in doing so, develop a common language and understanding for talking about it.

Based on research carried out by Ashridge Exective Education at Hult International Business School, as well as case studies 
of the strategic decision-making process in action, Jamie MacAlister takes the subject out of the textbooks and brings it engagingly to life. Drawing on lessons from Apple to Procter & Gamble, from Napoleon to Nelson, from Roger Federer to Sir Alex Ferguson, 
and from Pythagorus to Sir Isaac Newton, Risky Strategy provides a new and dynamic perspective on risk, demonstrating how and when to take the right risk.


“An important and stimulating read for any leader faced with deciding between a bold “knock-out” strategy and one that is less risky but less ambitious” Vic Luck, Director of The Foundation for Leadership through Sport; previously Senior Partner, PwC Consulting

“A breath of fresh air… combines analogies from the Graeco-Roman world and military strategy, along with real-life examples from Jamie’s time as a management consultant and senior manager, to re-interpret a variety of strategic tools” Kriss Akabusi MBE, former Olympic athlete and CEO of The Akabusi Company

“MacAlister has a knack for making you think differently about risk and encouraging an open mind … a risk, some may say, in itself” Martin Reason, Chief Executive, Melton Mowbray Building Society

“An incredibly helpful and clear book that gets to the heart of what strategy is all about” Francesca Brosan, Chairman and Co-Founder of digital agency, Omobono


Book excerpt: From Chapter 6 – Tigers and informal risk


Steve Jobs has been quoted as saying: “Don’t let the noise of others’ opinions drown out your inner voice.  Have the courage to follow your heart and intuition”…


The tiger in us struggles with the idea that you need to minimise risk. Why?  Because it represents the land of opportunity much more so than the land of danger and harm.  And the problem is that as soon as you stop to analyse or calculate, you are already engaged in minimising risk, whether you like it or not.


Tigers are intuitive instead of calculating. There tends to be more emotion involved in the decision making process.  Passion has a role to play.  There is a belief that the best way to learn about risk is not to study it or analyse it but to take it.


Some colleagues at Ashridge recently ran an expo trip to Silicon Valley, for a client group from the Middle East.  The aim was to learn something about how Silicon Valley championed innovation. They visited companies like Google, Apple, Tesla, Intel, Facebook, HP and Singularity University. One thing they discovered was that risk taking is a basic part of the culture, and failure is the seal of approval. It’s almost a rite of initiation into the community.  If you haven’t failed, you haven’t tried hard enough.  The skill is not in avoiding failure, but in failing fast and learning fast.


Perfection is not as highly valued by tigers as it is by elephants . As an executive coach, this is probably the single biggest issue that my clients wrestle with as they take on more senior roles and strive to become better leaders.  Often, they have achieved higher levels of responsibility by being technically good at what they do. They have experienced working in well-defined processes where attention to detail is important – where being right more often than wrong has been part of the basis of recognition.  They have built on the experience of their education, where getting the most right answers or putting together the most rationally persuasive arguments has been the basis for the best grades.


One of the things we look at as coaches is the underlying motivation that drives the behaviour of the people we are coaching.  The point is that these are often sources of stress, and can therefore undermine the resilience of leaders. ….For prospective leaders who are likely to experience increased levels of uncertainty in making decisions, letting go of their ‘Be perfect’ drivers is often one of the biggest challenges.


..What’s interesting when we talk to tigers about drivers is that they do appear to have a driver – the ‘Hurry up’ driver.   Tigers move quickly, because they move intuitively;  they are not waiting for more evidence to support their case.  So they are particularly useful where speed is critical. ….This has proven to be largely the case in Silicon Valley …Tigers seem to try, fail, try, fail, try, fail, try and succeed, but once they do succeed, they appear to emerge ahead of other animal life.


Speed is often important in combat.  Military strategy is primarily focused on beating the enemy…..  Being faster to act not only increases the chances of seizing important strategic assets, but also creates increased uncertainty, and thence fear, on the part of the enemy.  And this can be key to success.

 Tigers are highly selective about their use of information.  They tend to scan it rather than analyse it.  They have a natural inclination to look for short cuts and signals.  They have a phobia against paralysis by analysis.


… As we have seen, variability is at the heart of risk.  We also know that the world would be a dull place without variability.  And we are somehow conditioned to want to do something about that variability – to work with it and, at the same time, against it.


Imagine a game of tennis where the ball bounced in exactly the same place and to the same height before you hit it.  You would master the game very quickly by playing pretty much the same shot every time. You might become very good at it, but how interesting would it be?


…While the elephant mindset is, to some extent, that variability is an annoying distraction, for tigers it’s part their reason to exist.  In fact, tigers are naturally anti-fragile, according to Taleb’s view of risk. (Taleb, 2012). … It’s a kind of working with the variability and risk, rather than against it.


 “The best way to verify that you are alive is by checking if you like variations …. Food would not taste if not for hunger; results are meaningless without effort, joy without sadness, convictions without uncertainty;  and an ethical life isn’t so when stripped of personal risks” (Taleb, 2012)


Our human bodies are built to be anti-fragile – clearly designed to deal at least as much with the consequences of risk as to be able to avoid it.  Wounds heal themselves with relatively minimal outside help, and white blood corpuscles fight off unwelcome bugs which are part of the risky external environment that our bodies inhabit.   Our health systems seek to create robustness which is a pale comparison to the anti-fragility that is part of our human make-up.


… We learn from John Coates in his intriguing book on the “Hour between Dog and Wolf” (Coates, 2012) that risk is a ‘whole body’ experience.   Coates was formerly a financial trader in New York, and then switched careers to become a medical practitioner based in Cambridge in the UK.   His extensive research looks at how humans respond to risk physiologically, ie through the production and delivery of hormones.


It appears that three hormones play slightly different roles when we are confronted with situations involving some element of risk: cortisol, adrenaline and testosterone.  These hormones respond to variable inputs to the body:  visual input through the eyes, a sound, a smell or even some kind of impact to our skin’s sensory nerve endings.   What is interesting then is the role that the brain has in processing this information, and how the hormonal system is tied into that response.


Coates observes that in sport, for example, the speed of response needed by a player reacting to an approaching tennis or cricket ball, and making a skilful connection with that ball suggests that normal brain-based analytical processes can’t be too heavily involved.  There isn’t the theoretical time for the information to be sent to the brain, processed and sent back to the muscles that need then to respond.   It would appear that some kinds of pre-conscious and rapid communication between brain and muscles are what actually keeps us alive in fast-moving situations.  Hormones have some kind of role in facilitating this, even though the hormones themselves don’t move that fast.  Separately, conscious reflection shows up later, to analyse what has happened.


From this, we have the concept of muscle memory.   … Coates observed something very similar, and quite mystifying, on the financial trading floor. Traders, it would appear, seem to develop muscle memory for responding to situations, even before they have very much information, and certainly before they have much time to analyse it.   He tells stories of traders sensing a buzz on the trading floor, or even change of tone of voice here and there, or the speed at which information was appearing on the screen … and issuing a “buy” or “sell” order immediately.


Speed, once again, in financial trading is of the essence.  Being even a couple of minutes slower in executing a trade can make huge differences in financial returns.  The trading floor is really a place for tigers – elephants need not apply!


What is even more intriguing to the interplay between risk and strategy is what Coates calls the winner effect.  And it’s all down to testosterone. This is based on the study of animals, where winning a fight increases the likelihood of winning again, independent of any other variables such natural strength or size. …Coates believes this same winner effect is evident in humans, having run tests at sporting events such as tennis competitions.  Wins will raise testosterone levels, which in turn increases some of the attributes needed to improve the chances of winning again.


So we see in another way why winning brings risk into the heart of strategy making.  If and when risk is a whole body experience, and strategy is about addressing a winning aspiration, one clearly must feed the other.  The tigers in the team, or even the tiger within us, not only can feed us with helpful intuition, but also bring a winning physiology to improve our chances of winning again.

Excerpted from Risky Strategy: Understanding Risks to Improve Strategic Decisions, published by Bloomsbury Publishing PLC. Purchase a copy here.

About the author

Jamie MacAlister (MBA, MA) is a Professor of Practice at Hult International Business School, London, where he has been teaching courses in Global Strategy, Leadership, Coaching and Consultancy. He is also an experienced executive coach, facilitator, strategist, and commercial manager, having previously been Commercial Director at Ashridge Executive Education. He is in the process of helping to set up a business school in Uganda, and supporting a health products agri-business venture.

He specializes in Strategic Risk Taking and has also been part of a team publishing research on corporate leadership in addressing the issue of modern slavery, with a focus on risk in the global supply chain. He has founded and run three small businesses, all still operating, and has previous professional experience with PricewaterhouseCoopers and Procter & Gamble. He holds Masters degrees from Cambridge University and Wharton Business School, and is an Ashridge-accredited executive coach.

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