Dan
The legendary coach of Manchester United, Sir Alex Ferguson, is purported to have made this proclamation during his lengthy run of domination of the English Premier League in the 1990s and early 2000s. And while a sound defensive structure in Soccer (er…Football) may be a recipe for success, it’s not entirely clear to me if this philosophy of defense “Winning Championships” translates to world of highly regulated industry.
Companies as Value Maximizing Machines
When I started to think about this question about defense, I began to vividly recall my graduate school economics professors drilling into my brain that the singular purpose of a company is to maximize value for investors and stakeholders. Full stop. Not defense or risk mitigation, but rather innovation and value maximization. This was premised on the work of the Nobel Prize winning economist, Milton Friedman, and his landmark publication, “The Social Responsibility of Businesses.” In this article, Friedman stated that: “a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers…which is to responsibly conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society.”
As time has gone on, however, there has been a reckoning. Some companies have taken the doctrine too far which has led to the collapse of the very institutions they were seeking to advance and injuring the customers they claimed to serve. From Thalidomide to the Dalkan Shield debacle to the recent withdrawal of CPAP machines by Phillips. In each of these cases, it appears that the executives were too aggressive and not defensive minded enough.
The Rise of the Corporate Goal Keepers
Executives in response to these high-profile corporate meltdowns have begun to not merely practice reasonable caution, many avoid risky projects altogether. Instead, they celebrate incremental improvements and cost-cutting initiatives in lieu of real innovation and high-risk bets. This has marked the rise of the Corporate Goalkeepers.
The corporate goalkeepers are the stalwarts of risk management in highly regulated industries. Their primary focus is on safeguarding the organization against potential threats, ensuring compliance with regulations, and avoiding negative unintended consequences. This cautious approach is rooted in the understanding of the high stakes involved; missteps can lead to significant legal, financial, and reputational damage. In essence, the job of the Corporate Goalkeepers is to prevent any shots getting past them and putting their team at risk of losing. And if that means playing a very defensive style, the organization must embrace this cautious approach and adjust expectations when it comes to making risky bets and high stakes innovation efforts.
However, this defensive stance, while protective in the short term, carries the risk of stifling innovation. When Corporate Goalkeepers lead the strategic vision, their risk aversion can prevent the organization from seizing new opportunities and responding agilely to market changes. The result can be a company that, though secure, may lag as a slow follower, vulnerable to disruption by more nimble and forward-thinking competitors.
The Counterbalance of the Corporate Striker
The counterbalance to the goalkeepers who tend to play it safe is the Corporate Strikers. Just as in soccer, the strikers are always looking to improvise and attack. Their singular minded focus is on growth and winning. The Striker embodies the organization’s ambition and innovative spirit. These individuals are incentivized to take calculated risks, constantly seeking “shots on goal” in the form of market opportunities, disruptive technologies, and innovative business models. Their bold approach is essential for growth, driving the organization forward into unexplored territories that promise rewards. Yet, the Strikers’ inclination towards risk-taking and breaking with convention cannot go unchecked and has to be carefully managed. Without strategic discipline, their actions could lead to “red cards” – regulatory penalties, ethical breaches, and strategies that risk the organization’s standing and sustainability.
Thus, while Strikers are indispensable for their drive and innovation, their ventures must be pursued with a clear understanding of the boundaries and responsibilities inherent to a highly regulated industry.
How to Create a Balanced Team Line-Up
So how do you create the right balance between your defensive minded Corporate Goalkeepers and the ambitious Corporate Strikers? It starts with understanding. Too often the strikers and goalkeeper see themselves on the opposite end of the field or negotiating table. There is an “us” vs “them” mindset that can become downright tribal in how people view themselves and their responsibilities. The trick is to flip this script and create a “Total Football” approach in which all your major players can understand and assume one another’s role.
Practically speaking, I have done this with my regulatory and legal teams when I ran a brand team. I encouraged our team to swap positions. Even if it’s just for a week or so. I know this sounds a bit absurd, but it actually worked for myself and my team. By walking a mile in their shoes, our team members could better appreciate the challenges and complexities that one another faced. They also learn to speak one another’s language so they can better speak the regulatory or legal language and relate to one another when negotiating an appropriate risk. By taking the time to cross-train and educate one another, we moved away from a position-centric mindset and shifted to a total team mindset where we were all playing together.
Organizations that master this balance can navigate the complexities of a highly regulated industry with a dynamic strategy that embraces both innovation and risk management. It requires creating an environment where these roles not only coexist but collaborate effectively, leveraging the Goalkeepers’ vigilance against risks with the Strikers’ push for innovation and growth. This balanced approach fosters a culture where calculated risks are encouraged, and strategic innovation is pursued responsibly. It ensures that while the organization aggressively seeks to expand and disrupt, it remains firmly grounded in the principles of compliance and ethical conduct. In doing so, companies are in a better position to consistently finish at the top of the table.
Here’s the questions for you to ponder:
Is your organization led by Corporate Goalkeepers or are you driven by the Strikers?
And how can you start to create a “Total Soccer” mindset in your organization?
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