Takeaways from the Ride the Wave interview with author John Wessinger
Change and risk go hand in hand. Whether it’s evaluating new technology solutions or adopting innovative processes for better business intelligence, you’re always faced with decisions to make a strategic change that could create risk. Risk in business, and specifically within equipment finance, is a topic Scott Nelson, chief digital officer at Tamarack, has been exploring recently, and he discussed it with John Wessinger, author of Ride the Wave: How to Embrace Change and Create a Powerful New Relationship with Risk. We share excerpts from the interview below, along with key takeaways that can help equipment finance leaders explore strategic risk within their business.
Using Risk as a Compass
Scott Nelson: If I’m saying risk is a compass, then I’m using risk to navigate to a better place or toward a desired objective. So, how does risk as a compass provide strategic navigation?
John Wessinger: I would say the risk-as-a-compass concept is a motivator to drive toward something you may be avoiding. The example I gave at the beginning of our talk was how some organizations continue to do the same things and avoid change. My interpretation of that approach is that there are risks in doing something new and companies prefer to avoid the risks associated with making a change. So, if you're evaluating opportunities, maybe you’re doing strategic planning for the year and you say, “Here are the things we can go out and do. We know these things to be true, and we're comfortable with these approaches. We think these are the strategies that will work for us. However, there's this one over here that is appealing and that we find interesting. And we don't really know what the result would be because we haven't ever done it before, and it's a risk for us to try to do this because it's in opposition to what we've done historically. But it could net a different result. Should we explore it?” I would argue that the risk-as-a-compass approach would point you to that one thing that's new or an outlier, and based on the idea or concept, would be the one you should explore. You would go through the process I shared to say, “This area we've identified – that does hold a lot of risk for us – is it worth trying to explore it to find out what's potentially on the other side?” That’s how finance leaders should think about risk as a compass and exploring new strategic initiatives.
Managing Risk with Intelligence
SN: As soon as AI comes into a business situation, the word intelligence enters the conversation as well. And if you think of yourself as an intelligent person, you probably think of yourself as being able to avoid unnecessary or bad risks. Or avoid bad judgment. But does too much intelligence get in the way of embracing risk?
JW: I guess I’d say intelligence should help. If you go out and get the data and the information you need, it should make your decision more informed, and you should have – at your fingertips – all this intelligence that helps you work through a process and toward making a better decision. Even the concept of embracing the conditions is like market sensing. It's trying to understand what's happening in the market, and there's intelligence that’s garnered from that process.
Intelligence is also evaluating where you're at or where your organization is at strategically. So, there's another layer of intelligence there. And then with risk, you're right, it's about not just doing something, but more trial and error – prototyping, piloting, and testing ideas – and that generates more intelligence as well. I think some forms of business intelligence could talk you out of it for sure. An example from the book: Had I known everything involved with surfing before I went out, I would have approached it way differently, or maybe I wouldn't have gone out at all had I known the true risks.
But intelligence should give you each piece of information that you need, at each one of those steps to continue to move forward. Part of the third step could be “I have enough intelligence here to know that this isn't good for me to do personally or good for me as someone who’s at this organization.” Intelligence can help you embrace risk in some situations but give you the insights to help avoid risk in others.
Using Data to Explore Risk
SN: You wrote this book five years ago. You know there's been a lot of technology development, particularly in the data world, or the data space. Has technology changed any aspect of your three steps or does it just add additional color? Can you think about how AI could help people to embrace risk as part of this process?
JW: I would say it’s added more color. And that there's one piece I think is new and different. When I wrote the book, it was really about technology enhancing a buyer’s ability to get information and make better or more informed buying decisions. And five years ago, as you know, that was because of the internet and social media. There were a multitude of ways people could put out information about products and services and not just organizations, but other buyers and other customers. And so, there was an overwhelming amount of data or information out there on the web that really changed how people bought products. The example I use in my book is about how, when I bought a car, I basically went on a website, picked out the car I wanted, and emailed the dealership. Then they just sent that car to the dealership, and I picked it up. I didn't even do a test drive. I didn't even talk to a salesperson. I didn't show up on the lot and say, “What can you tell me about this car?” I made the buying decision on my own.
What’s different now is that data feels like it's the new thing that maybe the web was five years ago or around the time when I wrote the book. There seems to be a prioritization of getting data, using data, housing data and owning data to help make better business decisions. I've heard people comment that data is like oil now. Or it's going to be like oil in the future and companies are just starting to figure out what data they have, how to organize it, how to store it and how to keep it. And now they are starting to do things, like you're suggesting, with AI and automation – leveraging that data and using technology, platforms and software to make better decisions.
The thing that's different now is that we've moved from this buyer's journey being accelerated by the internet, to more of this data approach and AI. And that seems to be where a lot of the conversation is happening right now, especially in an industry like equipment finance. So, the first step is really getting a hold of your data and understanding, “here's what we have.” Or asking the question, “Is there a way to get data that we can use to start making decisions and leverage things like AI and automation to help us do it?” Data can generate business intelligence and help finance leaders make better decisions. This is a great approach to using data to minimize risk and or embrace more of it.
Navigating Risk in a Post-Pandemic World
SN: In the time since you wrote the book, has anything changed in the business world, and are you able to apply your concepts to make sense of this change?
JW: Yes, and I would say that a lot of the concepts still apply to what’s happening right now. That was one of the goals of the book, that the process could exist regardless of what is happening in the market conditions. With that, the biggest change is the aftermath of the pandemic. Having that period where people had to go home. That was a major change. Not only that, but then doing everything online. That dynamic is a big change, and I think if you've never worked from home before, if you've been in an office the entire time, working from home is probably really jarring. For example, people that had to set up offices at their dining room tables or figure out new a place to work from their home. That was challenging. And then adopting a whole new set of skills where you’re online 100% of the time. Think of people who have sales roles and are trying to sell to a prospect and now it's not face-to-face anymore, it's on Zoom. That’s really different.
I would say that the principles from the book still apply to this new and crazy world we live in, and there's still a process you must go through to embrace what's happening. You still need to identify areas where you need to improve your skills – even though it’s a completely different environment. And then there's this question of risk. Is it better to work from the office or from home? There’s a risk in forcing everyone back into the office, and there’s a risk in having everyone work from home. Leaders will need to decide what will work best for their unique situations, and that decision may come with some risk. I think the new work-from-home model is the biggest change, and it's even more challenging than what I wrote about in my book. However, we may be better equipped now because of new technologies like AI and automation that can help bridge the gap within distributed workflows. So, while the environment may have changed and presented new challenges, we continue to develop tools that can help us do our jobs better.