Do you have your New Year's resolution yet? Neither do I. Every year about this time, however, we go through the annual ritual of reflecting on our lives and singling out something that we want to change. New Year's resolutions seem like a good idea, and everyone else seems to be doing them as well. But is this an exercise designed to be successful or destined to fail?
If you look at the statistics, they are pretty bleak. One study found that about 25 percent of resolutions were abandoned after one week, more than 50 percent were abandoned after six months, and only about 10 percent succeeded in the end. With a 10 percent success rate, it is no surprise that the number of us making resolutions is declining. Only 45 percent of respondents in one study said that they currently do resolutions, whereas 88 percent had done so in the past.
The sure-fire way to keep yourself from the disappointment of failing to achieve your resolution is pretty straight-forward: Don't make one. This strategy is for those who are so severely risk adverse that they subscribe to the mantra, "The best way to keep from losing is not to play." Although entertaining, that is not exactly a mantra that I like to apply when it comes to making improvements in the quality of my own life.
Like most of you, I do not exactly have a stellar record for keeping my past resolutions and began thinking if I could do anything to increase my odds of success this year. Then it hit me.
Are some of the practices and tools that we use as professional strategists and risk managers available to help us be more successful in our own personal lives? A New Year's resolution is no different than an objective in business.
I have often tested new strategic planning and risk management methods in my own personal life first, before asking others to try to apply them in business, under the theory that, if it is not simple and straightforward enough to apply and maintain in my own life, then how can I possibly expect others to apply the methods in business. Could the reverse be true? With 90 percent odds of failure with our traditional approaches to New Year's resolutions, it is certainly worth a shot.
Unfortunately, I do not have a tried-and-true, road-tested approach that I can share with you yet for New Year's resolutions. We will have to see how it goes this year!
Still, here are a few of the successful strategic planning and risk management methods and processes from business that I plan to apply to my personal resolution this year:
One of the best ways to fail to achieve a business objective is to set an unrealistic one. New Year's resolutions are no different. There are a number of quality strategic planning methods to draw from. One of the most promising for resolutions is "SMART(ER) Objectives," an approach that will help me ensure that any resolution is specific, measurable, attainable, relevant, time-bound and then implemented with built-in checkpoints to evaluate, and re-evaluate, my progress on a regular basis.
Next, always be in control, not out of control. Businesses that are consistently successful clearly understand what is within their direct control and how those "levers" translate through to the ultimate results upon which they are measured (e.g., earnings, expenses or stock price). Similarly, I plan to focus my resolution on something for which I can directly control all or most of the outcome and will be cautious about resolutions than can be significantly influenced by things outside of my direct control. That way, if I do not achieve my resolution, I will be the only one to blame.
Yet do not ignore uncontrollable (or uncertain) variables. Understanding them is essential to success. A sign of a well-managed business is one where the leaders of the organization can consistently articulate: (1) what are the key uncontrollable variables that have the greatest influence on the organization's objectives; (2) what is the current state of each of those variables; and (3) what is the range of possible values for each over a given time horizon and the resulting range of influence on objectives. They also know that an "assumption" is just a fancy word for ignoring the fact that some variables are uncertain; therefore, they avoid them.
This same technique can also be applied to resolutions. For example, if my resolution is related to my waistline (38 percent of resolutions are, according to one study), then I need to understand that the availability of healthy food and exercise equipment is an uncertainty, especially when I travel. I would need to acknowledge this going into my resolution and preemptively plan and develop tactics for dealing with a situation when either isn't available.
Finally, go public and get some help. No, I am not suggesting that I am going to try to do an IPO for myself. Rather, I am talking about publicizing and sharing what my objectives are. This is a regular tactic in successful businesses and is the reason why many successful organizations have great corporate communications groups to help them clearly and regularly communicate the organization's objectives to the employees to help ensure that everyone is rowing to the same beat and in the same direction.
My probability of success will increase considerably if I enlist my family and close friends to assist me in achieving my resolution. First, I plan to ask a few of them to help pressure test my potential resolutions against all the tips mentioned above. Next, I plan to publicize my resolution to all my family and friends and ask them to help keep me accountable by regularly asking me how I am doing with regards to my resolution and to help me get back on track should I stray.
Wish me luck ... and please ask me how I am doing on my resolution next time we talk! And thank you for taking the time to read my column this year. I wish you and your family a safe and happy holidays and a wonderful New Year.
DAVID M. WONG is director of enterprise risk management at CME Group, the world's largest and most diverse derivatives exchange
December 20, 2010
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