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10. Leading with Context: The Power of Risk Matrix in Decision-Making
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Leading with Context: The Power of Risk Matrix in Decision-Making. In today's episode, we tackle a critical aspect of leadership and decision-making - leading with context, not control.
We kick off with a real-world dilemma from a small business owner, who discovered a newly hired manager had a past conviction for fraud. The immediate reaction from many was to fire the manager, a decision based on control, not context. This episode explores the value of providing context to such decisions, enabling better judgment and understanding.
We introduce the concept of a Risk Matrix as a tool to provide context. The Risk Matrix evaluates the likelihood of a risk happening and the potential damage it can cause, rating each on a scale from 1-10. This simple, yet powerful tool can guide decision-making processes, from safety measures to strategic business decisions.
We demonstrate the practical application of the Risk Matrix with an example from an agricultural business deciding whether to grow corn in the autumn. While the immediate reaction could be control-based ("Don't grow corn, it's not profitable"), using the Risk Matrix offers a context-based perspective, evaluating the likelihood of profitability and risk of crop damage.
In the case of the business owner with the fraudulent manager, the Risk Matrix proved essential. Even if the chance of the manager re-offending was low, the potential impact on the business was high, leading to the clear decision to let the manager go.
The key takeaway from this episode is the power of leading with context. By using tools like the Risk Matrix, you can equip your team with the understanding they need to make informed decisions.
Take this knowledge and apply it to your business. And remember, it's about owning a business that's worth owning, not a business that owns you. If you found this episode valuable, please subscribe for more actionable advice.
Until next time, keep growing your business!
Produced by The Podcast Boss
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