Companies manage risk as a functional issue: financial, operational, public relations. Yet the worst risk—industry dissonance—cuts across all functions, and no one actually manages it.
Top executives are especially vulnerable to industry dissonance since they are often the last to know and the first to deny it. Industry dissonance is therefore the most neglected risk with the consequences that are most damaging to careers and wealth.
Industry dissonance cannot be managed through data mining software and other technology toys. It requires human insight.
Strategic response to change should come early, in the form of the “Kaizen” strategy to avoid painful trade-offs.
It is not always possible to react to change with a brilliant move that will turn around a bad situation. But management owes it to its shareholders and employees to always be on top of the strategic risks and to let them know if and when it has no solution.