Managing Risk Like a Navy SEAL

Mike Richardson and Bob Schoultz


August 27, 2013

We live in a time-compressed world, in which the speed of business and pace of change are constantly accelerating, laced with the risks (and opportunities) of increasing turbulence, uncertainty and volatility. If this environment is not managed, it creates chaos. On the battlefield, Navy SEALs thrive in such chaos and uncertainty, and by learning from their experiences, business leaders can too.

Business is increasingly like a SEAL mission. The key to winning is agility—the ability to improvise, adapt and overcome adversity. By honing their tactical and strategic agility, business leaders can help their organizations cross the “agility gap” between the reactive behaviors used by the majority and the proactive behaviors that allow groups like the Navy SEALs to anticipate chaos, adjust accordingly and achieve greater success.

Chaos: From Disorganized 
to Organized
Chaos is the primary problem in business. We often hear consultants say that “poor execution eats strategy for lunch.” To that, we like to say, “yes, and disorganized chaos eats both for dinner.”
There is a world of difference between disorganized chaos and organized chaos. Disorganized C.H.A.O.S. can stand for “Constant Headaches And Ongoing Surprises.” Organized C.H.A.O.S., on the other hand, can be thought of as “Constantly Having An Organizing System.”

SEALs are masters of chaos. They specialize in creating chaos and disruption within the enemy’s organization, getting inside its strategy and decision-making cycle, anticipating plans and striking where least expected. They develop a system to master chaos, making it their friend and their specialty. They win by creating more chaos for the enemy than the enemy can create for them.

As commander of the East Coast SEAL Teams, I had a command vision in four parts, the third of which was, “We excel in ambiguous environments.” SEALs embrace ambiguity, since it creates an opportunity for strong leaders to step in, shape the environment and resolve ambiguity in their favor, leaving their enemy in a state of disorganized chaos.

We must do the same in business. Our enemy is disorganized chaos, which leads to poorly managed risks. Even amid chaos, we need to stay organized and adhere to our plan in order to meet our goals.

Triage: From Partial to Full
The antidote to chaos is triage. Triage requires the careful management of time, priorities, resources and focus in chaotic, high-stakes, real-time situations in which the demand for resources greatly exceeds supply. In these kinds of situations—think wildfires, oil spills, emergency rooms, battlefields and, increasingly, business—traditional approaches are not agile enough. They result in partial triage of the situation, which lets disorganized chaos seep back in.

SEALs don’t like disorganized chaos, so they are constantly triaging the full situation—both tactically and strategically. They are tactical forces designed to have strategic impact and must be prepared to operate at multiple levels of warfare in a wide variety of environments.

Therefore, their focus must be immediate and contextual at the same time. A split-second response must be appropriate to both the immediate threat as well as other bigger-picture factors that define a situation. It is challenging to sustain full triage—keeping “front-site-focus” on the target ahead of them while also maintaining situational awareness of all else going on around them. They know they can never settle for partial triage because bad things will happen.

This applies on a mission and to a command. When I was in command of the East Coast SEAL teams, we thought we were artificially constrained with very limited time and resources for training. The training was vital in order to prepare our forces to do the nation’s work overseas. It was going to require us to change everything we did, which was full of risks. My organization was frustrated, angry and upset, because lives were at stake.

My leadership challenge was to deal with the situation and stay focused on our mission readiness. I said, “OK, folks. This is it. We have to deal with a decision made way above us. Though we can send our complaints back up the chain, we’re going to have to deal with this. Where are the opportunities here? How can we make this work for us? How can we assume the same positive attitude that works for us on the battlefield, and apply it here in these bureaucratic circumstances? How can we improvise and adapt to overcome this challenge and make ourselves even better and more mission-ready?”

It is the same in business. We all face massive time and resource constraints. We have no choice but to perform full triage and take complete account of the situation and our desired path forward. If we do anything less, we allow ourselves to be blindsided by risk.

Insight: From Hindsight 
to Foresight
The secret of good triage is to learn as much as possible about an unfolding situation from foresight rather than hindsight. Hindsight is so much more expensive, and often comes with life-and-death consequences.

SEALs proactively seek to fully understand their environment and their adversaries’ key vulnerabilities and strengths. This is a combination of rational analysis and intuitive understanding—borne out of extensive training and experience—that creates foresight for the insightful action that will shape things the way they want. No matter what they are up against, SEALs always believe they can stack the odds in their favor. They subscribe to the old maxim “the more you sweat in peace, the less you bleed in war.”

We don’t always get it right. In 1989, during Operation Just Cause in Panama, one of our missions was to take out President Manuel Noriega’s aircraft, given that we expected him to fly out of the country. We had people on the ground in Panama who understood the environment very well, but the plan was developed in the United States by individuals who did not have the same knowledge. Forces in Panama executed the plan perfectly, but it was a flawed plan because it did not take into account the situation on the ground, the environmental constraints and the cultural issues. The imperfect plan, executed perfectly, still got four good men killed and a lot of them injured. It was a painful lesson learned in hindsight because we didn’t learn enough from foresight.

In business, if we don’t gain insights from foresight, we risk learning from hindsight—and a lot more expensively. The life and death of our business can depend upon it.

Luck: From Accident to Design
Luck is crucial in business. But most good luck does not happen by accident. It happens by design—if we have done the preparation that is. As the saying goes, “luck is where preparation meets opportunity.”

SEALs know that luck—both good and bad—can never be discounted in planning an operation. They make friends with Murphy, knowing he is always waiting in the wings to enforce Murphy’s Law: What can go wrong will go wrong. In every phase of an operation, SEALs map out “branches and sequels”—the what-if analysis of how a mission may unfold down different paths (branches) and the phases down those paths (sequels). In particular, they plan for bad luck that might disrupt or cripple an operation and develop contingency plans accordingly. Then they practice everything as much as possible. Nothing mitigates bad luck and creates the conditions for good luck like extensive, creative and challenging training, practice and preparation.

In the business world, fully preparing for the risks of bad luck creates the conditions for good luck—not by accident, but by design.

Journey Orientation: From Macroscopic to Microscopic
Business is a dynamic journey through a landscape where everything is in a constant state of flux. We must be oriented to how our journey is unfolding both macroscopically and microscopically so that we can determine if we are still on the right path or if we need to make adjustments to changing conditions.

SEALs are acutely oriented to the journey of the team and the mission. First, they train hard to integrate, energize and prepare as a team, and then they focus acutely on preparing for mission success. They must understand the “Commander’s Intent,” which is an official statement from a commander that establishes the broad guidelines, the overall goal and end state toward which all planning, training and operations are directed. Feedback and questions flow back and forth, up and down the chain of command, to ensure that the intent is clear and that the mission plan is in complete alignment in every detail. SEALs know that any communication disconnects, misalignment or details missed put the mission at risk.

SEALs also know that disorienting change is a constant that should always be expected. Mission requirements in both the Iraq and Afghanistan theaters of war required the SEALs to adapt their skills as maritime commandos to desert and urban environments.

More recently, their missions have evolved once again, from performing primarily direct-action raids to training local leaders to assume responsibility and direct local forces to fight and defend themselves. As their missions have changed, old training and deployment patterns have been disrupted and SEALs have had to innovate in order to develop new language, culture and negotiation skills that are not always intrinsic to their core competencies as maritime commandos.

In a rapidly changing business world we must be acutely oriented to the risks and rewards of how our journey is unfolding, both from the microscopic operational level and the macroscopic big-picture view. These perspectives will allow us to react appropriately to any new challenges we encounter.
Mike Richardson is the author of Wheel$pin: The Agile Executive’s Manifesto and a business agility expert. He serves on the advisory council of the Master of Science in Global Leadership in the University of San Diego’s School of Business and mentors fighter pilots, SEALs and other military students on transitioning into the business world. Bob Schoultz had a 30-year career as a Navy SEAL, during which he commanded all SEAL and Special Boat activities in Latin America and then commanded all the East Coast SEAL Teams. He ended his Naval career as the Director of Leadership and Character Development at the U.S. Naval Academy. Today he is a leadership consultant and the founder of Fifth Factor Leadership.