Andrew Morris on the risks associated with being in business
Our attitude to risk is often the most divisive issue in business. The buzz derived from the potential gain is never as great as the pain from the potential loss. Fear of failure can freeze us into a state where we cannot move forward for fear of going backward.
People at all levels in business must take calculated risks and make mistakes. It’s a simple fact that for progress and learning to take place, there will be failures along the way. Expecting perfection is unrealistic and unattainable.
As the marketing guru Seth Godin points out, playing it safe and not taking risks is probably the most dangerous thing you could do in today's rapidly changing and highly competitive business environment.
With the economy starting to pick up, the appetite within businesses for growth will also accelerate. According to a new report by Gartner, we are currently in a "risk-on" period, in which business leaders are feeling more confident and more inclined to take risks and invest in longer-term growth.
So how can we overcome these demons, balancing attitude with altitude and equip ourselves with the skills required to deal with today's more complex and risky business environment.
Scenario plan: Visualise and map out the downside. Look at all the situations from varying perspectives – the market, the customer, the economic climate, the logistics and any other angles that relate specifically to your sector and product. Using your most relevant team members, (not necessarily your executive team), create 3 possible outcomes – worst, medium and best. Stand back and see how these play out in your mind. Having created what might well happen, it shouldn’t feel quite so scary – you have made the unknown, known. Now you can start to plan to take advantage of the opportunity.
Remove judgement: We tend to be more concerned about what people might think, than what actually might happen. So if we separate the perception of others from the reality we will be far less afraid of stepping into risk. If you let your ‘black hat thinkers’ to spook you with what might to wrong, you will never allow yourself the benefit of working out what might go right. Too often the doom-mongers will make comments like “If it’s such a great idea, how come no-one’s done it before?” Or” We tried that a few years ago and it failed miserably.” The answer in both cases is the same. Timing is everything. And ideas are the easy bit – success is all about the efficiency of implementation.
Choose language: Replace ‘fear of failure’ with ‘fear of not succeeding.’ Business relies on taking calculated risks from a mind-set of confidence, taking account of your current margin for error. If one more error of judgement will push you over the edge, clearly you need to play it safe. But if you have a healthy contingency of cash your appetite for risk will naturally be greater. Create an expectation that allows you to re-group if things don’t work out quite the way you thought, carefully constructing the measurement of success and what this looks like. If you set the bar too high, you will be perceived as having failed. Too low and no-one gets excited about the upside.
Training experience: ‘It didn’t work as well as we expected, but we had a hell of a ride and learnt loads!’ So says many an entrepreneur who went onto achieve great things the next time round. Keep a record of what we went on from first concept to final outcome and note what you would have done better, or not done at all, with the benefit of hindsight. Rather than being turned off by your initiative, capture the learning, wait for the right moment, and try again. The most famous game changers rarely worked the first time round.
Confidence conquers: Risk is a state of mind. There is no certainty in life. If you want it enough it will happen. Most great enterprises were founded on some basic data and research, dosed with a bucket-load of self-confidence and self-belief. “We never considered failure for a second. We knew if would work. It HAD to work!” Once you’ve done all the analytics, go with your gut.