Chances are, if we asked you whether you’re into taking risks, especially in the context of your business, your brand or your marketing choices, you’d say no.
That said, most businesses want to grow. And to achieve growth, something needs to change. Yet change is that one thing we humans fear. It’s a fear driven by uncertainty because the outcomes are unknown. Given we all like to feel we’re making good (read calculated decisions), this can lead to an unhealthy inertia.
Staying put, following the herd, doing what’s been done before, whilst “safe” in the short term, are risky decisions in themselves. And given the speed of competition, an untimely demise could be a by-product.
Elon Musk sums it up bluntly:
“…this is how civilisations decline. They quit taking risks. And when they quit taking risks, their arteries harden.”
So, what to do?
We’re hard wired to minimise risk, yet our instinct to survive may well destroy our businesses. Risk, done well, is smart. It can be managed, it can be ‘calculated’. It’s the uncertainty we despise.
I saw this quote in one of my favourite blogs and the penny dropped.
From Nate Silver in The Signal and the Noise (2012):
Risk, as first articulated by the economist Frank H. Knight in 1921, is something that you can put a price on.
Uncertainty, on the other hand, is risk that is hard to measure. You might have some vague awareness of the demons lurking out there. You might even be acutely concerned about them. But you have no real idea how many of them there are or when they might strike. Your back-of-the-envelope estimate might be off by a factor of 100 or by a factor of 1,000; there is no good way to know. This is uncertainty.
Risk greases the wheels of a free-market economy; uncertainty grinds them to a halt.
So, risk gets an unfairly bad rap. Are you hungry for taking risks you can put a price on, knowing sometimes they will go sideways, but in the long run you’ll end up way in front?
If your ambition includes measurable and sustainable growth, you will need to take on risk.
The art of risk taking is in slowing down, making space to think critically in order to make some smart bets having considered all possible angles. Our instincts will scream no, don’t risk it.
But the real question is what are you really risking by not doing something?