Monday, 7 May 2012

Unblocking Potential - Part 1. Aversion to risk

Over the next few posts I am going to be looking at ways that a business could be blocking its own potential and making suggestions for unblocking the ideas, creativity and innovation that fuels future business success.

1.     Aversion to risk
In an episode of ‘The Big Bang Theory’, Sheldon learns to swim by studying techniques on the Internet.  He does not see the need to test these in actual water, preferring to claim that the skills he ‘learns’ in his living room are transferable should he ever need to actually swim!  Those of us who can swim know this to be nonsense, and that learning to swim involves learning by doing.  In the process of learning it is likely that we will swallow some water, flail about helplessly and maybe shed a few tears before we finally work up the courage to take the risk and trust ourselves not to drown. In business we have to go through similar steps to success.  Granted, knowing your market and analyzing trends and competitor activity are an essential part of deciding whether or not to take a risk, just as studying swimming techniques will help us to swim more efficiently once we have taken the plunge, but we do not learn the outcome without taking the risk. Not all risks are equal – some learn to swim much more adeptly and quickly than others.  In business taking a risk is not a guarantee of success and there are no guarantees that others who take the same risk will not out-perform you.  But the point is that unless the business takes the risk, the outcome will remain unknown and the opportunity missed.

The point here is not to take risks every time an opportunity arises.  That’s a fast route to bankruptcy.  However, the business that shies away from every opportunity because of a risk-averse attitude is doomed to mediocrity if not failure.  Too many businesses take such a conservative approach attempting to analyze every risk and its possible mitigation to within an inch of its life that by the time they are ready to take a risk the opportunity has passed or been snapped up by a competitor. 

There is an element of gambling involved in risk taking.  The business must spell out how much it is willing to stake and is prepared to lose, what the return is likely to be and what the odds of success are.  And then dive in.

   ‘Creativity makes a leap, then looks to see where it is.’ 
   Mason Cooley

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