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Leadership Thought #281 – Risk Is An Inherent Part of Business


I am beginning to get a little worried that the past 3 years has made many business owners a bit “gun shy” about taking risks.  Risk taking is an essential part of business.   Without it we would be confined to the comfort zone of “low hanging fruit” and incremental change.  Instead of redefining market boundaries, pushing innovation and challenging the status quo, our leaders are in danger of becoming content with making reactive decisions based on their current business limitations and/or past misfortunes.  Markets, companies, communities and people don’t grow effectively this way.

I’m not saying that all change is good or that some risk taking is unwise.  Many organizations lay on the scrap heap of commerce history due the impulsive nature of their leaders.   There is a point where the risk-reward tradeoff isn’t worth it or when unknown and/or potentially hazardous variables trump the need for change.   Leadership will always require a certain sense of intellectual and emotional maturity.  Informed, well thought out decision making is always preferable to “knee jerk” conclusions.  All good leaders know this and take the responsibility seriously.  They do their very best to protect the interests of their stakeholders, e.g., employees, clients, investors, etc.

Being wise and responsible does not mean avoiding risk altogether.  In fact, it requires embracing risk, the right risks at the right time with the required investment in resources.   As the saying goes,”…To the victor goes the spoils.”   And, victory by its very nature requires courage.  The objective of any business entity should be to grow its economic value.  To do this, companies must push their top and bottom line performance, seize market opportunities and fortify their competitive positioning.  All of this requires investment and capital investment always entails some level of risk.

I believe our economic recovery is well underway.  A few brave leadership souls are already beginning to realize this and switching to a more proactive, risk-reward mindset.  Over the next few months and years, completely new markets will open up; some companies will redefine their existing markets; new products and service innovations will be introduced; conventional business models will be challenged; new market entrants and substitute products will arrive unexpectedly; continued technological innovation will reinvent what we believe to be possible; consumer demand/expectations will shift to match changing demographic realities; and capital formation strategies will follow their seemingly unending path of chaos and creativity.

The future is defined by those who make it.  Don’t let unnecessary risk aversion stifle your potential for success.  Be prudent but also be brave (or someone else will in your stead).

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4 Responses

  1. Just want to say what a great blog you got here!
    I’ve been around for quite a lot of time, but finally decided to show my appreciation of your work!

    Thumbs up, and keep it going!

    Cheers
    Christian, iwspo.net

    • Thank you

  2. […] Leadership Thought #281 – Risk Is An Inherent Part of Business (edrobinson.wordpress.com) […]

  3. […] Leadership Thought #281 – Risk Is An Inherent Part of Business (edrobinson.wordpress.com) […]

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