Risk is everywhere, and while common sense and many business consultants tell you to minimize risk, I suggest the opposite. I maintain that embracing what I call the “two essential risks” is necessary to achieve your ultimate success in business.
Sure, you hope to avoid liability, investment, and market risks as you pursue your entrepreneurial dream, so you take steps to mitigate exposure. But an entrepreneur or business leader must embrace and leverage these two essential risks to achieve ultimate success:
1) Decide: Choose a direction and jump.
2) Change: Make both internal adjustments and external innovations to keep going and growing.
With all the potential risks present in business, how could I narrow it down to two essential risks? In my thirty years of experience, I recognized that successful businesses were always moving forward. As the business environment changed, they adapted.
As the competitive landscape became more intense, they decided to meet the challenges head-on rather than defer making a move until later.
Successful leaders have the courage to make decisions and to welcome change. So it was obvious that these two essential risks were necessary to maintain the forward motion for long-term entrepreneurial success. Here is a detailed look at why these two essential risks provide you with an unexpected edge.
Indecision is the mental paralysis in humans that prevents them from moving forward.
Is there anything more frustrating than waiting for a dinner companion who just can’t decide what he or she wants even after reading the entire menu, polling everyone at the table, and getting a detailed description of each dish from a clearly frustrated waiter? This is not a life-or-death situation—it’s dinner!
But this decision-making paralysis affects plenty of people, and when it possesses a business leader, there’s trouble with a capital T ahead.
Decision-making is a key component of execution, and execution is what transforms a plan into reality. Execution makes a business happen. The act of deciding turns theory into reality.
Decision-making will be an essential risk you must be willing to embrace throughout your entrepreneurial journey. The leader who wants the unexpected edge that comes from embracing risk welcomes the opportunity to make decisions. When no decisions are made, nothing happens, and you don’t move forward; you stagnate, and your leadership begins to crumble.
When a failure occurs, it’s natural to say, “I made a bad decision.” But what you need to do is ask yourself this question: Was it a bad decision or simply a bad outcome? A decision is a choice you make. Without the benefit of clairvoyance, you base that choice on timely information.
It would be unfortunate to measure the decision’s value based solely on outcomes. If we only accept the value of favorable outcomes, then we limit our ability to take risks, and forward progress stops.
We avoid making decisions for one simple reason: We don’t want to make a bad decision.
Truth is, we don’t fear the decision, but we do fear the outcome, specifically a bad outcome. Outcomes depend on so many variables, and not all are in your control. The reality is that important decisions made by intelligent people having the best information and intentions could still result in an undesirable outcome.
Leaders make decisions to determine the company’s direction. Promoting the proactive nature of decision-making is the objective because in an environment where there is decision paralysis, forward motion ceases, and that is a bad outcome.
The rule is simple: Newly started businesses must progress, and progress requires change.
Change, the other essential risk, holds the risk of failure. It is a difficult concept for most people to accept. In the business world, fear of change probably is the single biggest obstacle companies need to overcome to meet the evolving marketplace challenges.
What makes embracing change even more difficult is that a business must be willing to simultaneously change internally and externally, to keep progressing and remain competitive. How a business deals with change is reflective of organizational leadership and its ability to minimize the level of fear.
Internal change happens within the business walls, and it is not necessarily customer facing.
Internal change can be organizational; there are changes in personnel, management, department, and staff reorganizations. It also refers to processes or systems, changes in attitude, and the business personality. While these three aspects can and do change independently, they also can be linked, thus resulting in dramatic transformation.
External change is always customer facing; it’s most noticeable to your customers and competition. Innovation, an external change, brings a new competitive edge to your business by introducing products or services that increase the value of a customer’s experience with your organization.
When an entire organization embraces the risk of change, a dynamic transformation occurs: There is a continuous culture of improvement both internally and externally, and the business dynamically evolves to meet competitive challenges.
As internal processes are enhanced, the change will ultimately affect the customer-facing components, thus improving the customer experience. And with the proper feedback, this in turn helps to further improve the internal process. Embracing the risk of change creates an environment of perpetual motion FORWARD!
Just as the human body requires essential vitamins and nutrients, so do a business leader and the business itself. By withholding these two essential risks from your organization you are jeopardizing its health and well being.
The penalty for not embracing the two essential risks of Decide and Change is costly, stagnation, which leads to deterioration of the organization.
In my next article I will outline for you my Winner’s Framework, a holistic solution to insure success when faced with the responsibility for embracing risk.
What do you think? I’d love to hear your thoughts – join the conversation on Twitter!