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Taking Risks

Posted By Ron Sidman, Monday, December 3, 2018

If there is one regret I have when I look back on my own business career, it’s that I wish I had more aggressively pursued more of our riskier strategic alternatives.

Certainly, I made many moderate to high risk decisions when I was leading my company and most worked out very well. But as the company grew bigger, as I got older, and with the visibility and pressure of being a public company in the Sarbanes-Oxley era, I frankly became a bit more reluctant to try bold new directions. Looking back now with the benefit of 20-20 hindsight, I wish that were not true. I wish I had taken a gamble on some of the bolder breakthrough ideas we had at the time.

 

Who knows how they would have worked out. But the fact that I’ll never know is regrettable. In reality, most of us are naturally risk-averse for good reason. It’s a life-saving characteristic built into our DNA. As a result, too often it takes a crisis to get an organization to try a totally new approach. By then it can be too late.  

I would argue that the companies that have been and will be most successful going forward are the ones that consider prudent risk-taking to be a critical ongoing component of their culture and behavior.

 

The Challenge Today

In the years since our company was sold, being a CEO hasn’t gotten any easier. I don’t have to tell you about the increasing pace of change. And it’s absolutely impossible to predict the future. Five years ago, how many people predicted the total demise of Toys R Us/Babies R Us, a trade war with China, or the growing impact of artificial intelligence. The feeling most business leaders are experiencing today is like being strapped to the front of a speeding train not knowing what’s waiting for you around the next turn. The one strategy that clearly won’t work is to just continue to do what you’ve been doing regardless of what’s going on in the marketplace. Woolworths, Toys R Us, Sears, and many JPMA companies learned this the hard way.

 

The Need to Continually Evolve

This is where mastering risk-taking becomes important. Successful business leadership requires that you do today what will be needed to be successful in the future. So how do you prepare your company for a future you can’t predict? First, you need to think of your business not as a static entity but one that is in a continuous state of evolution. Then to evolve, you have to continually experiment with new business model components that seem like they might have promise—new product categories, new operating processes, new technologies. I’m not suggesting you recklessly plunge into the deep end. Any new bold direction can and should be validated with your customers and employees before you implement.

 

Next Steps

At the very least, make sure you perform an annual plan review that includes brainstorming possible creative new initiatives. Preferably you do this quarterly. Also make sure, as I mentioned, that you have a mechanism for testing and validating the best of the generated new ideas before plunging ahead.

 

As always, if you’d like more information or assistance regarding your unique challenges or you just want someone to brainstorm, vent, or commiserate with, consider taking advantage of JPMA’s Executive Mentor Program by scheduling a Skype or Face Time with me. I’d enjoy meeting you and helping you any way I can. Check the JPMA web site for more information or contact Reta Feldman at rfeldman@jpma.org.

 

Ron Sidman was the founder and CEO of The First Years, Inc. and former Vice Chairman of the JPMA Board of Directors. He is currently a  business consulting resource for JPMA members and serves on the Advisory Boards of both the Institute for Entrepreneurship and the Dean of the College of Education at Florida Gulf Coast University. Ron is also the President of Evolutionary Success, LLC, a life and business coaching company. He can be contacted at ron@evolutionarysuccess.com.

   

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