Donald Trump, Bill Gates, Larry Ellison, Oprah Winfrey, Richard Branson, Warren Buffet, Sheryl Sandberg, Elon Musk. Recognized and acknowledged as some of the most successful businesspeople of our time, all of them can tell a story of how success very nearly eluded them, and big risks had to be taken at some point. In the case of these mega-entrepreneurs, the majority still thrive on big risk-taking for big reward, and in fact the most common belief is that the biggest risk to them was not taking one at all. Business risk management is too often about risk aversion, as opposed to true risk taking, and risk registers should reflect a lot more upside opportunity risk, in order to maintain a sense of entrepreneurship within the organization.
Mark Pincus, the founder and CEO of Zynga (online social gaming company) took a huge risk when funding his first company, Freeloader. When an investor he’d lined up wanted him to hire the CEO of his choice, Pincus turned him down. Another investor came in a few months later, and they ended up selling the company for a good return. This was a massive risk taken at a time when it would’ve seemed illogical to most “good business people”.
When Elon Musk started SpaceX, with a business model dedicated to the reduction of cost and increase in reliability of space missions, he’d never been involved in the aerospace industry, or in fact, the design of anything similar. After pouring in most of the capital from the sale of PayPal, SpaceX’s annual revenue is in excess of $150million, and climbing. Musk risked all where others with far greater industry experience, and even existing footprints in the aerospace industry feared to tread.
Going back in history to legends of business like Henry Ford, imagination, and willingness to take big risks are standout qualities. In order to satisfy consumer needs, Ford decided to cut down on working hours, and increase the minimum wage for his workers, in order to prolong their careers, enabling them to work for a longer period of time before quitting. An incredibly risky move, frowned upon by many of his peers, enabled Henry Ford to truly conquer the automobile world.
Sherron Watkins, who helped uncover corruption while serving as Enron’s vice president of corporate development, can attest to the fact that it’s never easy to stand up for what you truly believe is right. She took a huge risk to her own career, one that ended up increasing her public profile and reputation as a famous whistle-blower, and now sees her addressing groups around the world about leadership and ethics issues.
What risk management strategy does your organization follow? Are you a risk-taker, treating risk management as an opportunity to increase the chances of risks taken paying off, or is your strategy designed at only mitigating against potential failures? Perhaps your organization shifts seamlessly from attack to defense, encouraging risk taking when opportunities arise, and bringing down the fortifications when risks threaten our business.
Entrepreneurial risk management, to quote Richard Branson is all about “Feeling the fear, and doing it anyway”. This doesn’t always mean risking everything on the throw of a dice, but rather using a combination of intuition, experience and qualified data to make big decisions that drive the business forward, encouraging confidence in the risks we take, and enabling a constant awareness of opportunities that should be taken. It’s about risk management and not risk avoidance.
“Life is either a daring adventure or nothing at all.” – Helen Keller
“Don’t be too timid and squeamish about your actions. All life is an experiment. The more experiments you make the better.” – Ralph Waldo Emmerson
“A ship is always safe at the shore – but that is NOT what it was built for.” – Albert Einstein