Without risk, there is no innovation.
Getting good at taking risks is the key to your success. Here are five reasons why.
“Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing.”
That sage advice from American author and motivational speaker Denis Waitley applies to business, as well. Yet based on how many leaders act today, you’d never know it. While risk management is a fundamental, seemingly reasonable process in most organizations, the logic is inherently flawed.
A Harvard Business Review article “The Six Mistakes Executives Make in Risk Management” attempts to address this problem by pointing out that low-probability, high-impact events—or so-called “Black Swan” events—are virtually impossible to forecast. As a result, the authors suggest that, rather than trying to anticipate such events, leaders should simply seek to lessen their impact and, thereby, reduce their vulnerability. But here’s the rub: they’re still approaching the problem with a defensive mindset.
My point? The key to business and career success is playing offense—and getting good at taking risks.
Regrettably, risk gets a bad rap. As opposed to focusing on what could go right, we tend to concentrate on all the things that can go wrong. Moreover, taking risks is especially challenging for individuals and organizations that thrive on avoiding surprises and delivering predictable results. But, whether they realize it or not, that approach can really cost them.
For example, consider Xerox and the case of the computer mouse and graphical user interface. The company invented the technologies at their PARC research facility in Palo Alto, California. Yet, today, you won’t find a Xerox logo on the back of a laptop. Why? Because the Xerox management team wasn’t willing to take the risk to bring the ideas to market.
Now consider the man who was willing to take that risk: Steve Jobs.
Todd Gormley, a finance professor at Washington University’s Olin Business School, portrays managers who “play it safe” and avoid taking risks as potentially harming the future value of the company. And, as both an innovator and now-retired tech CEO, I couldn’t agree more.
So if you’re serious about your business and career success, I’d suggest getting good at taking risks. Here are five reasons why.
1. Like it or not, you can’t avoid risk.
Two of the most common, misguided misconceptions about risk are: 1) you can be successful by simply avoiding it; and 2) if you make a big bet once, and it pays off, you’re all set.
Both ideas, however, ignore a critical fact: the world continues to evolve whether you choose to participate or not. Just look at all the companies that chose to rest on their past successes, only to later declare bankruptcy. (Consider Kodak, Blockbuster, GM, and Sears, to name just a few.) The lesson: To remain relevant, you have to consistently take risks. If not, someone else will.
Netflix built a successful business by taking a risk on renting DVDs by mail.(Remember the iconic red envelope?) But they didn’t stop there: They took another risk by going all in on streaming, even making a conscious choice to compete against their own DVD business. And now, with their groundbreaking Netflix Originals, they’re also the home of a stream of critically acclaimed original programming.
Like other successful business leaders, Netflix CEO Reed Hastings knows this: in an ever-changing, ever-competitive marketplace, the only risk is standing still.
2. Without risk, there is no innovation.
Innovation is about doing something new that both solves a problem and creates real value. So how can you achieve something that’s never been done before without taking significant risks? The short answer: you can’t. Akin to investing in the stock market, innovation is intrinsically tied to risk; if you want a bigger return, you have to take on more risk.
None of the innovative products or technologies that we rely on today would have been possible if those behind them didn’t embrace risk. Just think about the major innovations that, over the last two decades, have come to dominate our daily lives: the internet, mobile computing, and e-commerce, not to mention “the cloud.” All were developed and commercialized by risk-takers like Microsoft, Google, Apple, and Amazon—four of the most valuable companies in the world today.
“The people who are crazy enough to think they can change the world are the ones who do,” mused Apple’s Steve Jobs. To achieve something bigger and better, innovators don’t just take risks—they embrace them.
3. Risk leads to learning—and learning leads to success.
Success is a result of learning—trying new things and discovering not only what works, but also what doesn’t. In each case, you gain invaluable information that helps you determine what to do next. You can never allow yourself to become satisfied with what you know right now. When you believe that anything you do today can be done better tomorrow, anything is possible.
For a lot of people, however, their willingness to learn is limited by their fear of failure—perhaps the most powerful deterrent to risk-taking. But what they don’t appreciate is that failure often creates the best opportunities for continuous learning and success.
“I’ve missed more than 9,000 shots in my career,” said basketball legend Michael Jordan. “I’ve lost almost 300 games. Twenty-six times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” (You can read about my take on ESPN’s riveting Jordan docuseries “The Last Dance” here.)
4. You’ll live with fewer regrets.
As people examine their lives, they often find that the risks they most regret are the ones they didn’t take. One reason that happens is that they asked the question “What if?” when it was too late to take action.
So the next time you have an opportunity to take a risk, whether in business or life, ask yourself “What if?” when you still have the chance to act on it. And while you’re at it, remind yourself that you’ll never know if you don’t try.
What’s more, what if you take a risk and it doesn’t work out? Once you come out on the other side alive, you’ll realize that you’re still, well, alive.
5. Risk-takers may be happier.
Research shows that risk-takers may be happier. For instance, a study in Germany, with more than 20,000 participants from across the country, shows that people who enjoy taking risks are more content with their lives.
Granted, the link between a willingness to take risks and personal satisfaction is difficult to interpret. “It’s a classic chicken and the egg problem,” says German economist Armin Falk, a professor at the University of Bonn and one of the researchers on the study. “Are people who are satisfied more optimistic because they are satisfied and thus more ready to take risks? Or is someone who is not afraid of risks a person who takes their life into their own hands and shapes it the way they want to?” Personally, I’m inclined to think it’s the latter. Still, no matter how you choose to look at it, it can’t be denied that there’s a correlation between happiness and risk-taking.
So, as it turns out, “nothing ventured, nothing gained” is more than a centuries-old adage. It’s the key to your business and career success. And that means getting good at taking risks.
