For a race car driver, crashing your car is not a case of if
; it's a matter of when
. No matter how good a driver you may be, the risk of a crash at some point in your career is 100%. In spite of the risk of crashing, race car drivers will continue to strap themselves into high-powered machines and embrace the risks of racing. Racers realize that the risk of crashing is the cost for the opportunity to do something they are passionate about.
Succeeding at business has slightly better odds, but still, 85% of all businesses fail within five years. Yet every day thousands of ambitious individuals ignore the odds stacked against them and create new businesses. Successful race car drivers and entrepreneurs similarly recognize that only by continually embracing risk every day, can you achieve the desired result of winning.
Risk is everywhere, and while common sense and consultants tell you to minimize risk, I suggest the opposite. I maintain that embracing what I call the "two essential risks," decision and change, are necessary to achieve your ultimate success in business. Just as your body requires essential nutrients to remain strong and function properly, so too does business success demand leaders embrace essential risks to thrive.
Successful leaders have the courage to make decisions and to welcome change. And if you look at the definition of risk, the possibility of loss or injury, making decisions, and accepting change are fraught with risk. But we cannot avoid the risk of making decisions or instituting change lest our entrepreneurial pursuit become irrelevant.
So, it is obvious that these are two essential risks, necessary to maintain the forward motion for long-term entrepreneurial success.
With all the potential risks present in business, how could I narrow it down to these two essential risks? In my 30 years of experience, I recognized that successful businesses were always moving forward. As the business environment changed, the businesses adapted. As the competitive landscape becomes more intense, they decide to meet the challenges head-on rather than deferring a move until later. To accomplish this move, it was necessary for the entrepreneur to show leadership by stepping up to decide—on strategy, process, personnel, product, marketing, and so on. Perpetually successful businesses are always evolving, which means change.
Decide and Get on with It!
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 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 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 many variables, and not all variables 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: Businesses must progress, and progress requires change. Change, the other essential risk, also holds the risk of failure. This potential risk 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. This change also refers to processes or systems, changes in attitude, and the business personality. While these 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 improve the internal process. Embracing the risk of change creates an environment of perpetual motion forward.
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 wellbeing. The penalty for not embracing the two essential risks of decide and change is costly and stagnation, which lead to the deterioration of the organization and a painful crash.
Tom Panaggio has enjoyed a 30-year entrepreneurial career as co-founder of two successful, direct marketing companies-Direct Mail Express and Response Mail Express. He is the author of
The Risk Advantage: Embracing the Entrepreneur's Unexpected Edge.
Opinions expressed by the author are not necessarily those of WITI.
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