There is a dirty four-letter word that we, as humans, all have a naturally-wired aversion to. I’m talking about risk. There are many skills and abilities that set apart successful entrepreneurs and scaling businesses from the average “run of the mill.” One that I feel doesn’t get enough attention is the ability to identify, assess, and implement intelligent risk-taking.
Intelligent risk-taking is essential for scaling a fast-growing brand. Without it, growth will slow, innovation will dry up, and the competitive forces in our quickly evolving business landscape will take your business out of its market leadership position. Because there is so much at stake, I want to offer you a few helpful tips on how to take intelligent risks, which over time, will undoubtedly increase the odds of successfully scaling your business.
- Identify actual versus perceived risk and use information to close the gap. Every potential risk has an actual risk and a perceived risk. Because the human brain is naturally wired to be risk averse, out of fear, we oftentimes initially perceive a risk to be more costly than it actually is. As such, there is almost always a variance between perceived risk and actual risk.
How do intelligent risk takers deal with this variance? They close the gap with information. In other words - they gather data. Discuss the risk with subject matter experts who know more than you about the particular disciplines that the risk lies within. As you gather information, you’ll close the gap between perceived risk and actual risk. With this gap closed, you’re now better equipped to make a higher quality decision on how to implement taking the risk.
Another note on this topic: one major challenge for leaders of fast-growing brands is closing their team members’ gap between perceived and actual risk. Oftentimes the leader of a business has a clearer picture of the actual risk at hand, while his team members fall victim to an unrealistic perceived risk. Your job as the leader is to acknowledge and express empathy for what drives your team members’ perceived risk. After this, you must take ample time to thoroughly and consistently provide the information needed to close your team’s gap between perceived and actual risk, thus getting everyone on the same page and bought-in to the risk you are about to take together.
- Celebrate failure. In running my business, I always try to live by the entrepreneurial adage of “it’s only a failure if you don’t learn anything from it.” The bottom line is this – as a leader of a fast-growing brand, you must celebrate your own failure and the failures of your team members. The cost of not doing so is too high. Without an active and visible celebration of failure, nobody in your business will ever take any risks.
I recently heard an interview with a CEO who told a story about “failure parties” that he held each month. Once a month he’d crack open a keg of beer, get the whole company together, and have people share stories of their past month’s failures. Most importantly, during the “party” they would discuss what went well, what didn’t go well, and what they learned from the failure. The point is this – risk-taking is typically only successful a fraction of the time. However, every risk taken always has value if you take the time to break down what happened, learn from it, and take those learnings into future risk-taking. It’s within this process that risk-taking results in business growth and innovation
- Conduct a proper AAR and learn from every risk you take. I touched on this process in tip #2, but I think it’s worth digging a little deeper into the process that I teach my clients to use for reflecting and learning. It’s called the After-Action Review (AAR). The AAR process is simple, yet powerful when used regularly. If used to reflect on and learn from risks taken, it will become a powerful growth and innovation engine for your fast-growing business. The process is simple. Ask yourself and your team these questions: What worked? What didn’t work? What will we K.I.S.S. (keep, improve, start, stop)?
I hope you found these tips for becoming a more intelligent risk-taker helpful. I’m certain that if you follow these, and you begin today with taking intelligent risks, before you know it, you’ll find your business growing and innovating faster than ever before.
One more quick note before I close – if you don’t currently have a CFO on your team, I highly recommend getting one. A CFO can provide you with the financial and data-driven insights you need to take more intelligent risks.
If you don’t currently have the budget to afford a full-time CFO, contact Free to Grow CFO. We provide the outsourced, part-time CFO you need to scale your business without the full-time salary.
Until next time – Happy scaling!