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Risk and Failure Can Be Keys to Success

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Risk and Failure Can Be Keys to Success

Many organizations and individuals promote increased innovation, change and responsiveness.

While there are lots of prescriptions, we frequently ignore the major barrier:  fear of risk and failure. It is well proven that the fear of loss is much greater than the perceived potential of gain.

In part, this is a function of using analysis and probability to predict. What this frequently ignores is the characteristics of the exceptional or failure.

Similarly, I find the greatest barrier with many of my small business clients is being afraid to test the water and try new things. This is well-stated by some famous quotes which are really the key recommendation of this article:

“Because the people who are crazy enough to think they can change the world are the ones who do.” -Steve Jobs

“You miss 100% of the shots you don’t take.” -Wayne Gretzky

“What would you do if you weren’t afraid?” -Sheryl Sandberg

“A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.” -George Bernard Shaw

Several issues can make us risk-averse, like ignoring information and probability. Considering these issues can greatly improve our comfort in taking some risks. There is a greater chance of success in predicting results when there is significant and consistent historical data. However, predicting results with little or inconsistent data is much more difficult.

Risk is frequently overestimated in dealing with the rapid changes in our society like the internet, digital technology, mobile phones, Google, and Amazon are examples of technology that is transforming our lives. Relying on old methods and saying “we’ve always done it that way” can be riskier than making change.

One of the biggest opportunities in evaluating risk is dealing with innovation and the exceptional, and better data needs to be accompanied by some risk.

Understanding failure is also essential to improving the chances of success. Failure is a characteristic of many successful ventures. One example is Steve Jobs getting fired from Apple, and then creating great success in Pixar. Failure can have many advantages, like identifying alternatives, understanding reasons and solutions, and motivating organizations to understand the requirements for success.

Fear of failure is also a function of our backgrounds and environment. In particular, expectations and confidence are important psychological factors in the reaction to failure. For example, we underestimate the importance of issues like age, gender, environment, or race in our decisions to accept failure or learn from it. For example, football coaches and top schools teach participants to simply not accept failure.

Excellent people often tend to be independent by nature, and they require a culture that encourages their energy, determination, and focus. However, different cultures can result in more failures Empowering employees both encourages satisfied customers, and motivates employees to experience more success but does involve some risk

Here are some suggestions to increase risk-taking with positive results:
 

  • Empower your staff and management. Empowerment requires that you trust your employees and staff. This requires hiring and training good people, giving them the authority they need to do their jobs well, and understanding that they will make mistakes at times.
  • Create a more open and honest culture, which encourages communication and collaboration. Informal communication and social interaction can be great ways to foster a better environment.
  • Develop reliable resources outside your company. Don’t only rely on the opinions of friends and family- they love you too much to tell you the truth, and they may not truly understand your business. Instead, visit places like Google, your library, and incubators for networking opportunities.
  • Get to know your business inside and out. Make friends with financial statements and the internet. (Visit places like www.startupconnection.netwww.BPplans.com, and SCORE for lots of information and free tools).
  • Consider placing more attention on the process of decision-making by asking: How good is our information? What are the consequences of mistakes? How much risk can we afford? I frankly believe (with the exception of issues like safety) that we can afford more risk. We generally are overly concerned with the consequences of mistakes, rather than the potential upside of risk.

Related: Why Your Business Culture Needs to Be Like Mission: Impossible

In summary, I refer you back to the quotes at the beginning of this blog and encourage you to consider more risk in our changing environment.

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