Wide-eyed risk taking
It was Monday morning and Dan settled into the chair in front of his laptop with a fresh latte from the newly re-opened café down the road.
His plans to restart his own business were in place and he watched with relief from his office window as some of his employees started to arrive in the car park for the first time in months.
So far, so good, but things had changed a lot since the New Year and Dan had nagging concerns about the long-term prospects for the business.
What hadn’t changed, though, was that investors still wanted to see a return, or at least some strong evidence of ‘green shoots’. How was he going to lead the business through the next 6 months?
Well, some of my recent conversations tell me that this bitter-sweet challenge is a daily reality for many of you reading this. Business leaders and owners have some difficult and time-critical decisions to make.
However, I strongly believe in learning from the past and I’ve found two fascinating articles from the Harvard Business Review (see links at the end) about intuition and risk taking, which were written in the years following the 2008 financial crash.
We all know the siren voice of intuition, that gut feeling we have relied on before. It’s an easy route to a quick decision but is fraught with hidden danger, especially in the current uncertain climate. Studies show us that:
Good intuition is built up over a long time
It assumes the future will play out broadly the same as the past
We all apply our intuition inconsistently
Our decisions can be biased by the information we’re given and a whole host of other things too
And it seems that the people you need to keep an eye on are the risk averse. This seems counter-intuitive, but studies show us that they are the most likely to take significant risks when their backs are against the wall.
They will look for almost any means possible to reverse mistakes or losses and are more likely to make things worse in the process. History is littered with people who have not stopped digging the proverbial hole.
So how does this apply to Dan as he ponders the post-Covid future over his frothy coffee? And maybe even to you?
The business landscape has changed significantly this year and, for many, almost beyond recognition, so a degree of open-eyed risk taking is going to be necessary for some businesses to survive.
However, in the rush to avoid being left behind, don’t be tempted just to trust your gut reaction without first checking it out against some objective evidence and analysis. When you’re feeling the pressure to get quick results, remember as someone once said:
Don’t just do something, stand there!
You won’t regret taking some time out to get a different perspective and to check your long-term strategy is still fit for purpose.
I’ll be writing about that next time…
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