The Importance of Risk

tightrope act I was speaking with a really interesting CEO this morning after speaking at the North Shore Technology Council panel on social networks and their impact on business. This man turned companies around for a living. Complex work, if you think about it. One thing he said really struck me, and has resonated all morning.

There was a company he was once evaluating, and he mentioned that they had taken almost ZERO risk. My immediate thought was that he probably saw this as a good thing. Instead, he said, “If you don’t take risks, you can’t grow.” Wow! He knew MY answer, instead of what I thought he would say.

Risk is Important

Hours after that conversation, I spoke to a young professional who wanted to do something meaningful with his time and effort. I asked him whether he had a “lab” where he could test out potential ideas. At first, it sounded really foreign, but when I told him that most of what I’ve done in life came from trial and error, he started to see where I was going.

If you don’t try new things, you don’t discover new things. If you don’t fail, you don’t know what comes out of the failure. If you don’t risk your career, you won’t invent the job of the future.

Where are YOU Taking Risks?

The future is risky. Deciding to use social media to promote your business, augment your internal collaboration, or other uses is risky. It’s untested, or not very tested. It’s different than how people did things before. Convincing people that ads don’t work well when the folks selling ads have numbers is risky.

Where are your risks, business or personal? What are you doing to move over that crazy divide? How are you readying yourself for the inevitable fall on the face that comes with not being 100% certain? What’s your take?

Photo credit, Smiles are Free

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  • Guest

    Interesting post. Makes me consider how many risks I’ve taken which aren’t many with my career but I should be taking more. It gets more difficult when one has a spouse and/or family depending on a stable income.

  • http://blog.nordquist.org Brett Nordquist

    Interesting post. Makes me consider how many risks I’ve taken which aren’t many with my career but I should be taking more. It gets more difficult when one has a spouse and/or family depending on a stable income.

  • http://www.shaunanicholson.com/blog Shauna

    Of course, my biggest risk I’ve taken lately was resigning yesterday–before finding (or seeking, for that matter) another job. My closest friends are still balking at the idea that I’d do that; in all honesty, so am I. It’s an “unlike me” decision.

    The rationale is this: Sometimes you have to light to fire to see how fast you can put it out.

    Today, this is not a test.

    I will employ social media as my primary avenue and see where I land. I’ve tallied my skills and feel confident I’ll be able to pull this one off. :)

  • http://www.shaunanicholson.com/blog Shauna

    Of course, my biggest risk I’ve taken lately was resigning yesterday–before finding (or seeking, for that matter) another job. My closest friends are still balking at the idea that I’d do that; in all honesty, so am I. It’s an “unlike me” decision.

    The rationale is this: Sometimes you have to light to fire to see how fast you can put it out.

    Today, this is not a test.

    I will employ social media as my primary avenue and see where I land. I’ve tallied my skills and feel confident I’ll be able to pull this one off. :)

  • http://shannonsezso.blogspot.com ShannonRenee

    I am a risk taker, nothing ventured, nothing gained is how I try to live my life. Risk is one of key ingredients to discovery, Christopher Columbus (albeit, he got lost & bumped into the Dominican Republic), Neil Armstrong or Barack Obama. You have to push yourself out of the normal and rountine into the unknown and unchallenged, only then will you find who you really are and will become.

  • http://blog.scope.is/marketing_safari Hjörtur Smárason

    Precisely! If you don’t fail, you stagnate. The fear of failure stops you from taking risks, which stops you from developing.

    Funny you should write about this topic today, ’cause it’s the topic of my marketing column in tomorrow’s paper. I see I’ll have to write some more about it on my blog.

  • http://shannonsezso.blogspot.com ShannonRenee

    I am a risk taker, nothing ventured, nothing gained is how I try to live my life. Risk is one of key ingredients to discovery, Christopher Columbus (albeit, he got lost & bumped into the Dominican Republic), Neil Armstrong or Barack Obama. You have to push yourself out of the normal and rountine into the unknown and unchallenged, only then will you find who you really are and will become.

  • http://blog.scope.is/marketing_safari Hjörtur Smárason

    Precisely! If you don’t fail, you stagnate. The fear of failure stops you from taking risks, which stops you from developing.

    Funny you should write about this topic today, ’cause it’s the topic of my marketing column in tomorrow’s paper. I see I’ll have to write some more about it on my blog.

  • http://justinkownacki.blogspot.com Justin Kownacki

    Don’t confuse “risk” with “calculated risk.” Using existing assets to enter a new market, or starting a side job that utilizing some of your existing equipment / experience, is a calculated risk. Deciding you’re going to burrow to the center of the earth is not. It’s all a difference of degree, and of having access to resources that will likely help you accomplish your goals.

    It’s also about being able to learn from feedback and adapt to situations as they arise. Can you start a successful business with no experience, contacts or resources? Sure, but your odds are infinitely small. Of course, when 1% of those “renegades” succeeds, the media trumpets their success story in a way that makes taking a more conventional approach seem less sexy and, therefore, uncool — which leads to even more failure from people who ignore conventional wisdom and at-hand resources in favor of wanting to be The Next Big Success Story That Defied the Odds.

    Being the lunatic who survived the bad idea gets you a lot more free press than being the person who leveraged their assets does.

  • http://justinkownacki.blogspot.com Justin Kownacki

    Don’t confuse “risk” with “calculated risk.” Using existing assets to enter a new market, or starting a side job that utilizing some of your existing equipment / experience, is a calculated risk. Deciding you’re going to burrow to the center of the earth is not. It’s all a difference of degree, and of having access to resources that will likely help you accomplish your goals.

    It’s also about being able to learn from feedback and adapt to situations as they arise. Can you start a successful business with no experience, contacts or resources? Sure, but your odds are infinitely small. Of course, when 1% of those “renegades” succeeds, the media trumpets their success story in a way that makes taking a more conventional approach seem less sexy and, therefore, uncool — which leads to even more failure from people who ignore conventional wisdom and at-hand resources in favor of wanting to be The Next Big Success Story That Defied the Odds.

    Being the lunatic who survived the bad idea gets you a lot more free press than being the person who leveraged their assets does.

  • http://RemarkableParents.com Vicky H

    I’m doing something I love with http://RemarkableParents.com which means that I don’t think about failure at all.

    I’ve already decided what failure would have been and I’ve made it past that point.

    I think you need to have a good idea of what the measurement of your goals are and therefore, determine in advance what success and failure would be. Otherwise, it seems like you’d always be viewing the “small” successes or failures as your success/failure metric.

    Nice post, keep us thinking!

    Vicky H

  • http://RemarkableParents.com Vicky H

    I’m doing something I love with http://RemarkableParents.com which means that I don’t think about failure at all.

    I’ve already decided what failure would have been and I’ve made it past that point.

    I think you need to have a good idea of what the measurement of your goals are and therefore, determine in advance what success and failure would be. Otherwise, it seems like you’d always be viewing the “small” successes or failures as your success/failure metric.

    Nice post, keep us thinking!

    Vicky H

  • http://faleafine.com NEENZ

    My life is one big calculated risk! Calculated being the operative word. It’s my personality to “go for it” to DO rather than TRY or TALK, it’s not living if we haven’t taken risks. Of course, I never forget to make sure that I approach my risks, my decisions with a good heart.

    One of the most gratifying risks, is when someone takes a risk on me — and the goal is accomplished.

    Chris, in the little less than a year since *discovering* you, you’ve shown me awesome examples of your calculated risks approached with a good heart.

  • http://faleafine.com NEENZ

    My life is one big calculated risk! Calculated being the operative word. It’s my personality to “go for it” to DO rather than TRY or TALK, it’s not living if we haven’t taken risks. Of course, I never forget to make sure that I approach my risks, my decisions with a good heart.

    One of the most gratifying risks, is when someone takes a risk on me — and the goal is accomplished.

    Chris, in the little less than a year since *discovering* you, you’ve shown me awesome examples of your calculated risks approached with a good heart.

  • http://www.chriszach.com Chris Zach

    I completely agree, Chris! Hence my personal leap from a comfortable career to chase my passions in startups, marketing, and strategy. My biggest concern isn’t that I’ll fail, but that I won’t fail enough because I don’t jump when I have a chance.

    So, although my greatest dream to achieve is a successful startup…

    My second place dream is a failed startup. And many lessons learned.

    Some quotes I have on the wall to remind me to reach for the star:

    “Success consists of going from failure to failure without loss of enthusiasm.”

    -Winston Churchill

    “The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try.”

    -Debbi Fields, founder of Mrs. Fields Cookies

    “It doesn’t matter how many times you fail. It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and neither should you. All you have to do is learn from them and those around you because all that matters in business is that you get it right once. Then everyone can tell you how lucky you are.”

    -Mark Cuban, owner of the Dallas Mavericks, co-founder of Broadcast.com, founder of HDNet

  • http://www.chriszach.com Chris Zach

    I completely agree, Chris! Hence my personal leap from a comfortable career to chase my passions in startups, marketing, and strategy. My biggest concern isn’t that I’ll fail, but that I won’t fail enough because I don’t jump when I have a chance.

    So, although my greatest dream to achieve is a successful startup…

    My second place dream is a failed startup. And many lessons learned.

    Some quotes I have on the wall to remind me to reach for the star:

    “Success consists of going from failure to failure without loss of enthusiasm.”

    -Winston Churchill

    “The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try.”

    -Debbi Fields, founder of Mrs. Fields Cookies

    “It doesn’t matter how many times you fail. It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and neither should you. All you have to do is learn from them and those around you because all that matters in business is that you get it right once. Then everyone can tell you how lucky you are.”

    -Mark Cuban, owner of the Dallas Mavericks, co-founder of Broadcast.com, founder of HDNet

  • http://undercurrents.tmgstrategies.com Gloria

    “If you don’t risk your career, you won’t invent the job of the future.”

    That’s a really good point.

    At the same time, it’s also pretty important to not only take risks, but to also spend time and energy on learning and nurturing your skills in whatever you’re passionate in so that when you take the risks, you are solidly supported by your knowledge and passion. You gotta take risks you believe in!

  • http://undercurrents.tmgstrategies.com Gloria

    “If you don’t risk your career, you won’t invent the job of the future.”

    That’s a really good point.

    At the same time, it’s also pretty important to not only take risks, but to also spend time and energy on learning and nurturing your skills in whatever you’re passionate in so that when you take the risks, you are solidly supported by your knowledge and passion. You gotta take risks you believe in!

  • http://www.winningworkplaces.org Mark

    At my nonprofit, we evaluate the best small organizations in North America with the help of The Wall Street Journal. One of the themes we noticed with our 2007 “Top Small Workplace” winners (15 firms out of 437 that applied) is how many of them intentionally build risk into their cultures. Not that they want to fail and keep failing, but they realize some of their greatest long-term potential with customers can come from empowering employees to make on-the-spot decisions with little or no check-in with supervisors. The best firms are those that, when failure does happen from this risk, have systems in place to immediately tell employees what went wrong and brainstorm with them on what can be improved next time.

    We just sponsored a webinar entitled “Building an Ownership Mentality Among Employees,” and beyond the financial considerations of stock ownership, risk was a primary component as related by the CEOs of a Connecticut-based manufacturer and a Missouri-based county bank we had on the call.

    I think my favorite quote about risk came from the keynote speaker of our workplace conference last year, Colin Angle, CEO of iRobot: “A lot of people say entrepreneurs are great risk takers. I say hooey. If I were a great risk taker, I would have died on business model two. I think successful entrepreneurs are great at understanding what risk really is. The vast majority that succeed understand what they’re getting into, the pros and cons. So when you bet the company, know why you’re betting it, and know what your chances are of recovering if it does, in fact, fail.”

  • http://www.winningworkplaces.org Mark

    At my nonprofit, we evaluate the best small organizations in North America with the help of The Wall Street Journal. One of the themes we noticed with our 2007 “Top Small Workplace” winners (15 firms out of 437 that applied) is how many of them intentionally build risk into their cultures. Not that they want to fail and keep failing, but they realize some of their greatest long-term potential with customers can come from empowering employees to make on-the-spot decisions with little or no check-in with supervisors. The best firms are those that, when failure does happen from this risk, have systems in place to immediately tell employees what went wrong and brainstorm with them on what can be improved next time.

    We just sponsored a webinar entitled “Building an Ownership Mentality Among Employees,” and beyond the financial considerations of stock ownership, risk was a primary component as related by the CEOs of a Connecticut-based manufacturer and a Missouri-based county bank we had on the call.

    I think my favorite quote about risk came from the keynote speaker of our workplace conference last year, Colin Angle, CEO of iRobot: “A lot of people say entrepreneurs are great risk takers. I say hooey. If I were a great risk taker, I would have died on business model two. I think successful entrepreneurs are great at understanding what risk really is. The vast majority that succeed understand what they’re getting into, the pros and cons. So when you bet the company, know why you’re betting it, and know what your chances are of recovering if it does, in fact, fail.”

  • http://www.urbaneapts.com Eric Brown

    Chris, An excellent post, Thank you for your great work, At each phase of heightened risk I have taken over the last five years since leaving Corporate America, the payoff has increased substantially. I believe that our ability to create local Brand Awareness has much to do with Doing Things Differently We ONLY use Digital Marketing and Social Network sites such as MySpace, FaceBook, Flickr, YouTube and now Twitter for traffic and branding. The apartment business may well be the most antiquated business on earth, and so these new forms of marketing and branding are seen as whacky and too far out there for most. What is really staggering is the fact that we achieve rents that exceed the market by $250-$350 per unit type, and while our product is diametrically different and significantly sets Urbane apart, we also believe our unique approach to Underground Marketing and Management, and focusing on the Residents Experience drive the success. And yet when I chat with the local apartment guys (who are very successful by the way) they just look at me like I have a horn growing out of my head!
    In the beginning, we simply just couldn’t afford to be in the typical Main Stream Media venues and mostly if not solely relied on the free sites such as Craig’s List and we still do not do any print ads, we never have. Our next risk we are taking is that we are going to only focus on the free sites, such as Craig’s List, MySpace, FaceBook, Flickr, YouTube and Twitter which is clearly where most of our traffic and rentals s come from anyway, and we are going to create a Virtual Leasing Agent, and intend to create this from savings from the typical paid advertising sites that we will be dropping. I think if we do a good enough job marketing and branding, we simply don’t need them, we can create enough internet buzz to directly get the resident to our web site. This is seen by our some as Very Risky and goes completely against Main Stream Advertising and Marketing, I am betting not and I believe this will set the industry on their ears with this if it works.

  • http://www.urbaneapts.com Eric Brown

    Chris, An excellent post, Thank you for your great work, At each phase of heightened risk I have taken over the last five years since leaving Corporate America, the payoff has increased substantially. I believe that our ability to create local Brand Awareness has much to do with Doing Things Differently We ONLY use Digital Marketing and Social Network sites such as MySpace, FaceBook, Flickr, YouTube and now Twitter for traffic and branding. The apartment business may well be the most antiquated business on earth, and so these new forms of marketing and branding are seen as whacky and too far out there for most. What is really staggering is the fact that we achieve rents that exceed the market by $250-$350 per unit type, and while our product is diametrically different and significantly sets Urbane apart, we also believe our unique approach to Underground Marketing and Management, and focusing on the Residents Experience drive the success. And yet when I chat with the local apartment guys (who are very successful by the way) they just look at me like I have a horn growing out of my head!
    In the beginning, we simply just couldn’t afford to be in the typical Main Stream Media venues and mostly if not solely relied on the free sites such as Craig’s List and we still do not do any print ads, we never have. Our next risk we are taking is that we are going to only focus on the free sites, such as Craig’s List, MySpace, FaceBook, Flickr, YouTube and Twitter which is clearly where most of our traffic and rentals s come from anyway, and we are going to create a Virtual Leasing Agent, and intend to create this from savings from the typical paid advertising sites that we will be dropping. I think if we do a good enough job marketing and branding, we simply don’t need them, we can create enough internet buzz to directly get the resident to our web site. This is seen by our some as Very Risky and goes completely against Main Stream Advertising and Marketing, I am betting not and I believe this will set the industry on their ears with this if it works.

  • http://www.hooversbiz.com/ Anonymous

    These are good points, Chris, though I agree with the commenters above who suggest “calculated risk” in place of undifferentiated risk.

    The thing is, with social media and many other things, it’s quite possible to take a long (endless) series of *small* calculated risks to see what works at the margin. This allows you to keep exploring new areas, new processes, and so on. When something screws up, it was only a small risk, so you back it out and try again. (That’s a key idea of Jason Fried at 37signals: small risks, no big deal, just go ahead and try it.)

    Over time, you can end up approximating Toyota’s kaizen system, where many-many-many small changes feed into Big Change. And, again like Toyota, you won’t just have the end result of all those changes, but also the deeply ingrained *habit* of taking risks in the service of beneficial change.

  • http://hooversbiz.com Tim ‘@Twalk’ Walker

    These are good points, Chris, though I agree with the commenters above who suggest “calculated risk” in place of undifferentiated risk.

    The thing is, with social media and many other things, it’s quite possible to take a long (endless) series of *small* calculated risks to see what works at the margin. This allows you to keep exploring new areas, new processes, and so on. When something screws up, it was only a small risk, so you back it out and try again. (That’s a key idea of Jason Fried at 37signals: small risks, no big deal, just go ahead and try it.)

    Over time, you can end up approximating Toyota’s kaizen system, where many-many-many small changes feed into Big Change. And, again like Toyota, you won’t just have the end result of all those changes, but also the deeply ingrained *habit* of taking risks in the service of beneficial change.

  • http://blog.joeandersen.com Joe Andersen

    Risk is also important as an historically accurate simulation of the Napoleonic Wars ;)

  • http://www.altitudebranding.com Amber Naslund

    Chris,

    Wow…yeah. Timely. About 4 weeks ago, I finally stumbled on The Proverbial Straw and quit my job. No job in the wings. All I had to go on was about 10 years of experience, a bug to do my own thing, and a nice tax refund to pay the mortgage in the meantime. At least for a little while.

    And here I am a month later. Website launched. Some spankin’ new stuff printed. Lots of irons in the fire. Lots of inspiration from my fellow Marketeers. and I thought I was alone or a crazy-ass woman with brain damage until I started reading. Shauna and Chris here debunk that, along with a host of fledgling entrepreneurs out there.

    What I found most amazing? I took this immense leap off a cliff and expected everyone around me to look at me like I was an alien. Instead, I have resounding support from those around me, a bunch of new friends from the “you go girl” club, and I’ve even gotten a few of my friends thinking about what potential they might be missing in themselves.

    So, seems to me like risk might not just be a good thing once in a while, it might be contagious.

  • http://blog.joeandersen.com Joe Andersen

    Risk is also important as an historically accurate simulation of the Napoleonic Wars ;)

  • http://www.altitudebranding.com Amber Naslund

    Chris,

    Wow…yeah. Timely. About 4 weeks ago, I finally stumbled on The Proverbial Straw and quit my job. No job in the wings. All I had to go on was about 10 years of experience, a bug to do my own thing, and a nice tax refund to pay the mortgage in the meantime. At least for a little while.

    And here I am a month later. Website launched. Some spankin’ new stuff printed. Lots of irons in the fire. Lots of inspiration from my fellow Marketeers. and I thought I was alone or a crazy-ass woman with brain damage until I started reading. Shauna and Chris here debunk that, along with a host of fledgling entrepreneurs out there.

    What I found most amazing? I took this immense leap off a cliff and expected everyone around me to look at me like I was an alien. Instead, I have resounding support from those around me, a bunch of new friends from the “you go girl” club, and I’ve even gotten a few of my friends thinking about what potential they might be missing in themselves.

    So, seems to me like risk might not just be a good thing once in a while, it might be contagious.

  • http://biggsuccess.com George Krueger

    I took a risk, Chris and read your blog … it paid off! I heard someone say once that personal growth happens when we stray beyond what we know to what we don’t know. That’s risky, but it gives meaning to life.

    As several people have noted, Risk in and of itself is just gambling. As several people have noted, it’s the “calculated” risks that are worth taking. Most really successful business people are not risk lovers, contrary to popular lore. Instead, they are great managers of risk.

  • http://biggsuccess.com George Krueger

    I took a risk, Chris and read your blog … it paid off! I heard someone say once that personal growth happens when we stray beyond what we know to what we don’t know. That’s risky, but it gives meaning to life.

    As several people have noted, Risk in and of itself is just gambling. As several people have noted, it’s the “calculated” risks that are worth taking. Most really successful business people are not risk lovers, contrary to popular lore. Instead, they are great managers of risk.

  • Mab Widdershins

    Yes, thinking about risks, too, but from a more personal basis. How much of myself should I reveal at what point in a new relationship? Is it better to reveal the kinks right up front and risk being shunned, or hide the quirks for a while. When is the right time to say “This is me?” And how painful will it be not to be honest about one’s own true and deep identity? In the virtual world, we can play around and change, and we can re-charge, but still we live in the real world, and the other residents are not always as open to myriad possibilities as we might like.

  • Mab Widdershins

    Yes, thinking about risks, too, but from a more personal basis. How much of myself should I reveal at what point in a new relationship? Is it better to reveal the kinks right up front and risk being shunned, or hide the quirks for a while. When is the right time to say “This is me?” And how painful will it be not to be honest about one’s own true and deep identity? In the virtual world, we can play around and change, and we can re-charge, but still we live in the real world, and the other residents are not always as open to myriad possibilities as we might like.

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  • http://www.connectioncafe.com Jordan Viator

    It’s so very true that “if you don’t fail, you don’t know what comes out of the failure.” Trying new ideas in any business can be scary and somewhat intimidating, but it’s also the best way to pave the way for new, exciting opportunities. Kudos on your post, Chris!

  • http://www.connectioncafe.com Jordan Viator

    It’s so very true that “if you don’t fail, you don’t know what comes out of the failure.” Trying new ideas in any business can be scary and somewhat intimidating, but it’s also the best way to pave the way for new, exciting opportunities. Kudos on your post, Chris!

  • http://lizkdc.typepad.com Liz Kelleher ~ lizkdc

    Good question; I got a lot of value out of the answers.

    Let’s stop and look at one big, maybe scary aspect of risk–one that’s behind why a lot of people tense up at the word.

    When declaring “I want to take this risk,” one has to stop and be real about a responsibility to people other than oneseld. This doesn’t mean not taking the proposed risk–it just means thinking through “here’s how we all could benefit if I/we do this…and here’s some possible outcomes if it doesn’t work.”

    Good risk: if you succeed, there’s a gain for you and for other people. If you fail, you learn lessons, deal with the pain, AND do what you can to make it right with others involved.

    Bad risk: if you fail, others are left holding the bag.

  • http://lizkdc.typepad.com Liz Kelleher ~ lizkdc

    Good question; I got a lot of value out of the answers.

    Let’s stop and look at one big, maybe scary aspect of risk–one that’s behind why a lot of people tense up at the word.

    When declaring “I want to take this risk,” one has to stop and be real about a responsibility to people other than oneseld. This doesn’t mean not taking the proposed risk–it just means thinking through “here’s how we all could benefit if I/we do this…and here’s some possible outcomes if it doesn’t work.”

    Good risk: if you succeed, there’s a gain for you and for other people. If you fail, you learn lessons, deal with the pain, AND do what you can to make it right with others involved.

    Bad risk: if you fail, others are left holding the bag.

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  • http://aboutnewmedia.com Guinevere

    I agree with a lot of the comments… there are very different types of risks. Successful entrepreneurs think of risks like a scientists comes to a hypothesis. A hypothesis isn’t just a guess, it’s an educated guess and that’s a big difference.

  • http://aboutnewmedia.com Guinevere

    I agree with a lot of the comments… there are very different types of risks. Successful entrepreneurs think of risks like a scientists comes to a hypothesis. A hypothesis isn’t just a guess, it’s an educated guess and that’s a big difference.

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