There’s no way around it. Risk is simply a part of life. It can be put off for a time, or mitigated by knowing your stuff — but never completely. And we’re only better for it. When was the last time you achieved something worth celebrating without having taken some sort of chance?
Risk plays an incredibly important part in business, as well. It can be betting on your invention or innovation, adopting an unproven model or strategy, leaving safety behind to chase potentially higher profits, entering a new market or switching gears altogether. The willingness to take on risk can distinguish you from others, take you down new paths, and set you up well for the future.
Here’s are some key reasons why businesses (and individuals) should embrace risk.
It can lead to success
Sounds obvious, but it’s true. Risk-taking is an inherent part of entrepreneurship, and one of the most proven paths to success. Unless you’re a Hilton or a Kardashian, success won’t beat a path to your door. You have to go out and pursue it, usually with a lot of hard work and by taking chances others might not. In the end, there’s only one way to find out if something you’ve envisioned is going to work or not, and that’s by jumping in. So go ahead, bet on yourself!
That’s what Twitter did back in 2008 when it rejected a $500 million takeover offer from Facebook. Can you imagine turning down half a billion dollars as a two-year old start-up? That’s quite the risk for a fledgling social network with a growing user base but uninspiring revenues. It certainly looks like the right decision nine years on.
It can be a differentiator
There is a clear difference between companies that are willing to take a risk, and those who prefer to play it safe. The very act of risk-taking demonstrates confidence in your abilities and decision-making, and helps you stand out from the crowd. It can clearly show that you are a leader not a follower, with new ideas and the tenacity and perspicacity to make them reality.
Computer components giant Intel is taking a bold new direction, switching its focus from chips to betting it all on the cloud. They are abandoning their bread and butter position in the PC market to pursue the future, which they see as 5G and the Internet of Things.
It’s an opportunity to learn
Risks don’t always pay off. As my fellow coaches and I frequently tell my son’s hockey team, “You win or you learn.” Obviously in business the stakes are higher, but even when you lose you can come out ahead. Few would dare argue that Steve Jobs was a failure, but his headstrong commitment to the slow, expensive and user-unfriendly Apple Lisa cost him a job at his own company. Like every other obstacle he faced, Jobs learned from this and moved forward with even more confidence.
Taking risks can lead to new opportunities, innovation, and new ways of doing business. Take Elon Musk, for example. He rolled all the capital from the sale of PayPal into SpaceX. Having no experience in the aerospace industry, he burned through everything while his passion project found its way, finally landing a multi-billion dollar contract with NASA to re-supply the International Space Station.
Risk can be scary and occasionally painful, but it is critical to the continued vibrancy and relevance of many companies — and individuals. There are pitfalls to avoid when taking a chance, but the potential upside makes it worth the attempt.