Many business leaders avoid risk because they feel like their margin for error is too slim or they lack confidence in their ability to read the tea leaves. Which of their bets will be a resounding success, and what’s going to be a dismal failure? Make no mistake; failure’s not fun. But taking risk is vital for innovation and growth, and your chances of success often are greater than you think. In a demanding culture where customer needs change frequently, entrepreneurs and business leaders must be willing to step outside of their comfort zones and take calculated risks.
The key question is: Is this the right risk to take? At Mitchell Communications Group, we’ve been early to market with a number of new services because we believed the risk made sense for us and we had a strong right to win. At other times, we’ve stepped back to watch something develop before deciding whether to jump in — and at times, we’ve passed on it all together.
A business consultant once told me, “Entrepreneurs like you have no shortage of ideas, and you can’t pursue them all. You must learn to say ‘no’ to many good things so you can say ‘yes’ to the best things.”
Through my years of experience, I’ve learned that’s true. You don’t have all the resources in the world, so you must focus on the areas where you have the greatest opportunity to succeed.
As a leader, you must get used to taking some risk — even when you’re not sure of the outcome, but especially when the potential for payoff is promising. In my experience, I’ve identified four risks every leader should be comfortable taking:
- The risk of innovating in the first place: Many business leaders talk themselves out of investing in innovation because they’re too focused on immediate profits and don’t want to set aside future-focused funds. They worry about sunk costs or copycat competitors negating any real first-to-market advantage. But what about your clients? Oftentimes, they have needs they can’t readily address on their own, so they look to key partners for help. But if you’re not delivering fresh thinking for them, they’re going to look elsewhere. You’ve got to be in innovation mode on a regular basis so you can anticipate and meet your clients’ changing needs. Once you open the door to competitors, you’re potentially putting the rest of the business up for grabs as well.
- The risk of repositioning your company: We do a brand refresh every two to three years. Why? If you’re investing in innovation and your company is continually evolving, you need to inform your clients and customers of how you’ve changed and what’s new. If you don’t reposition every so often, the greater risk becomes the perception that your company isn’t innovative or that you’re “old school.” You can effectively reposition while still building on your established brand equity — just be sure to get professional help when undertaking this kind of effort. Don’t be afraid to take the time and spend the money to tell a compelling story. There are always new prospects who are ready to listen, and the payback is well worth it.
- The risk of the front-end investment: In addition to founding Mitchell, I started another company several years ago that offered training, facilitation, and executive coaching services. The investment on the front end was high — we spent considerable time researching the marketplace and creating original curriculum. But it was a smart move because once the curriculum was developed, we made our money back multiple times over by selling it to a growing client roster and customizing it to each clients’ needs.
There are times when making an investment on the front end is necessary to make a larger profit in the long run. The trick is balancing the investment required with an expected — and realistic — ROI. That return should include not just financial gains, but also other meaningful results, such as enhanced positioning in the marketplace, how this could lead to new customers or diversify existing revenue streams, and a clear idea of what timeline is reasonable to realize these returns.
- The risk of changing your pricing structure: Innovation doesn’t always mean new products or services. It can be as simple as shaking up your company’s pricing structure to capture more value or make it easier for clients to do business with you. At Mitchell, we reevaluate our pricing regularly by benchmarking our rates against competitors’ and gaining client feedback on the value they expect and receive from us for the price they pay.
Becoming comfortable with risk requires developing processes for evaluating potential costs and rewards. You must get comfortable with change and be prepared to test things out via trial and error. Starting out with small projects that can yield early wins is a great way to set the stage for taking larger risks.
Many entrepreneurs and business leaders have great ideas, but they allow too many concerns to hold them back. Don’t be afraid to take some risks that make good business sense. Get and stay in innovation mode, regularly reposition your company, make some front-end investment to set yourself up for long-term return, and take a closer look at your pricing. If you don’t take risks, your business won’t grow — and that means you risk being left behind.
Elise Mitchell is the CEO of Mitchell Communications Group. She is an accomplished strategic communications professional and business leader whose entrepreneurial spirit helped build Mitchell into one of the top 10 fastest-growing firms globally and a two-time Agency of the Year winner, honored by PRWeek and The Holmes Report. In recognition of her accomplishments, Elise has received numerous awards, including being named PRWeek Agency Public Relations Professional of the Year and a Top 50 Power Player in PR.