Playing It Safe Is Riskier than You Think

There are all sorts of reasons why so many big organizations can be slow to make changes that everyone agrees need to be made. “Our current margins are too good, even though the business is being eroded by new competitors.” “Our current products are still popular, even though a new generation of offerings is getting traction.” “Our current distribution system can’t reach the customers we need to reach to build a new business.”

In other words, most leaders and organizations are really good at quantifying the risks of trying something bold or striking out in a new direction. What are the downsides of and obstacles to introducing a new product or targeting a new market? They are far less adept at reckoning honestly with the risks of staying the course. What’s the worst that can happen if we do more of the same?

In a very real sense, the first job of leadership is to identify and overcome the costs of complacency. To persuade colleagues at every level that there are genuine risks for the failure to take risks—that the only thing they have to fear, is the fear of change itself.

And if you can overcome that fear, it’s remarkable what can happen. A fascinating white paper by Bradley Johnson, director of data analytics with Advertising Age, makes the case that difficult and uncertain times are often the best times for organizations to separate themselves from the pack, so long as their leaders are prepared not to stand pat. Johnson looked at the lowest point of the Great Depression (August 1929-March 1933), the Great Stagflation of 1973-1975, and the Carter/Reagan recession of 1980-1982. What’s remarkable about these three periods of economic trauma, he reminds us, is that the problems they posed inspired creative responses that reshaped markets for decades to come.

One representative example from the Depression: General Motors had to figure out how to maintain its upscale Buick brand in a sinking economy. The solution? Persuade consumers to buy a used Buick rather than a cheaper new car—a way to keep struggling dealers afloat and hold back the encroachment of rival brands. It was a daring idea at the time, and it reshaped dealer economics and marketing priorities. (If only GM’s modern-day leaders could have summoned such creativity amidst crisis.)

In a wonderful New Yorker column, James Surowiecki, much like Bradley Johnson, chronicled bold strategic moves that repositioned companies and redefined industries during periods of economic turmoil. He compared how Post and Kellogg, two giants in the packaged-cereal industry, responded to the Great Depression. Post, he wrote—“did the predictable thing” when it “reined in expenses and cut back on advertising.” Kellogg, on the other hand, “doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies.” As a result, Kellogg leapt ahead of its rival and became (and remains) the industry’s dominant player.

So why, he wonders, given all the evidence of the chance to gain ground during periods of economic upheaval, “are companies so quick to cut back when trouble hits?” One answer, he speculates, involves a distinction about risk made by two business professors nearly 25 years ago. In a paper published by the Journal of Marketing, Peter Dickson and Joseph Giglierano argue that executives and entrepreneurs face two very different sorts of risks. One is that their organization will make a bold move that fails—a risk they call “sinking the boat.” The other is that their organization will fail to make a bold move that would have succeeded—a risk they call “missing the boat.”

Naturally, most executives worry more about sinking the boat than missing the boat, which is why so many organizations, even in flush times, are so cautious and conservative. To me, though, the opportunity for executives and entrepreneurs is to recognize the power of rocking the boat—searching for big ideas and small wrinkles, inside and outside the organization, that help you make waves and change course. In an era of economic dislocation and technological disruption, you can’t do great things if you’re content with doing things a little differently than how you’ve done them in the past. The costs of complacency have never been greater.

I don’t mean to minimize the challenges, pressures, and potential setbacks that are a necessary part of making real change. But is there any doubt that far too many established organizations are far better at reassuring themselves about the virtues of standing pat than they are at rallying around the benefits of standing out? As Michelangelo famously said, “The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.”

It’s time to aim higher. Playing it safe is riskier than you think.

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