What Elvis’ big break can teach us about risk
No recording artist is worth $35,000, and rock ‘n’ roll won’t last. That was the general consensus of record company executives to the news that RCA Records had just paid just that to buy a young man called Elvis Aaron Presley out of his contract with Sun Records. Engineered by their chief A&R man, Steve Sholes, the deal opened both Sholes and Presley up to suspicion; after all, Presley was a new artist whose work didn’t fit into the company’s existing genres, and rock n roll was considered a terrible corrupting influence on white American youth. Less than five months later, Presley’s first album sold 360,000 copies at almost $4 each, becoming not only RCA’s first million-dollar album, but the first-ever platinum album in history. It was clearly a risk that paid off. But taking one ourselves, whether personally or professionally, can feel like a big deal. Donald Rumsfeld’s unwieldy quote about ‘known unknowns’ doesn’t need a repeat airing, but his fundamental point was correct – no matter your calculations and considerations, there is always an element of risk whenever we change. So how do we mitigate against risk as we do just that?
CALCULATE THE RIGHT ATTITUDE
There’s no exact science about what makes a risk worth taking; mathematical odds might give the gritters a fair chance to get out ahead of the snow, but culturally, predicting what will – and won’t – land well is a dark art straight out of Harry Potter (upon whom Bloomsbury had to take a risk after the story had first been rejected by 12 other publishers). However, we do know is that it’s your attitude towards risk that matters as much as anything else. Most people approach risk defensively, as something to avoid. But while it’s impossible to make risk 100% safe – after all, it wouldn’t be such a game-changer if it was – you need to embrace risk with a welcome smile. And why? Because well-managed risk, aside from being part of successful change, can lead to innovation, opportunity, and even a greater competitive advantage.
FAILURE IS JUST FEEDBACK
The brain is wired to prioritize negative news over positive, and it’s easy to understand why. It was, after all, no use pointing out the delightful art on the cave wall if there was a sabre-toothed tiger creeping in behind you. Although the threats have shifted as we’ve evolved, if something is set to change it makes sense to find those points of fear first, but this often prevents people taking any further steps. Add in the ego, and it’s easy to see why risk seems so frightening – if I fail, what does that say about me? Well, failure is just a message telling you that you need to make an adjustment. It’s not separate to success, but actually a critical part of the process. Thomas Edison risked financial and reputational ruin to produce electricity, only succeeding on his 1,000th attempt, James Dyson took his family to the edge of poverty during the five years it took to build the 5,127th prototype that finally launched the bagless vacuum, and FedEx founder Fred Smith took $5,000 to Las Vegas to raise the money he needed when he didn’t get approved for a business loan. While those are more extreme risks taken by individuals, the risks of failure didn’t deter them. After all, if to innovate is to create something new, how can you do that without risking failure?
OFFSET BY PAIRING UP
You may or may not work with partners, but if you do, what attracted you to them? Because we’re going to take a risk ourselves now and say that it probably wasn’t because they were sitting on their corporate laurels counting their money. It was probably because they are energetic and dynamic opportunity-seekers who try to innovate what they offer rather than standing still. And what are those qualities a sign of? A willingness to take a risk.
That the ecosystem is becoming the way to do business means that smaller companies can innovate together, drawing on each other’s skills and connections to produce bespoke solutions. Yes, some of those solutions might be risky, but because it’s shared between brave small businesses who know that the only way to find new answers is to pour everything into the pot and start stirring, it’s spread more lightly. Of course, working together also involves trusting each other and that will involve compliance and paperwork – as ever, in the breaks between being brave, attention to detail will help. But the rise of the ecosystem has changed the weighting on our shoulders – that we can now connect flexibly with other partners, and build relationships that are quick to pivot means that we can also approach risk differently; no longer does a sole reputation need to be at stake, and collaborative working means that whatever your version of the lightbulb, bagless vacuum, or million-selling artist, you’ll invariably discover or design it much faster, giving you an unparalleled competitive advantage.
A CAUTIONARY TALE
Badly-managed risk, particularly in sectors who thought themselves otherwise immune, has a well-illustrated history of casualties. Following the financial crisis, a new criminal offence of ‘reckless management of a bank,’ came into force in the UK in 2016, bringing with it up to 7 years’ imprisonment for those found culpable. And in the US, Lehman Brothers found itself filing for bankruptcy having taken on liabilities that brought its assets within touching distance of its debts. But similarly, companies who didn’t take risks and simply stood still, such as Kodak or Blockbuster, also collapsed because doing nothing is the biggest risk of all. So, remember that risk is forever related to change, because to survive businesses must evolve.
EMBRACE THE UNKNOWN
Nothing has happened because people have stood still. Whether it was Columbus discovering America, or the signing of an iconic 20-year-old from Tupelo, Mississippi, sailing into unchartered waters has – sometimes literally – shown itself to be the only way to discover the new continent, the next superstar, or the much-needed methodologies and innovations to help businesses evolve and excel. While risk will always have the whiff of danger about it, embracing it openly, democratically, and strategically will almost invariably pay off. After all, how will we change better if we think that we know everything? Pushing beyond what has been and what is leads to what will come next. Learning never stops, change never stops, and risk will always be part of that package. So if you don’t change, you risk negative consequences, and if you do change, you risk negative consequences – but the biggest risk of all is to do absolutely nothing.
If you liked this you might also like our article on positive risk-taking:
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