Risk Taking
February 14, 2012
The June 22, 2009 cover story of Business Week which I just reread was titled “The Risk Takers.” It featured businesses which during difficult times, instead of playing it safe, placed bets on some gutsy new strategies.
To make a point, the author used an illustration that we can relate to here in Michigan. I paraphrase:
Imagine a driver on a snowy night. If the car starts to slip, the driver’s natural instinct is to slam on the brakes and jerk the steering wheel in the opposite direction. But the laws of physics advise the opposite: laying off the brakes and steering into the turn.
The author reports that from 1985 to 2000, the average merger in an economic downturn created an 8.5 percent rise in shareholder value after two years; while the average deal in good times resulted in a 6.2 percent drop in the buyer’s share value. In other words, mergers – one of the biggest, boldest moves in business – do better in bad times than good. Much better, in fact.
It wasn’t recklessness this article was celebrating; it was risk taking – daring to be aggressive, rather than just defensive, amid a weak economy. Steering into the turn, so to speak.
Just like the winter driving analogy in the article, we who are involved in school sports in Michigan can relate to the big idea of the article because we too made some of our biggest moves at our bleakest times. The MHSAA retrenched in some ways, but the greater theme as we climbed out of our bad times of 2008 was that we made unprecedented investments in new technology.
Today MHSAA.com is the website of highest traffic and MHSAA.tv is the website with the most productions of any comparable organization in the U.S. And all of these investments in technology during those bad times have allowed us to undertake the ArbiterGame project now that will provide all member high schools the electronic tools necessary to make their tough tasks of school administration more streamlined than ever before.
Driving Lessons
August 19, 2014
Many millions of us this summer took to the expressways of North America, and most of us reached our destinations safely. I find myself amazed at how few the accidents are when highways are crowded with hunks of metal traveling at 60, 70 and even 80 miles per hour.
There are three actions on a fast-moving expressway that jeopardize the health of travelers that are like three actions that jeopardize the health of organizations.
- First, if any number of drivers defies heavy traffic or wet pavement, then the well-being of all the others is at risk.
- Second, if just a single car ahead of a crowd of others slams on the brakes, then a chain reaction collision is likely to follow.
- Third, if a driver fails to look around and indicate the intention to change lanes, then those around that car must take evasive actions to escape trouble.
Likewise, organization leaders who move forward too fast without regard to their environment, leaders who suddenly slow down or stop their forward motion, and leaders who fail to consult with those around them and clearly signal their intentions to make a change, put their enterprise at risk.
Lessons for the office, learned on the road.