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.
Innovation Obstacles
April 12, 2013
It doesn’t take long to compile a dozen or more examples of products or businesses that have disappeared, or nearly so, because the world changed while the product or business did not.
Think eight-track tapes and players. Consider what digital photography has done, from the Eastman Kodak Company to out-of-business local studios. What the Internet has done to travel agents. See what’s happened and still happening to print newspapers across the country, to magazines, and to both local and large chain bookstores.
It is not at all rare that businesses fail to reinvent themselves. For many reasons, including admirable passion for what they are doing, business leaders often miss the trends or ignore the signs that suggest the need to change their products or their entire business model.
As Geoff Colvin wrote in FORTUNE magazine Feb. 25, 2013, “Business model innovation is a competency that doesn’t exist in most companies.” He continued: “The largest obstacles will be weak imaginations, threatened interests, and culture.”
I suspect that those are also the three major obstacles we must overcome as we think about the future of interscholastic athletics.
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Does school-based sports, with a 100-year-old history, have a 50 or even 15 year future in schools and society?
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If so, should the business model change? And if so, how?
I suspect that some of what we think is change may be no better than rotating bald tires on our car; when what we really need is new tires, or no tires at all.