Calculated risks are key to business growth

Dr Jana Matthews | 4 min read | Calculated risks are key to business growth 

Many business owners are focusing on economic growth in spite of the current economic headwinds. Reflecting on the current and future strategy for your business will ensure your organisation is a position to take calculated risks and be ready to grow when the time is right.

Here are three actions to take.

1. Take calculated risks

In business, like in sports, you need to score goals (sell to customers) to win (secure revenue). This means you need to take risks and bet on specific opportunities that you calculate will yield a high return.

Risk and opportunity are often two sides of the same coin. So don’t try to avoid risk altogether or be excessively risk-averse as we come out of the pandemic.

CEOs, boards and politicians must be willing to take calculated risks, think through appropriate risk mitigation strategies, make decisions, and move ahead.

Avoiding risks is simply not an option.

Instead, we need to develop the capacity to assess risks and risk mitigation strategies.

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2. Stay doubly focused on your customers’ success

Ask yourself: ‘How does our product or service enable our customers to be successful?’

Once you have identified the answer to that question, make sure your prospects and customers understand the specific value that your company’s products or services add to their business.

Work hard to develop a deep understanding of what your customers need to be successful.

Don’t build in every feature and benefit that could possibly be of interest. Instead, spend time and money probing what your customers need, want and value.

Listen to their responses, and then figure out how to deliver it to them.

As Henry Ford noted, people may have said they wanted a faster horse. But he understood that what they actually wanted was to travel faster.

No one asked for an electronic toothbrush. But they did want to keep their teeth clean and reduce the number of trips to the dentist.

Listen to the meta-message your customers are telling you will help reduce risks. Then develop your products to meet their needs and make doubly sure those products are something they value.

How do you figure out what your customers value? Put yourself in the shoes of each of your customers and look at the world through their eyes.

Some of the most successful companies I know are practising what I call ‘customerisation’.

In short, they are looking at each of their customer’s value chains through the eyes of that customer. Then they developing products and services that enable that customer’s customers to be successful.

Delivering what your customer’s customers value creates customer ‘stickiness’. And a huge amount of information about what additional products and services your customers are going to need, want and value in the future.

Use this information when deciding which product or service to develop next and take a calculated risk on the results.

3. Stay hungry, be choosy, and keep learning

As a company grows, there are new lessons for the CEO to learn, strategies to pursue, and problems to solve.

Command-and-control and genius-with-one-thousand-helpers leadership models are not appropriate models for company growth.

Instead, CEOs need to learn how to surround themselves with people who match their company’s values, are high performers, and to whom they can delegate.

Members of the executive team, board members, investors, advisors and service providers all need to be willing to sign on to the company’s mission, values and vision. Alignment is key.

Keep learning, but be very selective about which people you use as role models and whose advice you take.

No matter how well-meaning or how much you might like a person, their experiences and lessons may simply not be relevant to the situation you are facing.

Not many people know what’s required to grow a company. So seek out the ones who do, and apply the appropriate discount to advice that others might offer.

In summary, if you take calculated risks, develop products and services that enable your customers and their customers to be successful, and you stay curious and practice selective learning, it will be difficult for your company not to rebound and grow.

Original article published in SmartCompany. Updated October 2022.

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