Risk and Leadership in a Competitive Marketplace

Risk and Leadership in a Competitive Marketplace

Today's highly competitive marketplace requires that we continually move forward or face a downward spiral toward mediocrity. As a business leader, vice-president, manager, or supervisor the challenge to meet the competition and survive, demands we return to the fundamental principles of an entrepreneur's mindset. The entrepreneur, enthusiastic and idealistic, boldly faces the daunting task of creating a new business with a singular focus that sees nothing but opportunity. It is this mindset that frees one to explore boundless innovation and true creativity, the strength of entrepreneurship.

But operating in a corporate environment with its layers of bureaucracy, formalities and risk aversion presents a formidable obstacle in this quest. Add to this our natural urge for self-preservation and the fear of change and adoption of an entrepreneur's mindset within a large organization is a lot like moving mountains.

Yet, blending an entrepreneurial mindset into the framework of an established organization doesn't mean being a radical, an outlier, or non-conformist. What it does mean is we no longer avoid risk, we maintain a "play to win" attitude, and continue to push ourselves and those we manage forward.

I attribute my success in business to the never-ending willingness to embrace risk, not just when I launched a business, but every day thereafter. What I discovered was risk and opportunity were eternally connected and, in fact, soul mates. Every opportunity came with risk and the only way to keep my business moving forward, to meet the competitive challenge of a brutal marketplace, was to keep pursuing more opportunities. Thus, risk was essential for success.

However, human nature prevents us from fully accepting the idea that risk is a positive force to be embraced. Risk is seen as a negative consequence to a decision made, so our natural tendency is to avoid those decisions where uncertainty is present. Avoid risk and therefore avoid failure thus we have achieved a zero sum advantage - no cost for avoiding risk.

The reality is that risk avoidance is the greatest impediment to progress, personally and professionally. We have been conditioned for self-preservation and as a result, we can easily justify the mitigation of risk with well-worn excuses, such as "I didn't want to lose." Yet this is hardly a zero sum game. Avoiding risk means passing on opportunity and that is costly.

Opportunity, like time, is perishable. Miss an opportunity to move your business forward due to risk avoidance and a competitive advantage could be lost. The cost could be an erosion of market share, revenue, profit, employee flight, or the decline of your business. And when any of those things happen, the very thing you were afraid of�"the risk of losing�"has become a self-fulfilled prophecy.

A second human trait that prevents us from forward progress is loss aversion, our tendency to prefer avoiding losses rather than looking for gains. In fact a study by Amos Tversky and Daniel Kahneman concluded we get twice as much joy from not losing as we do from winning. [Choices, values, and frames. Kahneman, Daniel; Tversky, Amos American Psychologist, Vol 39(4), Apr 1984, 341-350.] That creates a "play NOT to lose" mentality where the objective is protection of one's position rather than a desire to embrace risk for the sake of opportunity. Loss aversion is easily demonstrated in the sports world by the team that changes their strategy once they get into the lead. Instead of continuing with the strategy that got them into the lead in the first place, they change, fearing the loss of the lead, and now are playing NOT to lose rather than playing to win.

Assimilating an entrepreneur's mindset into the corporate world, with its varying degrees of autonomy, requires the individual to change, not the corporation. The best way to promote entrepreneurial change within a large organization is by leading with example. Some organizations require evolution rather than revolution, but when you can deliver success they all do acknowledge its source. It's also important to understand that having an entrepreneur's mindset does not mean we are unstructured or impulsive with our strategy. An entrepreneur does instead of talking about doing, they have an "I want to win" attitude, and are willing to embrace risk for opportunity.

By accepting risk as simply the cost of opportunity and maintaining a play to win attitude, the foundation for a new formula of leadership is formed and change can begin. In a later article I will outline my Framework for Success, which is key in helping you to comfortably embrace risk. Additionally in subsequent articles I will cover how to recognize a risk aversion situation, and what you can do to comfortably embrace risk when your self-protective mind is telling you otherwise. Our next installment will focus on the Essential Risks necessary for success, Decision and Change.

Tom's Bio
Tom has enjoyed a thirty-year entrepreneurial career as cofounder of two successful direct marketing companies. As a result, he can give a true perspective on starting and running a small business. His practical approach to business concepts and leadership is grounded in the belief that success is the result of a commitment to embracing risk as a way to ensure opportunity.

In 1983 he cofounded Direct Mail Express (DME) in Daytona Beach, Florida, with his siblings Mike and Kathy. DME has always been on the leading edge of marketing technology and is still recognized as an industry leader in personalized digital marketing.

As CEO of spin-off RME in Tampa, Florida, Tom headed a company that created the most effective lead-generation program in the financial services industry. RME revolutionized financial services marketing with its Seminar Success program, a marketing system that has created billions in sales for their clients.

Originally from Rochester, New York, and a 1980 graduate of St. Bonaventure University, Tom has always been involved in athletic competition. With his father, Mauro, being a successful basketball coach, that game has always played an important role in Tom's development. He was also a member of the St. Bonaventure varsity soccer team.

Today Tom lives in Tampa with his wife, Shemi. When he's not speaking or advising entrepreneurs and small businesses, he's spending time with his family - his four daughters, Ashley, Christine, Elizabeth, and Melara.

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