Without risk, there is no reward. This was evident recently when I toured a potential business acquisition with a couple of my partners, Jamie and Thad.
With more than 50 years of history, this company was known for its thriving business and innovative ideas. But not anymore. As we explored its operations, it became evident that the original visionary spirit had disappeared.
At some point in the company’s history, new owners took over and were complacent by failing to take risks. As a result, the business lost its edge, and it is now in a situation where saving it is likely impossible.
Walking the factory floors, we encountered dedicated employees with decades of service. It was apparent they had no idea the company was facing foreclosure, and they would soon be unemployed. Witnessing the impending fate of this business and its workers was truly heart-wrenching.
Later that evening, Jamie, Thad, and I talked about the necessity of thinking big to ensure our own survival. We discussed the importance of surpassing local boundaries and thinking beyond the confines of our current workplaces in Ohio, West Virginia, and Colorado. We concluded that without taking risks and pushing the limits, we were in danger of mirroring the struggling company we had just evaluated purchasing.
We also reflected on how far our companies have come over the last 40 years. I shared with them how I got my start. In my twenties, I was trying to get a business off the ground while laying block every day and living in a 14×70 mobile home. Jamie pointed out that had I never taken the risk to step away from the job site to focus on growing the business, I would still be living in a trailer, and we would not be in the position to purchase a company from those who have failed to take risks.
He reminded me that EZG and the manufacturing business would not be what it is today had I not taken risks. There is no doubt that it would have been simpler to maintain the status quo after I invented the Grout Hog.
Of course, we would still be running the business out of that old 30×40 garage next to where my mobile home used to be. My vision to do greater things pushed us to keep inventing more equipment, and today the company is housed in huge plants and thriving.
I have been listening to the biography of Elon Musk by Walter Isaacson. Although I do not agree with many of Musk’s people management techniques, it is hard to question the methods of the richest man in the world simply because that is how he got to where he is today.
One thing that stands out prominently is his stance on gambling the odds when it comes to making the world a better place. He has a reputation for taking significant risks by making quick decisions and living with the consequences.
When questioned why he has made so many mistakes, he explained that 20% of his decisions will be wrong, but it is necessary to make decisions quickly to test the consequences, or the companies will not move forward. His methods are bold, but when you look at what he has accomplished, they are obviously effective.
Some of his lessons that I find valuable:
- All technical managers must have hands-on experience. This assures they not only understand the method but also have evidence-based knowledge. Musk says without experience you are like a cavalry leader who cannot ride a horse or a general who cannot use a sword.
- It is okay to be wrong, just do not be confident and wrong. Taking risks demands confidence, but the moment you realize you are wrong, just admit it.
- Never ask your team to do something you are not willing to do yourself. If you are challenging them to take risks, you better be taking them yourself.
- Whenever there are problems to solve, do not just meet with your managers, meet with your managers’ teams to find the solution. I have always subscribed to this principle because those on the front lines are usually the best source for knowing where the real issues lie.
- When hiring, look for the people with the right attitude. In Musk’s words, “Skills can be taught. Attitude changes require a brain transplant.”
- You must have a high tolerance for pain to run a business. If you do not, stay out. In business, there are going to be good and bad times. If you have a high tolerance, when things get tough, you will not succumb to the pain and will likely come out the other side even stronger.
- Everyone who has changed the world for the better has done so by taking significant risks. I consider this a universal truth. Change demands risk. To remind myself of it every day, this quote from the late Steve Jobs of Apple hangs prominently on my office wall: “Only those who are crazy enough to believe they can change the world are the ones that do.”
While I recognize Musk is a visionary and a tremendous leader, as I mentioned earlier, I do not agree with everything he does. In particular, he warns against camaraderie in the workplace. He claims it makes it difficult for people to challenge each other’s work and that opportunities are missed because people do not want to gain personal advantage at the expense of a friend. I believe businesses are built with relationships. To eliminate them would decimate growth and new opportunities.
Personally, I would count Musk’s opinion on this topic among the 20% of his decisions that were mistakes. I wonder where he would be if he had built his companies in harmony with his teams instead of unjustly firing some of those who gave their heart and soul to help him. I would be willing to bet he would be in an even better position financially and mentally.
How is your business? Has innovation died and is foreclosure knocking on your door? What risks have you taken in an effort to change the world?
If you stop challenging yourself to achieve more and to pursue greater opportunities, you are missing the point of being a leader. The foundation of business stands on innovation, and that does not happen without risk.
