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Published 17 September 2012 13:09, Updated 18 September 2012 06:06
It is a painful lesson to learn. You are paid to take a risk, you give it your best shot but it doesn’t quite hit the mark. Then you discover you are the fall guy.
One Sydney executive, in his early 40s, was ruing the day he put up his hand to take on a new project for the IT company he worked for.
“I’m not going to get involved in something like that again because it damages your career,” he said to the director of MBA programs at the University of Sydney School of Business, Nick Wailes.
When the project was first scoped out, financial targets were applied – as a percentage return on capital invested – as if it was like any other part of the business.
“The project went well, but missed its financial targets,” Wailes says. “It illustrated to the business there was a new way to go to market with new things and get a greater share of the wallet but, within a short six-month period, it missed its financial targets and was killed off.”
Wailes says this was a classic case of an organisation not realising that you can’t automatically apply the same standards to a new risky venture. Such a misunderstanding can discourage people from looking for new opportunities.
Tough times are when companies need to start innovating out of trouble but the financial crisis has had a depressing effect on risk-taking, he says.
“People are less prepared to try new things and they are now more inclined to go for stock-standard, cost-cutting solutions. This is ironic; if ever you need a breakthrough solution to make the business more profitable, it is now.”
Wailes says risk has an image problem: “It is often a loaded term, because it has a pejorative aspect to it.”
The director of the University of Sydney’s innovation and enterprise program, Richard Seymour, says what is called “risk” is often better described as uncertainty or opportunity.
“It is not risk that entrepreneurs embrace, it is uncertainty,” he says. “They feel they can manage risk better than other people; they feel they can shape their future better.
Seymour says you can’t look at risk without understanding aversion to loss.
“If you are talking about losing your house and life savings, you will take a very different approach to risk than if you were just going to lose a summer internship or some work.”
Corporate coach Peter Black says people taking on risk need to prepare themselves. Often they can’t afford to take a risk with their careers because of their financial commitments. “They get trapped and they can’t afford to downsize their lifestyles,” he says.