Stick Your Neck Out
“Damn the torpedoes--full speed ahead!”--David Glasgow Farragut, at the battle of Mobile Bay, Ala.
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“Risk management” is a popular business topic today. No executive wants to have bad things happen on his watch. The hordes of investors who have entered the stock market in the last few years expect ever increasing returns--no blips or hiccups.
But a no-risk strategy often can prove to be a no-win strategy on both a personal and organizational level.
“The avenue that many people take, which is to lay low and dodge all bullets, is precisely the opposite approach to what will get you identified as having leadership potential,” said Kathleen Reardon, professor of management at USC’s Marshall School of Business.
Companies that frown on taking risks, Reardon asserts, are quickly becoming dinosaurs.
Reardon cites new Coca-Cola Co. Chief Executive M. Douglas Ivester as an example of a dynamic, risk-taking executive. Not surprisingly, the man who groomed Ivester, late Coke chief Roberto C. Goizueta, was also known for taking risks.
In 1982, the recently appointed Goizueta had “reversed a century of tradition” by using the formerly sacrosanct Coke name for a diet drink to compete with Coca-Cola’s own Tab brand, according to Daniel Kehrer in “Doing Business Boldly” (Random House, 1989).
“Had Diet Coke been a failure, we would have extended the trademark to a failed product and would have in the process damaged Tab irreparably,” Goizueta told Kehrer.
Instead, Diet Coke took off like a rocket--conquering a commanding share of the exploding diet drink market.
One of Goizueta’s most infamous risks--the introduction of New Coke in 1995--demonstrates how even dicey decisions that are perceived as flame-outs in the short run can end up paying off.
One year shy of Coca-Cola’s 100th anniversary, Goizueta ordered bottlers not only to begin production of New Coke, but to stop producing the old version.
Why? Pepsi had been slowly eroding Coke’s market share for several years, and it would have been a slap in the face for Coke to be trailing Pepsi at its 100-year mark. Besides, consumer testing showed that people clearly preferred the taste of New Coke.
Even with such research in hand, it was a bold move. And when consumers rejected the reformulated product, it looked like a victory for rival Pepsi. “Coke blinked,” crowed PepsiCo President Roger Enrico.
Goizueta was made out to be a traitor to the American way of life for tampering with the Coke formula. He responded by putting Coca-Cola Classic back on shelves within 80 days.
The whole thing could be viewed as a fiasco, unless you take a closer look. Consumption of Coke brand drinks grew at 2 1/2 times the industry average in 1985. And within a year of New Coke’s introduction, Coca-Cola stock doubled after years of reliable but steady growth. Goizueta continued to preside over Coca-Cola with distinction until his death from cancer last year.
One lesson of this story? Even if a risk doesn’t pan out as hoped, it doesn’t have to be an absolute win or lose. Americans love a comeback story.
“We have a lot of respect in our culture for people--and companies--that make a comeback,” said Reardon. “Look at all the people who come back in Hollywood. It’s the same with Tylenol [after the 1980s poisoning scare], New Coke. . . . As a culture, we prize new starts, new beginnings.”
How does one gird oneself to take the plunge that any risk entails? Ken Kragen, a personal manager for recording artists and the organizer of such charity events as Hands Across America and We Are the World, says one simple element is crucial: passion.
“I try not to get involved with clients or activities that I’m not excited about,” Kragen said.
“With most things I’ve accomplished that were really significant, there was a moment where I could’ve thrown in the towel,” he said. Being passionate “is what makes you know you can get through those obstacles and get the thing done.”
Kragen says that the night before the 1985 We Are the World recording session to benefit relief efforts for Africa, the project almost collapsed because of ego-driven battles among the more than 40 recording stars, who included Bruce Springsteen, Willie Nelson, Stevie Wonder and Kragen client Kenny Rogers, and their handlers.
“I wasn’t going to stop the event,” Kragen recalled. “I said, ‘We’re still going to go ahead.’ . . . I had to gut it out at that point.”
The event had received so much advance publicity that failure to deliver the assembled star power would have been viewed as a fiasco.
Luckily for Kragen, Springsteen--at that time, arguably the most powerful of the event’s many stars--insisted that he would go forward no matter what. The other stars quickly came around, and the project came off successfully.
Kragen’s book “Life Is a Contact Sport” (William Morrow, 1994) outlines a 10-point strategy for career success.
Two that apply directly to Kragen’s experience--and to risk-taking in general--are maintaining enthusiasm and optimism and recognizing that “life is an opportunity--everything, even the negatives.” Viewed as part of this overall strategy, risk-taking can seem less daunting.
Still, many people remain risk-averse--especially women, says USC’s Reardon. Reardon, the author of “They Don’t Get It, Do They?: Closing the Communication Gap Between Women & Men in the Workplace” (Little, Brown & Co., 1995), said women often need to overcome a “fear of speaking up or contradicting.”
“Women are afraid they’ll be labeled,” she said. “But you’re going to be labeled anyway, so you might as well have some input.”
Reardon thinks women’s aversion to risk plays a significant role in their getting stuck in middle-management positions, rather than moving to the top of the corporate ladder.
For top executives, she recommends fostering an environment that encourages people to stick their necks out.
“People have to be rewarded [for taking a risk], even if they fail. People won’t take risks if they don’t have options,” Reardon said.
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Ken Kragen’s 10-Point Strategy for Career Success
1. The Event Strategy: Build your career by concentrating several events in a short period.
2. Creating a Personal Balance Sheet: Utilize your assets and minimize your liabilities for a clearer outlook on your life and career.
3. Backward Thinking: Create a road map to where you want to be by thinking backward.
4. Your Life Is Not Your Career: Your career is only a tool to use for a better life.
5. Optimism and Enthusiasm: Two vital keys to success.
6. Life Is a Contact Sport: Start developing your network today.
7. Life Is an Opportunity: Everything, even the negatives.
8. Absolute Honesty Is the Best Gimmick: Only it’s not a gimmick.
9. Timing Is Everything: When you do something is as important as what you do.
10. The Power of Giving: You truly get back more than you give.
Source: “Life Is a Contact Sport: Ten Great Career Strategies That Work.” (William Morrow, 1994)
