Playing It Safe – The Enemy Of Business Growth

It’s pretty much universally agreed that taking too much risk is a bad thing.Playing it safe and avoiding risk could impede your company's growth

That doesn’t, however, seem to prevent business owners and their management teams continuing to do it.

When large, publicly-listed companies – e.g. Lehman – do it, the results make headlines. When smaller, privately-owned, companies do it, the results are the same but they’re buried in the business bankruptcy figures.

So you would think that being cautious where risk is concerned must be a good thing.

And it is – but only to a point.

Extremes of anything are bad. And taking too little risk – or avoiding risk completely – is no exception.

Another way to describe taking too little risk is “playing it safe”.

The danger with playing it safe when things are going well is that for a long time – it could be years or even decades – it gives the appearance of being sensible.

The results are good, better still they’re consistently good. It’s human nature to begin to enjoy – and expect – the lifestyle that good results brings. Why would anyone risk losing that?

But taking too little, or no, risk is a slow, steady killer. Ever present but never visible, it’s another example of the boiling frog syndrome. A danger that’s so easy to ignore.

Then, when revenues and the bottom line begin their inevitable decline, owners and management teams often do the wrong things.

They reach for quick fixes to restore the status quo. Let’s train the sales guys. Let’s get a marketing campaign going. But that doesn’t work.

What does work is understanding that the status quo has gone. What does work is challenging what the business does and for whom.

Arguably, leaders are paid to do that on an ongoing basis. Even – in fact particularly – when things are going well.

The company now has to take risks. And, depending on what its financial landscape looks like, it may have to take big risks. It is undoubtedly in for a lengthy period of adjustment during which the results will not be consistently good.

So how do business owners, division heads and their management teams avoid this?

It sounds simple enough. Continuously challenge the temptation to play it safe.

Even when things are going well, ask tough and thoughtful questions. “What will happen if we lose 1 or 2 major customers tomorrow?” or “What if the competition finds a way to reduce costs by 30%?” Just because the likelihood of something happening is low, don’t overlook the impact if it does.

Then encourage everyone else to ask tough and thoughtful questions about how and why they do things.

Make thinking critically and taking risks the norm. It’s better for companies to take well-considered, relatively small risks, which go wrong than to become, and remain, complacent.

Read about how one CEO went about it here.


If you enjoyed this post you’ll also enjoy Strategy, Productive Paranoia and Boiling Frogs.

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Tags: ask tough questions, business owners, challenge temptation to play it safe, division heads, execution, growth, Jim Stewart, management teams, Planning, playing it safe, ProfitPATH, strategy, taking risks


  1. Lisa says:

    This is a timely post! As part of looking ahead to next year I have been wrestling with the exact issue of how much risk to take — or how bold a plan to set. The article is a good reminder that my view as a business owner may not be objective and that failing to step slightly out of the comfort zone might very well be the thing that keeps the company from growing.

  2. Jim Stewart says:

    Lisa, thanks for sharing your experience. Jim

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