Wednesday, January 8, 2014

Nothing to Lose

Huge success stories often involve bold moves. This is the case with individuals as well as organization. How many of the most successful entrepreneurs dropped out of a prestigious university to pursue their vision? Or invested their last penny, and then some, into their company? The same happens with companies, which sometimes put their entire future on the line to pursue a risky strategy.

These bold bets are much easier to make when you have "nothing to lose". Dropping out of Harvard, Stanford or MIT is certainly bold, yet compare that with the challenge faced by someone with a "steady job", spouse, kids and a mortgage. If this person leaves his job for a start-up that fails, he might lose his house and have to relocate his family. In other words, he has a lot more to lose (at least on the surface). Same goes for companies: a small company that "bets the farm" on a new product might go under, but compare that with a multi-billion dollar corporation with thousands of employees and shareholders. The later has a lot more downside.

The reality is of course more complicated than this. A large corporation might have a lot to lose if a bold bet goes wrong, yet it might also have a lot to lose if they don't innovate and evolve (just take a look at Kodak). Same goes for an individual, who might end up very unhappy if their corporate job is not satisfying - or goes away. A few takeaways I shared with the boys:

- Take advantage of situations in which you have nothing to lose. Say you take a risky job after college and it doesn't work out? Well, you just go get another job!
- Recognize that that you, or your organization, has an advantage over those who have a lot to lose - and hence behave conservatively. Having nothing to lose is a huge competitive advantage.
- If you, or your organization, does have a lot to lose, remember that "playing it safe" is not without risks. The risks tend to be longer term ones, but not less serious. Enduring organizations often reinvent themselves with bold moves and great "risks".

1 comment:

semilshah said...

Hi Ariel, I've been reading your blog for while, I'd love to meet. I'm in Palo Alto, my email is here: