According to research performed by Jim Collins, famous for his book “Good to Great”, the answer is NO. In his book “Great by Choice” (which I strongly recommend), Jim Collins highlights that great companies (by extension – the great entrepreneurs who built and run them over the period of his study) excelled at how they managed risk.
Here are some of the tips from his book, which we apply ourselves and share:
1.Understand your risk profile
It is important to understand the various risks that your business faces (labor/people, market, environmental, competition, financial, legal etc) and the implications of those risks on the success and very life of the business. Armed with this knowledge, you are able to determine your business’ tolerance for taking any risk and to monitor how long you have before the risk profile changes. This prevents surprises caused by the highly uncertain business environments we operate in (especially in Africa).
2. Shoot bullets before firing your limited canon balls
Starting a new business, introducing a new product or entering a new market can always be tricky. The research however showed that the great companies systematically validated their ideas on a small scale with minimal cost (shooting bullets). It was only after they were absolutely convinced with the results from these small scale test of market acceptance that they would commit resource and money to boldly launch (firing the canon).
3. Be a productive-paranoid freak
The study also showed that the great leaders never rested on their oars. They maintained a certain level of productive paranoia which tied with theirempirical creativity and fanatical discipline ensured that they left nothing to chance. They were actually more conservative in their approach to doing business than their not so successful competition.
ServLed touches on some of these concepts in our idea validation sessions. For those of you in Ghana, you may want to check outour training session on “Building a business model that is viable, sustainable and scalable.”
Author: Samuel Yeboah || CEO Mirepa Capital