The Risk of Not Taking a Risk

​“The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” said Mark Zuckerberg, CEO of Facebook. Although risk is inevitable, there are some companies that still choose to not take a risk. This happens because a company is managed by humans who can experience an impact bias. Impact bias is a cognitive bias, is the tendency to overestimate the intensity or the duration of future emotions and states of feeling which can be positive or negative. In this case, the impact bisa will zoom in the fear of future uncertainty by taking a risk. Refers to what Zuckerberg said, a totally-risk-averse action is ironically a risky action.

​Like it or not, you can’t avoid risk. Two of the most common, misguided misconceptions about risk are: 1) you can be successful by simply avoiding it; and 2) if you make a big bet once, and it pays off, you’re all set. Both ideas, however, ignore a critical fact: the world continues to evolve whether you choose to participate or not. Just look at all the companies that chose to rest on their past successes, only to later declare bankruptcy. (Consider Kodak, Blockbuster, GM, and Sears, to name just a few.) The lesson: To remain relevant, you have to consistently take risks. If not, someone else will.

One of the most popular company that later goes down in history because they’re afraid of taking risks is Nokia. The mobile phone giant was really popular back in the 90’s for their mobile phone technology that fit well with everyone’s needs in those days. Peek of their market domination was in the early 2000s with the famous Nokia 3310, also known as the ‘brick’, for the reliability and indestructible features.

As time goes on, the mobile phone market keeps on rising, and the smartphone becomes more popular. Nokia’s refusal on evolving their mobile phone operating system became one of the factors of their downfall. Other companies such as Apple with their IOS and Samsung with their Android became the new leading players on the market. When Nokia began to eventually relent and adopt a better operating system after their bankruptcy, the market had already left them behind.

​There are many benefits of taking risks that a lot of people did not realize. The greatest benefit is by taking risks, we can achieve all the things we want that we couldn’t get if we didn’t. They open up opportunities that allow us to go further. Most people are afraid of taking risks because they are afraid of failure. However, the truth is, in every progress there is always a risk. As mentioned in the well-known theory, high-risk high return, to get the results we want, we must be brave enough to take high risks.

​Tesla is an example of a company that has been successfully taking a risk. Tesla’s journey to earn $721 million in 2020 is not that smooth. A few years ago, many analysts had criticized Tesla regarding its sales and operations. No wonder with those critics, the company still experienced $862 millions loss in 2019. However, Elon Musk, CEO of Tesla, can demonstrate brilliant strategies to break the boundaries and overcome the situation. one of the strategies that raise critics, but then actually become a successful strategy is closing retail stores and shifting to online-only sales strategy. There are many others companies that successfully taking a risk like Apple and Amazon. This indicates that taking a proper risk is a necessary thing to do for a company as it is a part of taking an opportunity. However, it doesn’t mean that a company carelessly takes a dangerous risk that it can’t handle. As Zuckerberg also said “When you do stuff well, you shouldn’t have to do big, crazy things, right?”

References:

Dans, E. (2021). Guess What? Everyone Was Wrong About Tesla. Retrieved 11 March 2021, from https://www.forbes.com/sites/enriquedans/2018/10/28/guess-what-everyone-was-wrong-about-tesla/?sh=7b2110ff3ca4

Impact Bias definition | Psychology Glossary | alleydog.com. (2021). Retrieved 11 March 2021, from https://www.alleydog.com/glossary/definition.php?term=Impact+Bias

Mark Zuckerberg: CEOs need to take risks, but shouldn’t have to do ‘big, crazy things’. (2021). Retrieved 11 March 2021, from https://www.businessinsider.com/facebook-ceo-mark-zuckerberg-on-taking-risks-2016-8?r=US&IR=T

Nationals, H., vaccinated, A., rising, M., Finland, R., roundup, C., & 2021, 5. et al. (2019). Whatever Happened to Nokia? The Rise and Decline of a Giant. Retrieved 11 March 2021, from https://www.helsinkitimes.fi/business/16809-whatever-happened-to-nokia-the-rise-and-decline-of-a-giant.html

Tesla Has First Profitable Year, but Competition Is Growing. (2021). Retrieved 11 March 2021, from https://www.nytimes.com/2021/01/27/business/tesla-earnings.html