I was really looking forward to reading the Deloitte report on the lack of courage in Canadian business. After all, the report was provocatively titled “The Future Belongs to the Bold / Canada needs more courage”. Wow! Right up my alley.
The idea of a 38 billion dollar global accounting firm commenting on something as raw and real as courage is seductive. And I loved their report called Scaling Edges ). So I lit the hearth, poured a wee dram, and settled in for a good read.
Boy was I disappointed.
Between the scolding, paternal tone, the high-school grammar and phrasing, and a looping repetitive structure that results in a document 3 times longer than it needs to be, it was a struggle to finish. Thank goodness for whisky.
But the real fail is in the logic. While there are a couple of valid points, Deloitte has created a document failing to show a causal relationship between the performance of Canadian business and a lack of courage. I got to the end of the document asking myself “What the heck are you actually trying to say here?”
One problem is in definitions. The authors ask:
“How do we define courage? What does it mean to be courageous?”
Exactly the question. And the answer?
“There’s no single answer, but over the years a consensus has emerged around the traits that are integral to the idea of courage.”
Spot it? Yep. That tool of the political and corporate writer: the passive voice.
Apparently a consensus on the meaning of courage supporting Deloitte's report sprouted organically ("has emerged") like the very acorn of truth. The passive voice, for any thoughtful reader, acts like bright colours on a poisonous plant or insect: a signal of danger. Someone is hiding something.
While the article as an entirety was weak, there were some good points raised. First among them is the discussion of risk; the appetite for risk.There are no guarantees
"In a world that's changing so quickly, the biggest risk you can take is not taking any risk." Mark Zuckerberg
Unlike the authors of the Deloitte report, I won’t speak to Canadian business owners being more or less risk-averse than Americans or anyone else. Almost every piece of writing on the appetite for risk in different countries is subjective or vague when it comes to the evidence. As in the Deloitte report, the fuzziness starts with the terms themselves. What do courage and risk-aversion mean in a business context?
Differences in Research and Development (R&D) investment come up. American business owners do seem to invest more in this area than Canadian owners. Both government and private R&D investment levels have Canada near the bottom of the OECD (Canada is falling behind global leaders in R&D).
Beyond that limited metric, international comparisons are often vague, logically weak, often comparing apples and oranges.
I can best speak to my own subjective experience. Both as a business professional and a consumer it is my experience many business owners are often reluctant to move forwards when the odds are anything less than a guarantee of success.
A couple of years ago I facilitated a series of sectoral roundtables for a mid-sized BC city. One of the sectors we spent the morning with was main street retail. It was it depressing. We spent the morning listening to complaints about employees, competitors, suppliers, the government (every level), even customers.
It was customers that took the biggest hit: why don’t they shop local? Why do they buy online? Why don’t they support us?
When the 4 facilitators and advisors in the room tried to suggest the business owners look forward, take some chances, and start investing in some new technologies, some new ways of thinking, they weren’t buying.
Change was risky and blame is safe.
We can’t grow without risk. We can’t guarantee new recruiting and people management strategies will grow our businesses. We can’t guarantee reshaping your business model or exploring new markets will grow our businesses. We can’t guarantee investing in social marketing, app-based customer support, or an eCommerce platform will grow our businesses.
We can guarantee if we don’t take those risks our businesses will stagnate or fail.
Competitors will delight our customers with better trained staff. Growth will stall out because we are working in a saturated market or one that is moving on. Customers will look us up online, but unable to buy something or even find our hours of business, move on.
Meaningful growth and meaningful risk are positively correlated in business, as they are in life.
A meaningful risk is one taken intentionally; for a purpose. It is meaningful when we know if we don’t take it, we may miss an opportunity for growth. It is meaningful when we know what the possible costs are but take the risk anyway. Romantic relationships, travel experiences, expanding our tastes in food or drink, spiritual or emotional growth, or growing our businesses beyond mere self-employment; none of this is possible without meaningful risks.
“...recognize that there are times when you can’t put a toe in the water; you have to leap in with both feet. You have to say, “This is going to be expensive—and that means we’re going to have to make it work.”... It’s the institutional yes.” Jeff Bezos in Harvard Business Review
Drawing on my background in the performing arts I use theatre improv games in workshops. They are a powerful way to teach communication and teamwork skills. The first of my four rules for any workshop is “Always say yes.”
Improv is about working together to create a story in real time without a safety net. Sound like business?
If SME (Small to Medium Enterprise) businesses, Canadian or otherwise, want to grow, they are going to have to take risks. They are going to have to say “Yes” at times when it feels like saying no is the safe thing to do.
Like courage, ‘risk’ is a big idea. It is a concept, not a sandwich or a widget or an app. Courage and risk are the words we use when we are changing the world, when we are engaged in real and meaningful growth. They are the blue sky of tomorrow. To get there we have to lay miles of pavement.
Here are three pavement-level areas business owners need to say “yes” a lot more often than they do now.
- Investing in talent. You don’t grow a business without talent. Systems matter greatly, but talent comes first. For business owners this means recruiting talent before we think we can afford it. When it still feels risky. Without talent there is no delegation. And without delegation there is no way to get out of the engine room working in the business and up to the wheelhouse to work on the business.
- Investing in new markets. The myth that Canadian SME’s export less than their American counterparts is just that: a myth. 4% of American SME’s export their goods. But that’s not to say there isn’t a ‘risk gap’ here. That gap is between the two ends of the SME spectrum, not between two countries. 7% of micro SMEs export. 34% of medium SMEs export.We can’t grow a business without growing market share and your overall market footprint. Online and export sales are central to success here. 1 in 5 Canadian SMEs still have no eCommerce channels at all. Not every business is a perfect fit for online sales, but a 20% non-participation rate is simply too high. In speaking with the bricks and mortar retail sector the constant refrain we have heard is owners are unwilling to take the risk on investing in eCommerce capacity including the development, staffing, and logistics required. The sentiment we heard was “How do I know it’s going to work? Unless you can prove to me it’s guaranteed to work, I’m not taking the risk.” Fine. Keep complaining about those big bad online retailers and your disloyal customers who shop with them in relentlessly growing numbers. This is the Zuckerberg quote about failing to take a risk in a constantly changing world, played out perfectly.
A Risk Roadmap
The conversation around meaningful risk hinges on timing more than any other element. The questions: “When is the right time? How do I know when to jump?” are at the heart of every conversation about risk.
"At the right time (but probably sooner than you think)."
More often than not the question that should be asked is not “Do I have the resources to survive if this risk fails?” But “Do I have the resources to deliver if this succeeds?”.
Sometimes conditions are not right for a risky investment. In my experience however this is true a fraction of the time business owners think it is. “Not ready” is far more often a rationalization than a useful position.
How do you know the time is right (or not)? Three simple tactics do the trick.
- Listen to yourself. If you find yourself saying to yourself anything like “We’re ready to try this but...” there is a good chance you may be ducking reasonable risk. “I just want things to settle down a bit.” “I just want to make sure things stay good a little bit longer.” If you are almost ready you are probably ready. If you will be ready next week you are probably ready today. Turn off the voices and jump.
- Follow Dr. Apgar. In 1953 Dr. Virginia Apgar formalized a test with 5 simple variables and 3 simple scores (0, 1, 2) that transformed forever infant mortality rates. No big data, no regression analysis, nothing fancy. When assessing a risk create a simple test: 5 or 6 independent traits or variables each with a simple 1 - 5 scale. Decide on your appetite for risk in advance: is a ‘go’ a 5 or a 4? Then score your variables and average the results. Don’t second-guess the answer. 4.5? Go. 3.5? Stop. Read Daniel Kahneman’s Thinking Fast and Slow for more.
- Get an outside perspective on your decision-making process. Write up your rationale for taking a risk (or not) and type up a copy of your simple check-list. Share it all with someone you trust who has no direct investment in your decision. This person’s job is not to evaluate the risk you are considering; it is to evaluate the processes and inputs you are using to assess the risk. Are you asking the right questions? Did you use the right variables in your simple test? Is there anything obvious you missed? We are trying to figure out if you asked the right questions, not if you got the right answer. If you have faithfully executed tactics 1 & 2, and your outsider has agreed you, as the expert, seem to have asked the right questions, you will know your answer.
We know growth eats resources. We know growth requires taking chances. What we too often fail to acknowledge is our relationship with risk. While I can't prove one country or another lacks 'business courage' collectively, I can vouch for the truth that growth does require the courage of risky decisions.
Clemens Rettich is the retired Principal of The Great Performances Group, and a Senior Manager, Business Consulting, for Grant Thornton LLP. The opinions in this article are Clemens' and not necessarily those of The Great Performances Group or Grant Thornton LLP.