Frozen in the headlights

 

headlightsA while ago, I was talking to a CEO who related a conversation he had had with his store manager.  The Store Manager had asked him for some funds to revamp his tired store frontage.  The CEO replied by giving his approval provided that he raised sales by 5% over the next six months.  The Store Manager never got his money.

Recently during a discussion about whether to recruit another sales person to the sales team, one of the directors said that he would approve it only after the current staff gained an extra $200,000 in unexpected sales.  That firm is still deliberating on what to do.

Both men were risk averse.  Inaction can seem like the safe option.  If no investment was made, then there is no loss, right?  Wrong.  What is lost is the opportunity cost.  As Nobel Prize-winning psychologist Daniel Kahneman has written, “For most people, the fear of losing $100 is more intense than the hope of gaining $150. We concluded from many such observations that ‘losses loom larger than gains’ and that people are loss averse.”

Growth can only come from investment.  You have to make your luck.  Making that luck will take investment in time, preparation, visiting potential clients, raising awareness of your firm’s products and services, conceiving new marketing programmes, developing new ways to broaden your product line, training staff, building better gateways for clients and customers to engage with you, learning to win more times than losing.  As they say, the harder I work, the luckier I get.  Nothing will change unless you change what you do.  If you want to swim, you have to let go of the side of the pool.

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