Your client or customer hired your company based on your reputation or performance. They are eager to grow, defend or take market share from their competitors and yet, every time you suggest a product strategy or marketing campaign, they hesitate to make a decision. Why? It could be that they do not understand the “risk strategy” associated with making the decision. The absolute risk/reward is not clear. Or perhaps you are working with managers that avoid all risk; in that case you are in trouble. Think Blockbuster going out of business kind of trouble.
No client has ever moved their business forward without taking some risk. You do have to understand a company’s culture as it pertains to risk. Everything depends on the company’s appetite for it. Unfortunately, many companies have never developed a risk strategy plan. Formulating such a strategy is one of the most important things you can do to help a company take calculated risks. A good risk strategy makes clear the types of risks the company can assume to its own advantage or is willing to assume, the magnitude of the consequences and the possible impacts to the business. Here are some thought starters to perhaps building a risk strategy plan for your client.
What will not changing cost? While changing may feel risky, not changing is risky too. It’s important for you to clearly communicate the cost of not changing whether that is introducing new products, a new marketing campaign, a new division or a massive pivot in face of competition. Clearly communicating the costs of not taking a calculated risk, with the pros and cons, is something you should be able to articulate to your client. Don’t sell it, explain it. And back it up with quantifiable research.
Make risk reasonable. You don’t need to convince your clients to drive to Las Vegas and bet on black. While that may seem thrilling, you can’t ask a client to risk their $50 million company on that kind of strategy. First, take small reasonable risks with your client, getting small wins and building the relationship of trust. You should also have a risk contingency plan which clearly shows how you can mitigate the risk should things not go as planned.
Don’t risk more than the client can lose. It’s easy to want to take risks when you personally have nothing to lose. But what if your recommendation goes badly? Will it get your client sponsor fired or demoted? You need to understand not just the companies risk but the actual risk to the person you are working with at that company. Again, do the homework and research to mitigate the risk. If you can take a big step, instead take a small one first. Then build on the success or failure of that step.
Evaluate the potential options or outcomes. Failure to take risks in life and work leads to stagnation and inhibited growth. To overcome a client’s aversion to risk, lead them through an exercise of the worst-case scenario. Next, work with the client to make a list of potential benefits, and rate the possibilities. Then ask the client to rate the negative consequences of not taking any action. Rating the potential downsides of doing nothing and the potential upsides of taking decisive action are often quite compelling.
Normalize fear and risk. Do little things first. The final step in getting more comfortable with taking risks in business to feel the fear of uncertainty and do it anyway. But you mitigate your risk failure by doing seriously good research and understanding the cost of the risk. The more you take small risks and succeed, the more comfortable you’ll become at taking them. The same is true with failing at taking risks. Once you overcome one failure it becomes easier to overcome others. A company cannot progress without taking some risks. The perfect company is one where calculated risk is part of the culture and employees are recognized for success or failure.
Create an open relationship from the start. If you acquired a new account or business, great. Take the time at the beginning of the relationship to build honest trust. That means making recommendations, that at times, will not help your company but will help your client. If you consistently put your clients needs first, they will see that and respect you, perhaps even trust you. Once you develop a relationship on trust, then you can really begin to do great work together.