Earlier this year, I read something coming out of the defense industry that has a much wider application. (https://www.defensetech.org/2017/02/17/special-operations/ ) The article is entitled, “Executive to Military: Be Like SOCOM and Bet on the Little Guy,” and it raises the perennial issue of staying with the so-called tried and true vs. taking a strategic risk on a new idea or product.
Today I read something coming out of the defense industry that has a much wider application. (https://www.defensetech.org/2017/02/17/special-operations/ ) The article is entitled, “Executive to Military: Be Like SOCOM and Bet on the Little Guy,” and it raises the perennial issue of staying with the so-called tried and true vs. taking a strategic risk on a new idea or product.
James “Hondo” Geurts, the top weapons buyer for U.S. Special Operations Command, says that taking risks on fledgling defense companies is sometimes the only way to get the right gear to operators in months instead of years.
Using a blackjack analogy Geurts argues that “If I can place 100 more bets than you, I don’t have to succeed every time. I may only have to succeed 10 percent of the time, and if you can only place five bets, I’m always going to beat you,” Geurts told an audience at the National Defense Industrial Association’s Special Operations/Low-Intensity Conflict Symposium.
“We are not always about taking the lowest-risk approach. There are times when we need to press the envelope.”
Being risk-averse indicates a fear of failure as well as simultaneously stifling innovation. Today, what is needed is the ability to take “strategic risks”, risks grounded in hard research and in knowing “the basics” of your current and future needs.
In my new book, Make Your Own Waves: The Surfers Rules for Innovators and Entrepreneurs (http://www.louispatler.com/books/), I take a close look at some of the most extreme of the strategic risk takers I have encountered, Big Wave surfers. In attempting to ride 30-60 foot waves that are literally life-threatening, Big Wave surfers start with the basics. The first chapter, “Learn to Swim”, addresses these issues by looking at what comes before the start up, the invention or new product.
Many would-be entrepreneurs face incredible self-imposed barriers to entry that they can avoid by taking the simplest of first steps. Basic research, networking and prototyping are essential. Without those first baby steps their dreams were at risk.
Nine out of ten start ups fail, and in my research and experience 9 out of 10 times they fail because they try to bypass the basics. In the beginning, there was work to be done on three levels…the mindset, the skillset and the toolset. The right mindset gives them the strategies and ideas. The useful skillset gets them moving towards implementation. And the last but very important toolset helps the innovator/entrepreneur refine and execute. Taken together they are like three legs of a stool; they create certain stability.
Jeff Amerine is a successful entrepreneur many times over. Based in Northwest Arkansas, for 25 years he has been involved in the investor community as well. So Jeff knows both sides of the equation. He and I have done TV interviews and podcasts together focusing on innovation and entrepreneurship because we share the same desire and perspective: hard work and good preparation make success much more likely. Most recently Jeff has created Startup Junkie, a consulting practice that coaches, mentors, and advises startups regarding venture finance, business model validation and growth strategies—the entrepreneurial equivalent of learning to swim.
Too often, impatience foreshadows the demise of an endeavor. And too often risk-aversion might keep a large corporation from placing their bet on the little guy.
Hard work plays a part as good things come to those who prepare and who wait for the right time and conditions. In business as it surfing, when the smaller innovative and progressive company beckons to be ridden, it could be the right time to give the wave a go.
My next blog will discuss this further.