As I write this, the economy has been in a slump for nearly three years, depending on how you define the downturn. In response, companies have slashed costs and lowered investment in an attempt to weather the storm. Considering the current environment, this chapter is as timely as ever—for I believe that in downturns and difficult times, CEOs and other organizational leaders must continue to push their tolerance for risk. Fred Smith founded FedEx in one of the worst economic periods since the Depression; Compaq was launched in 1982 amid a recession; and Wal-Mart opened a record number of stores during the 1991–92 recession.
In a Business 2.0 piece, Gary Hamel and Erick Schoenfeld argue for the need for continued innovation in difficult times. They observe that cost cutting and innovation avoidance in economic downturns only make companies "smaller, not better." Innovation, combined with courage and prudent investment, will position the leading companies of the future:
In the midst of hunkering down, we need to remind ourselves that we are still living in a world pregnant with possibility. The hard times will end. Billions of dollars in new wealth will be created. Focus too much on retrenchment, and your company will emerge from the downturn weakened, diffident and uncertain of the future. Manage this period well, and your company will emerge lithe, impassioned, and raring to go. Those who beat the bear will be ready to ride the next bull.
It's true that fear makes us more risk averse, and that some reckless CEOs have given risk taking a bad name. However, members of Accountable Organizations understand that, even during tough times, they need to embrace educated, responsible risk taking to ensure the growth and prosperity of their companies, as well as the advancement of their careers. These risk takers are creative, courageous, and conscientious—they have the faith and will to follow their passion, and they do their homework. When you make it your mission to be the vanguard, you put your company on the cutting edge.
BUILDING THE ACCOUNTABLE ORGANIZATION
Gary Hamel and Erick Schoenfeld, "Why It's Time to Take a Risk," Business 2.0 (April 2003): 63–68.