This is another excerpt from chapter 2 of Moonwalking For Dentists. Email [email protected] if you’d like a free pdf of the full chapter or a copy of the book with a 25% discount.
The overriding driver behind making business, or indeed life decisions, is understanding and mitigating risk. Risk is not just the reason why people don’t do things; perversely, it’s also the reason why people do them – the gambler loves the adrenaline rush of rolling the dice or waiting for the next card; it’s the anticipation, the uncertainty, that drives them on to the next gamble or risk.
We are all risk takers to a greater or lesser degree, we all take risks every day, driving at 85 when the limit is 70, and we all get a bit of a rush when we take a chance and it sort of spices up life.
Strangely, not taking a risk can have a long term depressing effect on your life, creating an irritating merry go round of thoughts in your head when things go wrong or are flat in your life: why oh why did you not take that associate job in Sydney back in 2001? If you had done you would not be in this miserable NHS practice in Clapham on a rainy Tuesday afternoon in February with a waiting room bursting with ungrateful, dull, smelly patients…
Your attitude to risk shapes your whole life. I am not suggesting you have to take it to have a happy life, but you do have to take risks regularly if you wish to be an entrepreneur.
“Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do.” Mark Twain.
The first step to understanding risk is to objectively list all the implications of taking that risk. Start with the reason you are taking the risk in the first place: what is the objective?
Now list the consequences if it fails totally: the costs, the wasted energies, the impact on morale. Now – and this is the tricky bit – list all the unforeseen consequences associated with taking the risk.
Is it a big list? Great. You have now put yourself in a place where you manage or mitigate the risk because you have anticipated every single possible outcome or consequence. You are in control.
The next step is to build a remedy or a workaround for each of the possible outcomes. Yes, I know it’s tiresome, but I promise that you will end up feeling totally different about taking the risk, however large.
Realistically it would be highly unusual for a particular risk to be a total failure. The most likely scenario is that only 40 per cent of the expected new patients you have in your plan actually show up.
The bottom line is: do you want to play it safe and be a ‘Steady Eddy’ or do you want to take a chance and be remarkable?
Getting this bit right in your head is fundamental to your approach to your business. However entrepreneurial you are in character and behavioural style, if you don’t really want it you are going to struggle to achieve it. And, frankly, we need Steady Eddies – like the captain flying the plane to take you and your family on holiday.
Three: Continuous building and development
I found it difficult to come up with a better phrase, but continuous building and development describes the notion of taking various apparently unrelated elements or situations and creating something bigger.
The perfect illustration for this philosophy is Jeff Bezos, the guy who created Amazon. Bezos runs the world’s largest e-retailer, yet he did not invent the internet and e-retailing had already been invented by the time he came on the scene.
The reason behind Amazon’s success was not part of his plan – the business model was all about tax avoidance at first. In the US, online retailers don’t have to collect sales tax in states where they do not have a physical presence, which provided Amazon with a significant price advantage.
But Bezos was not going to stop there. When he happened to meet a guy who told him about predictive analytics, he thought he’d try making it work with his product, and this happened to be a stroke of genius.
As customers, we all love the idea of being offered yet another book on our obscure but favourite subject. As an e-retailer it’s the perfect differentiator that simultaneously makes the shopping experience memorable and turbo charges sales while at the same time engendering outstanding loyalty and lifetime customer value. It made Amazon take off.
The imperative of continually building provides ever more opportunities. It’s a bit like a practice opening at the weekend for emergency treatment and discovering there is a significant number of new patients that would really like and happily pay a premium to see the hygienist on a Sunday afternoon.
Four: Be happy about making mistakes
Get ready, you are going to make loads of mistakes in your business career. Running a practice is not an exact science. Think back to the 1980s and Sir Clive Sinclair’s C5, which sadly became the decade’s biggest laughing stock, or Coca Cola’s disastrous launch of ‘new’ Coke in 1985.
You will make loads of mistakes in your practice this year. Feeling the icy water of reality down your back – telling you the clever new pay plan with your star associate is not going to work for you – means you have to change it and fast, however painful.
The reality is that failing quickly is not really that bad, it’s inconvenient but you will get over it. Failing slowly is deadly and it’s bloody depressing. A simple tip is to always have a plan B and a C before you change things – if nothing else it will lift your confidence level.
Entrepreneurs make loads and loads of mistakes. They don’t get hung up by it, they just move on to the workaround or next idea swiftly – but they always learn.
Five: Learn quick
When things go wrong, take them apart quickly and work out what bit failed to perform. Did you fail to sell it in to the team? Did you misinterpret the patient’s needs? What was the failing component that brought the aircraft down? Equally, when things go right, what is the particular element that people really liked, and how can you develop it?
The entrepreneur learns quick, but always shares the results – good or bad – with the team in order to make the boat go faster.
Six: Respond to changes
From hero to zero in four years
In 2007 Nokia was at its peak and almost invincible. It was ‘the’ cool brand and had been for the previous 10 years. It had an estimated 32 per cent share of the global feature phone market where the margin averaged a robust 36 per cent. But Nokia failed to enter the smartphone market quick enough, leaving the space wide open. Apple and latterly the unstoppable power of Samsung rapidly filled the space and now dominate.
In 2012 Nokia finished the year with an 8.6 per cent share and a margin equivalent to 18 per cent. It has responded to the rapid change in the market with a range of great products but it was too late. Apple and Samsung had stolen the space so Nokia are now fighting a rearguard action and will be until the next significant mobile innovation disrupts the market, forcing change again.
Often as a company grows the sparks for innovation fade, or as the practice reaches its zenith (in the eyes of the owner) it fails to develop or take any risks by responding to marketplace opportunities, like a new pharmacy opening two doors down… How would the entrepreneur take advantage of that?
Seven: Work smart
Entrepreneurs are often gifted with a false sense that only they can perform tasks, only they have the ability to get things really right. Of course, this is completely bonkers and has a massive adverse impact on their effectiveness.
The 80/20 rule always applies. Typically 20 per cent of your activity generates 80 per cent of success – however success is determined.
Spending hours trying to make your diary sync between your laptop and desktop when the right person could achieve that in three minutes is daft when you could have spent the afternoon growing the business directly.
Be smart, know what you are good at, know what are you are bad at and play to your strengths. Carefully develop or recruit people that complement your strengths and mop up your weaknesses.
Work out when your most productive time slot is. Everybody has one, mine is between 6am and 11am – my productivity and ability to think diminishes rapidly after that time.
The entrepreneur above all else knows himself and treats himself as a machine, will always make sure he is in top condition both physically and mentally, and may often display a touch of hypochondria!
Building a business for me is the most exhilarating and rewarding sport imaginable, every day I feel like I am going to a new party.
The killer question is: How much do you want to do it emotionally? Here are some potential answers:
- A lot – I can lead a team and have my values and beliefs met on a daily basis.
- I want the success, but feel I’m going to have to learn a lot and get some support.
- I want it but I’m not sure I want the hassle. It’s kind of what’s expected of me though.
- I thought I wanted it but this has made me question the wisdom of going down that route. I’d be happy as an associate though.
- I’d rather not – it sounds like a lot of hard work and I’d rather be a scuba-diving instructor/chef/stay-at-home parent.