Be Revolutionary – Not Evolutionary

I read the following  from Joe Magnacca, CEO at Massage Envy, with great interest, and I wanted to share it with the KCS readership.

Taking strategic risks could be your best business bet

I’ll be the first to tell you that taking risks can be scary, whether it’s rebuilding a brand or embracing a new business model. But it’s vital to success in business.

 Obviously, there is no formula for risk-taking, because every business, budget and leader is different.  But, there are successful ways to take risks.

 Be Revolutionary – Not Evolutionary

Risk is not just about embracing change, but having the courage to create it. I’ve found that people tend to understand that change needs to happen. For some leaders though, they are naturally risk-adverse, so they are challenged to drive the necessary change.

Being a catalyst for change means that you need to consider what happens to your business or a category in the next year and then three years from now and then five years from now.  Having a vision of how the future of your business needs to look plus a willingness to take necessarily risks will allow you to implement change that will pay off in the future.

 Do Not Fear Failure – But Prepare for It

Asking, “What’s the worst that can happen?” is a vital first step in evaluating risk. But it’s not a question to ask only in a rhetorical sense. 

You actually need to consider all the contingencies and plan for what could happen. At the same time, you should also be planning for how to quickly scale your idea if it proves successful. I remember telling a previous team that the result of a risk was either going to put them in a position of affording a private jet – or they would be looking for a job. There’s nothing wrong with taking a flying leap. But just in case, have a parachute to fall back on.

 Give Teams Permission to Think

A critical part of business risk-taking is giving your teams the confidence to think less traditionally.

Innovation is what encourages and grows people, so set the example of giving your team room to think outside of the box. 

 I don’t fight innovation, whether it comes from a change in technology, customer experiences or the services we provide. And that’s a huge motivator for employees when they know ideas – good, bad or ugly – have a fighting chance.

 Taking risks will force you to become more creative, inventive and calculating than you ever imagined you’d be. But to see your brand come out on the other side, hopefully stronger, streamlined and more focused than ever before, makes it all worth it. (thank you, Joe)

How many plan sponsors continue to “tinker” with their ROA, moving in quarter point increments? How has that worked out? Have funded ratios improved? Contribution costs fallen? We would hazard a guess that incremental change has brought very little reward for the considerable effort put forth. Stop tinkering!

KCS has for years been talking about making asset allocation decisions based on the funded ratio and a plan’s liabilities, not on the ROA.  It may be revolutionary to what has been done within the asset consulting business for years, but what do you have to lose? We’ve already seen substantial harm done to DB plans by inaction. Now is the time to try a different path.  Let us help you improve your funded ratio, stabilize your fund’s contribution costs, and improve the long-term viability of your plan.  Your beneficiaries can’t afford another shock to their plan.


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