MPW Insider is an online community where the biggest names in business and beyond answer timely career and leadership questions. Today’s answer for: Why is it important for women to take risks in business? is written by Adena Friedman, president of Nasdaq.
You can’t be successful in business without taking risks. It’s really that simple. New products, new markets, new investors and new ways of doing things are the lifeblood of growth. And while each innovation carries potential risk, businesses that don’t innovate will eventually diminish.
By definition, risk exposes businesses to danger. A new product may fail, a new market may not welcome your entry, and new investors or clients may lose interest. The approach to risk taking and the appetite for risk is often debated within industry sectors and across corporate cultures, and now the debate has moved to gender. Are risk-taking and risk-aversion gender traits? At least once a year, some distinguished business publication or another shares research that supports the notion that women are more risk-averse than men – by evaluating women on whether they are more likely to gamble and embark on risky activities.
I’ve never been entirely sure what this research actually tells us, but couldn’t the interpretation of the statistics indicate that women calculate risk more carefully and more judiciously, and isn’t that a good thing? When I assess my own approach to risk-taking, I have to consider my life experiences and how they inform and shape my decisions. Because I had children early on in my career, perhaps motherhood had an impact on me. As a mother, it would be tempting — or at least would create fewer “debates” in the home — to say ‘yes’ to every risky thing my kids propose. At the same time, children must learn to take measured risks, and as a mother I can’t keep them home all day in fear that something could go wrong. So it’s a balancing act, as we measure each “proposal,” we gather information, predict potential outcomes, weigh the consequences and make a decision to take the risk, or not.
The same concept applies in business where women tend to gather more facts when assessing opportunities and risks. We research more thoroughly, including probing how the business can extricate itself if failure occurs. So if anything, a women’s tendency to measure risk, to examine the possibilities, and to take the time to calculate potential costs and benefits before taking the big plunge of committing shareholder capital, should be something to be celebrated and replicated.
That said, we have to fight the tendency to focus all of the attention on the risk associated with a new initiative, venture or investment. We have to balance our view of risk with excitement about the potential reward. Because the rush that comes with success with launching a new product or entering a new market or completing a key acquisition, is almost indescribable. Having the courage to take the risk is a reward in its self. It can be infectious and create a culture of success and excitement throughout the company, resulting in a sense of pride among the employees. It just can’t become so intoxicating that it causes the leadership to forget the discipline that created their success in the first place. Risk measurement upfront and management throughout are key ingredients to successful risk taking.
Here at Nasdaq, we are always mindful of the impact of our work on the economy and on the long-term welfare of investors, but staying nimble and innovative is at the heart of our business — so long as we do so within a proper risk-management framework. Our duty is to shareholders as well as to the investing public who trust us to fuel economic growth with our markets and our technology, and they both expect us to invest in innovation across our business. The companies that choose to list on Nasdaq are among the most innovative, risk-taking businesses in the world, and they are proof to us all that prudent risk-taking drives our economy forward. So, stay hungry and maintain a good risk appetite, but watch what you’re putting on your “plate.”
Read all answers to the MPW Insider question: Why is it important for women to take risks in business?
The main reason you shouldn’t leave your job — yet by Kim Getty, president of Deutsch LA.
Here’s why this CEO doesn’t fear failure by Robin Koval, CEO and president of Legacy
How to be a fearless risk-taker at work by Donna Wiederkehr, CMO of Dentsu Aegis Network.
What the financial crisis taught this Bank of America executive about risk by Meredith Verdone, global wealth & investment management marketing executive at Bank of America.
How this woman became the first female dean of a top b-school by Sally Blount, Dean of Northwestern University’s Kellogg School of Management.
What I think about when I think about failing by Colleen Smith, vice president of SaaS and Cloud at Progress.
Here’s how bragging can boost your career by Beth Monaghan, principal and co-founder of InkHouse.
This CEO cashed in her IRA to start her own company by Gay Gaddis, CEO and founder of T3.
An unlikely degree choice got me my dream job by Lori Bailey, global head of special lines at Zurich Insurance.
Why getting too comfy at work is the ultimate career killer byKrista Bourne, president of Houston Gulf Coast Region at Verizon Wireless.
Would you risk your job to move abroad? by Mary Beth Laughton, senior vice president of e-commerce and digital marketing at Sephora.
Why it’s okay to break the rules at work by Susan Coelius Keplinger, entrepreneur.
Why recent graduates shouldn’t plan their careers by Teresa Briggs, vice chair and west region managing partner at Deloitte.
Is gender bias a reason to quit your job? by Lauren Stiller Rikleen, president of Rikleen Institute for Strategic Leadership.
The one way to guarantee failure at work by Kathy Bloomgarden, CEO of Ruder Finn.
Why starting my own business at 25 was a huge mistakeby Carolyn Rodz, CEO of Market Mentor.
Build-A-Bear CEO: Why women need to take risks in business by Sharon Price John, CEO of Build-A-Bear Workshop.