Taking business risks
Gerald Ratner and some of Britain's other notable entrepreneurs and business people...
James Dyson, Martin Sorrell, Richard Branson, Ernst Malmsten and Gerald Ratner look at the balance of risk and reward over their careers. Which risks paid off, and which ones didn't?
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Uh, uh I think our attitude to risk taking is very, very interesting. I think when people see it uh they're very excited by it and peop-, we really want risk takers, people who, who change the way we think about things, people who, who make exciting things that we can buy and use at home.
We, we really like that. I think we're sometimes rather nasty about people who fail when they do this and it doesn't work.
So I think that um we shouldn't have such a down on people who have failures and go on carping on about it for years afterwards. I think we should move on and see what their next thing is going to be and it's, in a way um the exciting thing about risk taking and the thing which, which heightens your senses if you're doing it and uh, and gets the adrenalin pumping is that you don't know whether it's going to work or not.
That's what's so thrilling about it. It's like living on a knife edge um and uh it make, it forces you to be very creative and uh and to use money very well and wisely. Uh when I started my business I had no money at all, I had, if I'd (in fact I?) had an overdraft, so I had to go out and borrow money and do things very economically and you know I was taking a huge risk.
Um and had it failed people could have sort of sniped at me for years afterwards but luckily, luckily it worked. Um so I, I think we we should be, we should be very careful how we treat people who try to innovate and who fail.
I think we should be more sympathetic um and uh help them bounce back and, and use their energy and intelligence to have another go.
We, we really don't want to see things being done in the same old way, we want to find a better way of doing it and you can only do that by experimenting, making mistakes, understanding what was wrong and then creating something you couldn't have possibly imagined uh and you can only do that by having lots and lots of experiments and failures.
And the biggest problem that we have at the moment is uncertainly.
And in an uncertain environment people's unwillingness to take risk. And that's critically important. So what you get, particularly in large companies is it almost becomes institutional against risk.
So you, you, you always look for the downside you never look for the up side. You know there're a hundred thousand people can tell you not to do things. There are very few people who are prepared to take an intuitive risk.
That's why you know owner managed companies often are more you know risk prone, and sometimes perform better, particularly in recession. Cause I think we've seen in the last recession that owner managed countries tend to be, do better than, than bureaucratic companies.
Er, I think that, a, a, a true entrepreneur ta, er, takes some, you know, major bold moves er, that most people would say, you know, are completely, he's completely mad or she's completely mad at the time they take them. When we went from, you know, having the record company to going to the airline business, er everybody, you know, all my fellow directors panicked, and my bank panicked and, you know, and, um, you know, people thought I'd gone off my head.
You know, what on earth is an entertainment entrepreneur going in to the airline business? And you know, what they didn't realise was the airline business should be about entertainment and we've made it about entertainment and, there we've thought-(unclear), we've made a success at it. But look, but the, the, the key to taking, the key thing to remember when you take a risk is protect the down side, er, make sure that every move you, any move you make, er, that you can afford to fall flat on your face and you, um, and so you can pick yourself up and move on to the next thing.
And, um, we've fallen flat on our face on a number of occasions, er, we've learnt, learnt from those, you know, those mistakes and we've moved on to the next thing.
Yes, it’s dramatic but the numbers wasn’t big if you compare what happened in, in all our investors, all the big banks, err but it really, I mean, no, err it really I mean it was and also risk also when you have a high expectation you know it’s a Swedish expression you raise as the sun and you fall down flat like a pancake.
And I think Boo symbolise sort of, the rise to the I mean the high burst and the ambitious, and, and then we fall down, and the downfall. I mean it’s classic sort of err have all the ingredients of a of that but I mean it’s err it was an exciting time you know but of course we did lots of mistakes, and we couldn’t do things different you can analyse it you know.
Umm, I mean we did lots of things right and we did things wrong and things we did wrong you know was very critical we did too fast err but it’s thin line between success and failure. It’s a thin line you know what you can do, I mean we tried to achieve too much in a short time and, and our technology was, I mean all was pioneers it’s I mean they take risk you know we take risk with technology something, sometimes it works sometime it don’t work you know.
I mean it’s a balance between risks and rewards and it’s always a thin line between big, big success and completely failure.
Before you - before you um before you did the speech did you there was any risk in telling those jokes?
Um yes, I thought there was a risk but that was - I liked that, in a way, and that was perhaps my arrogance of feeling that I could walk on water. Um but I didn't think the risk was as great as it was, that I was gonna lose my business, that I was gonna wipe off five hundred million pounds off the value of my company.
Nobody did. Um and it annoys me to this day, when right afterwards people said oh, you should never have said that and er, you know, I would have told you not to say that. Nobody could have predicted that it would have had the effect that it had. Nobody, cos it's never happened before to that degree over a joke. Yes it was a dumb thing to say but the reaction was totally over the top.
And one of the people who said that I shouldn't have said it, er who stands out, is my wife. She said don't say it. Um and I said well you were wrong about me making a joke at - the last time I did a speech, which was actually at Buckingham Palace. And she said you're at Buckingham Palace, you should never make any jokes.
Cos Princess Anne was there and everything. And I made a joke and she laughed, the princess, and everyone did. So I said well you were wrong about that so you'll be wrong about this. Er but she said I shouldn't have said it.
Copyright & revisions
Originally published: Tuesday, 19th April 2011
Last updated on: Tuesday, 19th April 2011
- Body text - Copyright: The Open University
- Video - 1: Copyrighted
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