Election reflects American entrepreneurial spirit
Regardless of what you think of the election of soon-to-be President Donald Trump, his election reflects a unique aspect of American culture. Americans will take chances that many others in the world will not.
The election showed that those who voted for Trump were willing to try something new — even though they do not know what it is. The choice of Hillary Clinton and the potential for more of the less-than-2-percent average annual growth of the economy and flat wages that occurred for most of the last eight years apparently was seen as more threatening than electing Trump. This occurred even though the president-elect’s agenda changed several times during the campaign and has changed again in many areas since the election. That’s taking a risk!
Risk-taking behavior is very American. The country was founded by those willing to break away from a country and travel to a place they knew little or nothing about. Some studies say this is part of American’s DNA. It is no accident so many of the products, services and organizations found around the world were invented here.
This willingness to take a risk also is reflected in the U.S. by people who are willing to take risks to start new businesses. This kind of conduct is less common in other parts of the world.
Risk taking is a significant part of being entrepreneurial. The term entrepreneur itself is French for a person who takes risk.
The perception is that entrepreneurs take great risks in search of great rewards. The reality is that most who start their own business are taking some sort of calculated risk. They typically weigh the advantages and disadvantages of taking the plunge into the business endeavor they choose. They try to predict their probability for success.
While they take greater risks than most, many entrepreneurs see themselves as being averse to risk. They only take risks when they have to. The risk they take is on themselves. Entrepreneurs are confident in their own abilities to succeed.
Humans by our nature are generally risk-averse. Most of the time, it is easier to go along with what already is happening than try to attempt something new. We tend to exaggerate the possibility of failure.
Risk aversion, also known as loss aversion, has become a popular topic in psychology and economics. It refers to people’s preference for avoiding losses instead of acquiring equal gains. Researchers have stated that psychologically, losses are twice as powerful motivators than gains.
Many organizations say they encourage employees to take risks. But do they really? About two-thirds of employees asked in a recent poll said they are afraid to take any risks at all at work because they fear the repercussions from their employers if they fail.
The irony is that organizations need employees to take risks for innovation to occur. At the same time, managers said they want their subordinates to take risks — but not too much risk.
“If companies really want to encourage innovation and creativity, they need to develop and implement performance reward systems that recognize both. This will help in creating and establishing an organizational culture that employees can feel safe in, and appreciated for, their ideas,” according to Lisa Kahle-Piasecki, assistant professor of management and information systems at Tiffin University.
Despite the emphasis on innovation, most organizations have underlying cultures that are quite risk-averse. Organizations that want to succeed need to find ways to reward risk taking and make sure they are not punishing those who fail when taking risks. Easy to say, but hard to do.
Maybe more managers need to take a lesson from the American electorate and take a risk nobody thought they would. The next four years will see if that risk taking paid off.
Perry Haan is professor of marketing and entrepreneurship at Tiffin University. He can be reached at (419) 618-2867.