Take Risks, But Do It Wisely

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If you are a businessman, you will understand this: taking risks is a fundamental part of running an enterprise. If you are not willing to seize opportunities and bet thoughtfully on future growth, you are probably just not meant to be an entrepreneur or a decision maker in a bigger company.

That being said, the assumption of risk is a much more tricky matter than it might seem at first sight. As it goes, we live in a highly complex universe with an enormous number of economic actors. And so what seems absolutely logical from the standpoint of a small entrepreneur turns out to be much less obvious for people who act within the framework of a big organization. Taking risks is of course still a must. However, the attribution of responsibility that comes along with it is much less clear in these cases.

Thus, complex economic systems oftentimes produce significant asymmetries when it comes to assuming responsibility for wrong decisions. The most flagrant case of such a disconnection in recent history happened in the 2008 crash, when banks were bailed out after extremely risky decisions that turned out to be a disaster.

For a business to work properly it is absolutely necessary that this connection be fairly strong. Recently, the American-Lebanese economist Nassim Nicholas Taleb has analyzed this connection in his book Skin In The Game. As he points out, a disconnection between taking risks and assuming responsibility can prove very dysfunctional to the economy. If decision makers don’t have to fear negative consequences of their actions, they will act lightheadedly and take unjustifiable risks that might put in danger millions of people.

And while most of us won’t be able to change the way the whole economic system works, we can at least take care of our own businesses. The best way to do so is learning the right way to take risks – and never forget that the last laugh is on you.

The Importance of Being Cross-Cultural

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When it comes to business growth, mergers and acquisitions have always been a hot topic. Originally focused on national markets, they have become increasingly international. This means that lately cross-cultural skills have become crucial for the success of billion-dollar deals. As such a merger is a very complicated operation that involves unification of assets, finances and organizational structures. This alone can be extremely difficult and lead to failure. However, if additionally you have to keep in mind the cultural differences of the merging partners, the task can become almost impossible to resolve successfully.

The former Daimler boss Jürgen Schrempp could certainly tell a lot about this topic. When Daimler-Benz and Chrysler merged in 1998, most people thought that it was the first step towards the creation of a highly successful worldwide car company. Some years later it was clear that Schrempp had underestimated the complexity of the task. To be sure, DaimlerChrysler had many different problems. But there is no doubt that the differences between the German and the American business cultures were at heart of many misunderstandings. Finally, both companies parted ways in 2007. However, the question about the right way to handle cross-cultural communication has not disappeared.

In the meantime, the amount of transnational business operations has increased significantly. That is why it is so important for managers to train themselves how to move smoothly through culturally different business environments. And thus maybe to avoid mistakes that cost Jürgen Schrempp and Daimler millions of dollars. Get ready, it’s time to become cross-cultural!

Know What Warren Buffett Knows

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Stock markets often behave in quite an inexplicable way. Just like recently, when Warren Buffett’s announcement to buy 75 million of Apple shares made the stock price rise almost immediately. Of course, Buffett is not just anybody. The Oracle of Omaha is one of the most successful investors of all times. If there is a company he is willing to invest such a big amount of money into, there must be good reasons for that.

In fact, Buffett’s capability to foresee stock market development in the future is quite astounding. To be sure, he is not always right with his predictions. But on the whole his bets mostly turn out to be more successful than anyone else’s. One of the secrets behind his success is his principled approach to stock market that goes for long-term investment and avoids speculation. The other one is Buffett’s capacity to take into account an incredible amount of data when it comes to making investment decisions.

Buffett himself always points out that he spends a lot of time reading. The information that he (and his team) extract from things they read allows them to analyse the economy in a much more comprehensive way most people do. Unlike many decision makers, Buffett focuses not only on industry data, but also on macro-economic developments and socio-political trends. To put it plainly, he just controls more information than you.

The good news is that there is basically nothing that prevents you from doing what Warren Buffett does. Of course, it will take some time to get a feeling for the major trends that might be important for the future development of a company or an industry. Even Buffett was not good enough to see Google come. Yet, it is definitely worth trying. The sooner, the better. Just do it!

Learn to plan for the long run

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“In the long run we are all dead.” Frequently, this handy phrase is used in economic debates when a government needs to justify this or that measure, or when the opposition wants to discredit governmental effort. However, it is rather rare that anybody bothers to understand what John Maynard Keynes was really talking about when he wrote down these words in 1923.

For the outstanding British economist the phrase was, of course, only a tiny part of a much bigger argument which suggested that in times of economic hardship it is rather unwise to do nothing, just hoping that in the long run the economy will be alright. Since then, this argument has been much discussed, proven and rebutted – both by scholars and the reality. As recently as 2017, Geoff Mann published a highly recommendable book on this topic.

No matter what your personal opinion about Keynes and his political economy is, he has got a very important point. This point is basically about what is to be done when things go wrong. Of course, Keynes was a Cambridge scholar, and as such rather interested in the overall economic system than in corporate affairs. And yet, his take on how different factors interplay and shape economic reality can be a extremely useful for making important business decisions.

In the long run we might be all dead, but until then there is plenty to learn for success of our enterprises. So, let’s do it!

Hedgehog or fox – what kind of businessperson are you actually?

hegehog_foxIn his well-known essay, published in 1953, the British scholar Isaiah Berlin was talking about different types of mindsets you can find among writers and thinkers. Some of them, the so-called “hedgehogs,” are good at one thing and almost ignore all the rest. The second group, the so-called “foxes,” are much more versatile, but might lack a certain focus.

Of course, such a division can also be found in many other areas of life. The contrast between specialists and generalists is not just imaginary. Actually, it can be crucial for the success of a company. And while being a specialist in at least one field of knowledge is oftentimes indispensable, it is hard to deny that a successful business also needs people with a broad scope of knowledge in order to understand the overall context.

The problem is, of course, that established systems of higher education frequently do not offer enough preparation for understanding the complexity of the current business environment. On the other hand, one might also argue that there are many people in manager positions who lack the deep knowledge of the field they are responsible for.

So what’s the solution? The first step is recognizing whether you are a hedgehog or a fox. Neither of it is good or bad – it just shows you who you are and where you need to improve. Once you’ve done that, the second step would consist in deciding about the things you want to change first. Finally, you need to find someone who shows you the shortest way to achieve your goal. International Trainings might be the right place to find the answer. Just have a look at our courses and don’t hesitate to get in touch if you have questions.

An investment in knowledge pays the best interest

BenFranklinWe live in a fascinating time. The world is changing at an incredible pace. Business, technology, international relations – everything seems to be in a state of transition. Thus, continuous transformation becomes paramount for companies and individuals that work in them. Advanced training offers probably the best opportunity to increase your understanding of what is going on and improve your skills to deal with upcoming challenges. International Trainings will provide you with the right knowledge and tools to succeed in the ever-changing business environment. And if you are still doubting if it is worth it, just remember what Benjamin Franklin said more than 200 years ago: “An investment in knowledge pays the best interest.”