Nov 19

Fear and Paralysis – taking risks in a bad economy

Fear of change

Hiding won’t make economic realities go away

We mentioned before that loss aversion can lead people to make decisions that are not in their best interest. And given the current economic climate, we can be pretty sure that most people are scared stiff.

Whether or not the current malaise remains a ‘new normal’, and despite the often devastating statutory cuts many organisations are feeling, the natural reaction to retreat, post pone and cancel projects can, in fact, make things worse.

Let’s look at the worst case scenario – things are bad, income is down, and there’s no light at the end of the tunnel.


You try and make savings by cutting things that ‘appear’ to be less critical, you cancel that research project, you forgo that brand change, training has been put-off indefinitely, and that new fundraising project that was prefaced with those terrifying words, innovative, has been moved to a dark corner and everyone refuses to even make eye contact with it.

So where does this leave you?

Paralysed.  And it’s not just the charity sector, as the Harvard Business Review  reports.

A bad economy is not quicksand – struggling will not pull you down faster. Quite the opposite. By remaining as you are, by stagnating, your organisation is not in a position to adapt to the new economic realities. The reliance on the same strategies that saw you good before are not going to assist now. Change, innovation, improvement, expertise. If there is a light at the end of the tunnel then it lies somewhere in a mixture of those four words.

Let’s put a rosier spin on things. Let’s jump to the summer of 2014, and a steady growth in GDP is making everyone breathe a little easier.

First, we need to assume that by playing it ‘safe’, you have survived that long. No guarantees there, of course.

Which organisations are going to be in a position to capitalize on this?

The ones who found new ways to thrive in adversity, or those who hunkered down and hoped for the best? The charities who took risks in finding new directions, new methods, or those who took the risk of keeping things the way they were, and have always been?

We know that you work hard for your money, and that the idea of ‘risking’ it on innovation and change can seem counter intuitive.

But that’s not the real question. The real question should be  – ‘Can we risk carrying on as if it was business as usual?’

Unfortunately, the task doesn’t end there.

Perhaps to spread the blame in case something doesn’t live up to expectations, charities spend a shocking amount of time debating in committee and stakeholder meetings.

The phrase ‘time is money’ seems very apt here.

I don’t think any of us, outside coronary heart disease specialists, have heard the word sclerotic bandied about as often as we have over the last two years. But it’s a real danger in the charity sector as well. Endless conversations are not the answer, no matter how comfortable they may be.

The answer to this problem is going to be different for every organisation. But somewhere, somehow, someone has to be able to stand up and show that the risk of not changing is much, much worse than the risk of carrying on regardless.

Your thoughts, as always, are welcome.