Despite the rocky start to the Trump presidency and growing concerns about business risk, post-election confidence is holding up. To succeed in an environment characterized by both more confidence and more uncertainty, leaders must focus on intelligent risk taking.
Growing Confidence and Uncertainty
US stock indexes hit record intraday highs on Monday, signaling a counterintuitive surge in confidence since inauguration despite the flood of controversy throughout Trump’s first two weeks in office. Amid market uncertainty and fears that the new president could instigate a global trade war, investors are finding renewed optimism in their expectations for cuts to the corporate tax rate, deregulation, and overall pro-market policies.
Recent data from an ExecOnline poll of 73 business leaders who participated in the February 9th Trump and Leadership webinar revealed a similar pattern among executives. Although 61% of executives have grown more concerned about business risk and uncertainty since the inauguration, 49% also feel more confident or somewhat more confident in their business outlook.
Interestingly, few executives reported experiencing any direct impact from the controversial travel ban. Only 16% knew of any employees, colleagues, or business partners who had been directly impacted by the Executive Order regarding travel restrictions, and 60% reported that they had not discussed the restrictions at all with their employees and teams.
Taking Intelligent Risks
In an environment characterized by more confidence and higher risk, a wait-and-see approach will fall short. We need to “play offense” and proactively place smart bets to take advantage of new opportunities.
To do this requires intelligent risk taking – achieving the right balance between data and intuition. When we asked business leaders which characteristics had become more important since entering the Trump era, 68% chose data. Leaders can’t make quality decisions based entirely on chance; they need to analyze data and apply judgment.
However, 55% of leaders also said it was more important to accept risks and avoid being too risk-averse in the Trump era. In other words, we need to lean into risks, but in an intelligent way. A simple but powerful rule of thumb comes from Willie Peterson of Columbia University, the faculty leader for our program on Leading Strategic Growth: ask whether the value of the learning outweighs the cost of potential failure.
To take intelligent risks, leaders must also balance the the tension they face daily between making quick decisions and collaborating with others. In our data, 61% of leaders considered decisiveness more important, whereas 58% placed more value on collaboration.
Regardless of the outlook, consensus remains that a great deal of change is in store, and organizations must prepare to adapt. In a high confidence and high uncertainty environment, effective leadership means going on the offensive with thoughtful, informed risk-taking. To learn more about taking advantage of change and innovation opportunities, check out Accelerating Change Readiness and Agility.