How to Make Confident Decisions: Avoid The 4 Risks of Inaction
5 min Read
JFK once said, “There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.”
Decades later, his words still ring true—especially for businesses. Inaction can be a tempting course to take. Maintaining the status quo, particularly during economic uncertainty or change, seems to make sense.
After all, nobody wants to rock the boat when the waters are already churning.
However, the uncomfortable truth is that inaction never pays. But it will certainly cost you extra. Uncertainty and hesitance can cost a business far more than immediate courses of action, regardless of industry.
Being proactive and maintaining a disciplined yet flexible business strategy can help organizations better handle turbulence and fuel growth even during economic turmoil.
But to resist inaction, it’s important first to understand what constitutes inaction. What causes it to sneak up on all of us? And what are the consequences any degree of inaction can have both in the short and long term for your organization?
What causes organizational inaction?
Inaction usually occurs when companies fail to commit to and maintain a course of action. In essence, they “commit” to doing nothing.
And while it may be easy to attribute this inertia to poor leadership, the truth is that fearing change and uncertainty is not only normal, but also one of the most common human fears.
This overriding fear of failure can take many forms, which are then used to justify inaction. Maybe leaders are worried about the risks of changing the status quo and what it could mean for their company, or are concerned more with their present job security than making drastic changes.
Inaction can also stem from an inability or unwillingness among leadership to determine an agreed-upon plan, which leads to stagnation.
While fearing the “tide of change” is an understandable reaction when the pressure is on, letting that fear take hold and influence your organization from the top down can spell disaster for any business, no matter how large or successful it may be.
The Four Horsemen of Inaction
1. Missed Opportunities
As the old adage goes, it’s important to strike while the iron is hot. Failing to do so can result in missing out on prime opportunities you may not see again, which can be detrimental to your business and its long-term strategies.
At times, it may be tempting to pursue a “wait it out” strategy when a company is uncertain about (or cannot reach a consensus on) what course of action to take.
On one hand, there’s nothing inherently wrong with this approach, as waiting rather than acting rashly can sometimes be a good decision. On the other hand, waiting or hesitating instead of deciding and acting can result in a myriad of missed opportunities, some of which may not be available down the road.
While most leaders nowadays understand the need for adaptive change within their organizations, it can still be very difficult to pull the trigger when it comes to more significant or costly decisions.
If you or your team find yourself in this situation, ask yourselves: “Do we have the resources and know-how to act now?” If so, what’s stopping you from pursuing your desired course of action? What good will waiting do?
How you answer that question may help motivate you towards the best decision for your company, both in the short-term and the long run.
2. Increased Costs and Inflation
In its June 2022 briefing on the World Economic Situation, the United Nations credited rising inflation to both the aftermath of COVID-19 and the ongoing war in Ukraine, which shattered global recovery efforts and has caused food and commodity prices to shoot up. As a result, inflation hit a 40-year high last month.
Between these economic concerns and growing geopolitical uncertainties, business confidence is also at record lows, which is hindering short-term economic projects and furthering the cycle of economic turmoil.
With all this in mind, it’s essential that businesses take potential inflation risks into account when contemplating changes in their course of action. Choosing to wait rather than act on certain projects or integral company changes can result in businesses paying significantly more down the line than they might have otherwise.
It may seem easy to wait, deliberate, or linger on a decision when certain variables are not favorable. The cost may seem too great, and perhaps your team cannot unanimously agree on how exactly they want to proceed.
At face value, this kind of standstill may appear harmless. After all, shouldn’t you carefully examine all possible outcomes before finalizing a significant purchase or committing to a long-term project?
Sure. But allowing projects to hang in limbo or fall briefly by the wayside can leave you vulnerable to the whims of the market, which can lead to increased prices due to inflation or other issues that can turn a previously affordable, sensible project into an overpriced, unfeasible one.
Waiting can also potentially limit the opportunities available for expansion or stability, opening the door to greater risks down the road.
3. Black Swan Events
Following the COVID-19 pandemic, 70% of global business leaders surveyed said the pandemic had an overall impact on their organization. Yet only 62% of respondents utilized a crisis action plan in response to the pandemic.
More interestingly, in a survey of business leaders from 2019, 95% believed a crisis of some kind was imminent within the next couple of years, but no one expressed fear or concern about a pandemic or deadly virus, which went on to plague the world for over two years.
In a sense, this made COVID-19 the biggest black swan event in recent memory, something that no one anticipated or was truly prepared for that shook the world to its core.
The truth is that no one really knows what tomorrow will bring. Between the onset of the COVID-19 pandemic in 2020, the market surge that followed, and Russia’s invasion of Ukraine in 2022, unanticipated events can have earth-shattering impacts that last much longer than you can stay solvent.
While it’s impossible to plan for every conceivable opportunity, it’s always better to be prepared for a potential crisis than to be caught unawares. Failure to act can irreversibly damage your company and its goals.
4. Recession Fears
An unfortunately unavoidable part of the business cycle, recessions result from significant declines in economic prosperity or even general activity, and can last anywhere from a few months to several years.
During times of economic uncertainty or poor performance, it may seem most sensible for businesses to avoid change at any and all costs. Instead, many leaders choose to stay the course to maximize their chances of success during a recession (the devil you know is better than the one you don’t).
Truth be told, inaction is among the riskiest responses to economic downturns, and can potentially lead to increased anxiety or drastic, rash decision-making down the line. This can put companies in a difficult spot as they struggle to toe the line between doing nothing and acting too rashly.
Where is the line drawn? How do you know if you made the right decision? When it comes to a recession, a business must understand not only when, but also how to act in order to safely lead their organization through the storm.
What works in periods of economic calm or prosperity is not guaranteed to last in a recession, so any business looking to survive must understand and adapt to economic crises by choosing what financially makes the most sense—even if it feels uncomfortable.
How to resist and combat inaction
The essential first step in combating inaction and working to correct it is to readjust your views on change. Rather than fearing the unknown and what potential risks change may bring, consider embracing change with an open mind by meticulously mapping out the risks and rewards.
No course of action is without potential drawbacks. But by choosing a set course of action and opening up the floor to discussion and rigorous scenario analysis, you place your organization in a far better position to deal with anything the future has in store.
It’s also worth noting that preparing your company to act proactively, rather than reactively, gives you greater leverage and control during economic uncertainty.
Instead of waiting and hoping you’ll weather the storm, having courses in action already in place, and maintaining the discipline and commitment necessary to follow through on these plans, can better prepare and guide you through the toughest situations.
Model different outcomes
While it may not be possible to prepare for any and all future events, it’s still invaluable to have contingency plans in place. The best way to do that? Model different potential outcomes.
No one has a crystal ball, and it can be hard to predict once-in-a-lifetime incidents like a global pandemic. However, ensuring your organization has plans in place for some of the most likely events allows you to better prepare for worst-case scenarios.
Work on coordinating a clear plan of action. This should include some degree of consideration of both the risks and benefits the plan may pose, enabling you and your company to approach any solutions with the broader picture in mind.
Once both the benefits and risks have been weighed, you can decide on a track that your business can follow—and stick to it until your goal has been reached.
Not only will this make it easier to stay your course, but you will give leadership a more realistic picture of what they can expect, rather than overpromising and under-delivering.
Planning ahead can also make it easier to avoid wavering or hesitating down the road.
Remember that an essential business skill is being able to make clear-cut, significant choices without being indecisive. Work on instituting this same resolve into whatever course of action your company decides on.
Don’t fear fear
As Meister Eckhart once said, “The price of inaction is far greater than the cost of making a mistake.”
It’s easy to fall victim to fear and uncertainty, whether it’s the fear of starting a new plan or progressing an existing plan as unforeseen variables arise. The anxiety that stems from making a mistake or misstep is understandable, and unavoidable. No business is perfect, and neither is any plan, no matter how well thought out in advance.
Instead, focus on that which you can control. Setting clear project objectives and adjusting the scope of your project to encompass a realistic goal will make it easier for your business to stay the course.
This is why it’s essential to understand both the needs of your business, and how those needs will be impacted whether you go forward with your plan or not. Understanding why you must make a decision, and clarifying how it can benefit your company for the better, is critical to pushing ahead and avoiding the perils and pitfalls of inaction.
Plan wisely, then act confidently
Combatting inaction can be stressful for most business executives. When it comes to leading your organization in the right direction, it can be hard to know when and how to act, and how your company will fare with different courses of action.
Synario can help. Let us work with you to help get your business on top of its strategies, and build a plan that embraces change intelligently and sustainably regardless of what the future holds.
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We started Synario because we were tired of struggling with spreadsheets and their shortcomings. We needed a solution that was dynamic, adaptable, and promoted cross-team collaboration. To answer this need, we created Synario: the agile modeling platform that organizations from all corners rely on to forecast and visualize their financial futures.
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