What are acceptable risks?

Ashley Thacker, CEO of Ranger Lifting, asks: in an industry built around reducing risks, what does an acceptable risk look like? As business owners and leaders, when is it right to risk our revenues and reputations – particularly if the reward is growth?

We work in an industry dedicated to removing risk from lifting and rigging. What gets us out of bed every morning is the deep desire to ensure that everyone in our sector is exposed to as little danger as possible.

However, in an industry built around reducing risks, are we as business owners too risk averse? Does that culture of avoiding risk – the right thing to do for lifting safety – end up spilling over into how we run our companies?

This is more important than it might look at face value. All leaders have to take risks, it’s inherent to what we do. Play it too safe with your business and you actually risk stagnation, or worse, getting left behind by your competitors.

Mark Zuckerberg once famously said:

"The biggest risk is not taking any risk...in a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks."

Almost every change in a business therefore represents risk, from growing your team or opening new premises to taking on new product lines or adding new strings to your bow. The question we should always ask ourselves, is: does the reward justify the risk? Often the greater the risk, the greater the reward. However, there are ways to ensure that the odds are ever in your favour.

A calculated risk is a lot different to simply jumping in with both feet. US general George S Patton was a big believer in the difference between a calculated risk and a foolish headlong rush, saying “Take calculated risks; that is quite different from being rash”.

The difference really boils down to doing your homework and there’s no shortcut here – putting in the hours, days and even weeks at this analysis stage will really pay dividends further down the line. It’s absolutely worth it either way, for example if you discover something that makes your plans unviable, or perhaps more viable. Research can help you avoid a costly mistake and to seize that once-in-a-lifetime opportunity.

A good example is when we announced the addition of the Ultra-Maxx HMPE range of round slings to the Ranger product portfolio.

HMPE is no longer a novelty in our sector. It’s reduced propensity to stretch enhances safety and efficiency, and its lightweight properties are well understood. Its popularity also means that it’s a fairly crowded, competitive market segment, meaning it is harder to stand out.

In these instances, you can sway the risk/reward ratio in your favour through differentiation. There are several ways to achieve this, but common ones include superior product quality, pricing, and availability. It’s very rare to achieve all three, but in my opinion you should always aim for that golden triangle. You can sometimes be successful with just one, and more often with two, but all three is the holy trinity.

In terms of pricing, Ultra-Maxx is very attractive – which can actually bring its own problems. How do you convince your customers that a product they perceive to be cheap is still of excellent quality?

At Ranger we’re known for our methodical and data-driven approach, so we went down this tried and tested route. It increased the investment required because it meant extensive product testing to develop our own data set. However, this gives us confidence to give Ultra-Maxx the Ranger seal of approval, and if our clients know we stand behind Ultra-Maxx, they’re happy to trust us.

In fact, what we found was that the performance and quality are just as good as anything you will find on the market in Australia. Another differentiator for us is that we’re happy to share our data. We can give our clients full specifications including D/d ratios, enabling our customers to make accurate calculations on rated sling capacity. We know precisely what you can and can’t do with these products.

Last but not least, you can turn competitive pricing to your advantage by focusing on availability. With Ultra-Maxx, we’re stocking a full range of slings with capacities up to 200 tonnes, and up to 15 meters long. This is an additional risk in terms of the drain on working capital - and it keeps our accountants up at night - but in our eyes it’s worth it.

The ability to beat your competitors on lead times, whether they are manufacturing locally or importing a product, is almost always worth the risk. In our business, where time is money, suppliers who can deliver quickly are highly prized. It’s one of the ways you truly build customer loyalty. In fact, it’s a philosophy that we have stuck to for years, right across our business. It will give your bean counters a few more grey hairs but, in our experience, it almost always delivers a return on investment.

Looking at our work on HMPE round slings as a case study, you can see how we were able to find a gap in a competitive marketplace. This involved all the elements discussed above – we took the time to analyse the market and identify the best supplier, provide a good product line at an attractive price point, and with better availability than most of our peers. There is still risk attached to this new venture, but we’ve worked our socks off to reduce that risk as much as possible.

Other common examples from our sector include extending your geographical coverage by opening branches in new locations. It’s rare to find yourself in completely virgin territory, meaning that you’re going up against a competitor.

Again, analysis is vital here. Questions we ask ourselves include: how can we deliver a better service than existing providers; do we fully understand the local market’s needs and how to fulfil them; and can we attract the right new people to create the team for that branch expansion?

And sometimes, even after all the due diligence, you simply have to trust your instincts.

We invest a large amount of money in supporting the global lifting industry. The senior team travels regularly to international events and trade shows to show our support as well as maintain and establish relationships. They’re also a great opportunity to scout for new products and stay on top of industry developments. Like most elements of work, you get out what you put in. Treat it like a jolly holiday and it will end up as an unnecessary cost rather than an investment. There’s nothing wrong with having a beer or two later on - but work hard before you play hard.

Perhaps the one that made some of our peers scratch their heads the most was when we decided to give away our technical resources, for free. We developed our Riggers Book to help everyone work more safely, regardless of whether they spend any money with us. We see that as a tool to improve safety so we’re happy to absorb those costs. There has been some upside but that wasn’t our goal. In our industry, respect is always earned, not given, and offering resources like our Learning Hub or Riggers Book has certainly enhanced our reputation as being serious about lifting safety.

Obviously, we’ve all got businesses to run, but why not choose to take risks that benefit the whole industry when the opportunity arises?

Another example is that I believed passionately that we needed to professionalise our industry and one way to achieve this was accredited training. There was no data I could analyse to confirm whether this was the right way to go, or that there was any guarantee of success. And it was clear from the outset that this would require significant investment of both time and money.

In September we launched the first comprehensive online training program of its kind in Australia, the Safe Use of Lifting Equipment training course. It’s accredited with LEEA and based on the appropriate Australian Standard.

However, it wasn’t an easy road, taking three years to come to fruition. With any project of that length, you are bound to have some doubts at some point. Was I overextending myself? Was I taking my eye off the ball by devoting so much of my personal time to achieve a self-imposed target? Was it truly a labour of love or merely an exercise in self-delusion that would blow up in my face?

Of course, as the project began to take shape, those doubts disappeared – sometimes you really do have to trust the process. The first steps can feel like an act of faith, but if you’ve done your homework and it feels right, always back yourself to succeed.

Some people might say that going on gut instinct and succeeding is just an example of blind luck. But I believe entrepreneurs make their own luck. You really do miss 100% of the shots you don’t take, and you can only achieve the reward of continued, sustainable growth if you take those risks in the first place.