Risk Aversion: A barrier to Innovation
The most daunting aspect of a start-up is the risk that an entrepreneur takes by beginning a company. Many times, innovators leave a stable job and are placed in an unstable situation as a result of a desire to change the way things work and bring a new product or service. However, the type of innovation that most people associate with inventing- the hands-on, hardware innovating as opposed to software engineering and website building- does not have as much of an appeal to entrepreneurs as it used to, primarily due to the increased risk. There are exceptions, though; take Elon Musk- after founding and earning a fortune from dot-com startups like Zip2 and X.com (more commonly known as PayPal), Musk chose to funnel his wealth into inventing: he started SpaceX, Tesla, SolarCity, and The Boring Company. A common thread between all these companies were that they actually required the inventing of new and revolutionary technology, not just a website or software service. Although Musk had a solid entrepreneurial reputation, these enterprises were viewed as extremely risky to the optimistic, and bordering on impossible and/or insane to the level-headed. Despite these opinions, Musk chose to innovate in a way that stepped across the line of caution that most innovators choose to stay safely behind, and ended up reaping the fruits of his (extremely hard) labor.
However, obviously, not all entrepreneurs and businessmen are as comfortable with being uncomfortable as Musk. Even after founding a successful and profitable company, most executives are still hesitant to take bigger steps: according to Accenture, 64% of companies hesitate to put out new products and services, choosing to extend current products instead. This hesitancy is a part of why some consider the spirit of innovation in places like Silicon Valley to feel more stagnant or stalling than the flurry of activity in years prior. This isn’t to say that there hasn’t been any important innovation recently- companies are developing many incredible products and technology- but the fear of failure and the mentality that something is too infeasible is hindering innovation even a little.
So, should innovators and businesses take extreme risks in hope of striking gold? Not necessarily. Only if they feel strongly about an invention or development, and have the drive to see it to fruition. However, businesses have to be conscious of too much risk-aversion, as although there is a high, immediate risk coming with innovative ideas, stagnancy and a passiveness in moving forward could yield even more risk in the long run.
https://www.businessnewsdaily.com/4476-businesses-cautious-about-innovation.html
“Elon Musk”, Ashlee Vance