As I write this column, the economic signals are not particularly reassuring.
Data from the U.S. Bureau of Labor Statistics shows input prices for new nonresidential construction on the rise—again. The economy lost 92,000 jobs in February. And geopolitical tensions have intensified with war breaking out in Iran. Contractors see uncertainty in rising costs, labor shortages and projects that suddenly pause.
Against this backdrop, let’s ask a question. Is it time to make bold bets? According to new research published in MIT Sloan Management Review, the answer is “yes.”
Only 10% Bet Big
MIT Sloan’s “The Case for Making Bold Bets in Uncertain Times,” authored by Adam Job, Ulrich Pidun and Valentín Szekasy, examined nearly 6,000 companies over a 15-year period that included the COVID-19 pandemic, the rollout of tariffs and other major disruptions.
Periods of uncertainty, the authors say, often create the greatest opportunities for growth. But only 10% of companies make big bets during such periods. The authors found that risk-taking companies saw revenue growth nearly twice as fast as competitors that hesitated. Their total shareholder returns were 50% higher as well.
Construction has seen similar patterns during past downturns. Contractors that invested in new capabilities—prefabrication, digital layout tools or new market sectors—often emerged from slow periods stronger than competitors that waited for work to return.
“People really want to avoid uncertainty,” says Stanford professor Jeffrey Pfeffer in the 2017 article, “Why Uncertainty Makes Us Less Likely to Take Risks.”
The instinct is familiar. Contractors often respond to uncertain markets by reducing hiring, delaying equipment purchases or avoiding unfamiliar project types—even when those opportunities might position the company for future growth.
“Only 30% of leaders actually increase resources for growth initiatives during uncertain times,” says Greg Kelly, senior partner with McKinsey & Company, in the recent McKinsey podcast, “What Does It Take to Achieve Sustained Growth?”
Three Suggestions
The MIT Sloan authors say managers do not need a long track record of successful risk-taking to pursue bold opportunities. What can they do?
- Encourage experimentation. Frame risk as a necessary part of growth. You might create “get-out-of-jail-free” cards. Managers who play a card—and pursue well-reasoned opportunities—are not punished if those bets fail. The goal is to remove the fear that often prevents people from trying new ideas.
- Resist herd behavior. Instead, pursue opportunities precisely when competitors step back. You could establish “red teams” tasked specifically with questioning strategies and identifying blind spots before major decisions are made.
- Move quickly when shocks occur. This means being prepared. Maintain a list of potential opportunities so you can act when conditions change. Some firms write playbooks, anticipating disruptive events.
Organizations need to “elevate human connection, resilience, adaptability and imagination,” says Annie Peshkam of INSEAD in the Harvard Business Review. Managers don’t need more tools. They just need to “stay available when answers are not yet clear.”
“Authentic human connection … leads to effective collaboration,” says Shawn Quinn, executive education faculty member at the University of Michigan Ross School of Business, in the article, “Leading Through Uncertainty with Positive Leadership.”
In other words, effective leaders openly acknowledge uncertainty rather than pretend to have all the answers. This creates space for open dialogue and stabilizes teams.
Yes, uncertain times may feel like moments to retreat. But they can also be moments to invest in projects others overlook. History and researchers suggest that those who move forward during uncertain periods emerge stronger when the next building cycle arrives.
Mark L. Johnson writes for the walls and ceilings industry. He is also the editor of BuildSteel.org. He can be reached via LinkedIn.com/in/markjohnsoncommunications.
