Today's Definition of Risk is Fear
How has the definition of Risk changed since the age of Berkshire, now that we've entered the Age of AI, Digital Assets, Spatial Computing, and Robotics? What are mitigation strategies and execution methodologies to not just remain competitive, but take a leadership position in the market?
We work with a lot of companies and professionals to not just build their business to remain competitive in the age of AI, but rather to develop a winning position such that disruptive threats and disintermediation are something that happens to "them", but not to "you".
As a result, we've begun advising investors and operators to change their mindset when they see the word "Risk".
In the past, when defensibility and moats drove consistent cash flows in perpetuity, regardless of disruption events, these types of strategies no longer hold, as emerging technologies compound on one another to completely reshape the global economic landscape.
Just because a consumer or company gave your business money yesterday, it doesn't mean they will find you relevant or valuable tomorrow. As capital becomes more prevalent due to currency debasement and inflation, but quality businesses and savage operators become nearly extinct, only the strongest and ferocious will survive.
The perfect financial model you're using to plan your business around, with stable growth rate assumptions, team assumptions, token cost assumptions, and cash flow assumptions, is going to be disrupted by an army of influencers who create low-cost solutions in real-time for their communities.
Therefore, in the past, when operators and investors saw the word "Risk" in McKinsey strategy presentations, they stayed away from it or developed new systems or tools to mitigate it.
Today, one of the best defensive moats you can have is real-time intelligence streaming into your decision engine, enabling real-time adaptability and a relentless attack on the market via every available channel.
This is table stakes to compete.
Those who get it, win. Those who don't face rapid onset obsolescence.
Risk is lack of action, not the fear you have of a small change in structural EBITDA on your balance sheet. It's existential.
You need to survive. Clean up the balance sheet later. Of course, model and try for ROI when creating budgets, backing into resource commitment and roadmaps from there. But by no means view a smaller, short-term increase in cost because you're reformulating and re-powering your strategy, your execution.
It's not risk. It's fear.