Feeling lucky? Is it the right time to take some risks?

As told by Peter Bernstein in his classic, “Against the Gods”, no less an observer of economics than Adam Smith himself understood that that:
“…[while] risk propelled economic progress….society would suffer when that propensity ran amuck.” So, why – in the midst of this current example of “propensity run amuck” – is BusinessWeek offering a detailed look at companies willing to take risks in a recession? Have they observed something we don’t know?

It sure looks that way.

Despite the obvious challenges this period presents, it also creates opportunities to gain market share and compete in a less crowded marketplace. Money quote:

“…Audi, is boosting its U.S. ad budget by as much as 20% this year as U.S. rivals pull back on ads. “When the clutter is dying down, our message can be very, very visible,” says Johan de Nysschen, executive vice-president at Audi of America.”

While I initially mocked Microsoft’s excessive ad blitz for its new search engine (oh, and here), Microsoft’s Bing – and especially that excessive ad blitz – shows the company is willing to invest in a down economy to try and steal share from a dominant competitor. Does it have Google running scared? Eh. Maybe, maybe not. And I’m not sure you need to worry about Bing one way or the other. But, again, you’ve got to be impressed by their aggressive moves to capture share in a down market.

So how can you take advantage of this buying opportunity? Well, while Nassim Nicholas Taleb might disagree whether such a thing as “risk management” exists, there’s no question you can look for opportunities to limit your downside risk. My favorite way? Testing. If you’re not sure whether something will work, roll it out to a segment of your customers first, then move forward based on the results of the test.

Some – admittedly tired – maxims provide guidance: Buy low, sell high; Don’t put all your eggs in one basket. Cliches? Certainly. But how do you think they got to be cliches? Think of it this way: isn’t sitting on the sidelines risking market share to willing competitors putting your eggs in a single basket of a different sort?

What do you think? Is this a time for retrenchment? Is it too risky to make a move? Or have we reached the point where some calculated risks can work to your advantage? Tell us what you think in the comments.

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