Could Playing It Safe In Uncertain Times Be Risky?

Most organizational leaders respond to periods of high uncertainty by pulling back — reducing spending, delaying investments, and waiting for the fog to lift. But new research from the BCG Henderson Institute, published in MIT Sloan Management Review, suggests this instinct may be exactly wrong. Analyzing nearly 6,000 companies across 10 major uncertainty events from 2010 to 2020, researchers found that only about 10% of companies made bold moves, such as doubling M&A spending, during uncertain times. The remaining 90% cut back by roughly 25% on average. Interestingly, the bold minority was rewarded: their revenues grew almost twice as fast (6.9% vs. 3.5% annually), and their total shareholder returns were 50% higher over the following three years — all without facing a higher risk of failure.

The article debunks three myths that often hold leaders back. First, the idea that risks can only be taken from a position of strength — in reality, companies with weak past performance that took bold risks saw significant turnaround results because uncertainty levels the playing field and disrupts established hierarchies. Second, the misconception that a proven track record of risk-taking is necessary — first-time bold movers outperformed experienced risk-takers, who tend to be overconfident. And third, the belief that only diversified companies with a buffer can afford to be bold — focused companies that increased their efforts during uncertain times achieved the greatest outperformance of all, with an additional 10.2 percentage points in annual total shareholder return (TSR).

The lesson from BCG Henderson’s research with for-profit companies is clear: uncertainty doesn't just create risk — it creates opportunities. Organizations that recognize this and prepare to act quickly when disruption strikes are the ones most likely to emerge stronger on the other side. The question is whether this lesson applies only to the for-profit sector or if those of us operating in the nonprofit environment can also learn from it as well. We would love to hear your thoughts on this question.