August 15, 2011

A new study by finance professors at the University of Oregon and Notre Dame’s Mendoza College of Business suggests that businesses run by pilots are substantially different than those run by non-pilots.

 “Cleared for Take-Off? CEO Personal Risk-Taking and Corporate Policies,” a joint research venture between Professor Stephen McKeon at the University of Oregon’s Lundquist College of Business and Professor Matt Cain at Notre Dame’s Mendoza College of Business, studied 3,079 chief executive officers. Nearly 200 were pilots, whom the study found to be comfortable with decision-making that involves some level of risk.

“What we found is that [pilot] CEOs actually create more value for their firms,” Cain said. “At least in the CEO context, the ability to take on greater risk is actually a beneficial thing.”
NBAA Flight Plan podcast host Pete Combs decided to get a first-hand perspective on the matter. He recently took to the sky with Brad Pierce, CEO of NBAA Member Company Restaurant Equipment World.

Pierce, who is based in Orlando, FL, flies more than 400 hours a year pursuing new business and meeting with existing customers. He agrees wholeheartedly with the study’s assessment, and firmly believes embracing some level of calculated risk is key to his role as a business leader.

From the cockpit of his Cirrus Turbo GTS, he said, “We have taken a lot more risks than our competitors, certainly when it comes to the area of using general aviation aircraft, in that we’re spending money before we’ve made it. We’re spending money on [aircraft] fuel, and hotels, and different things to go out and visit actual, potential customers, as our competitors are taking less of a risk – they’re sitting back on the porch right now waiting to see what happens in this economy.

“Those who fly…tend to be experts in the areas of risk management and risk mitigation,” he adds. “In your business life, that attitude will lead you to do things your competition won’t,” he said as he piloted the Cirrus 4,000 feet above the mountains of north Georgia. “But at the same time, you’re thinking like a pilot. You ask yourself, ‘What if this happens? What comes next? What do I need to do to prepare for this deal?’”
By taking calculated risks, whether with his company, or in his travels – and by having several backup plans designed to meet just about any contingency – Pierce says he’s become a very successful pilot, and a very successful business owner. He performs a constant series of risk-assessment self-checks in the boardroom as well as the cockpit. The key, he says, is moderation.