Risk means different things to different people. I cringe every time someone equates risk to gambling foolishly. Something on the lines of – I’d like to launch a startup, that means i have to sacrifice my X (Say 2) yrs salary and time. If this works out i will end up with a multi-million dollars startup. Downside is of losing two years salary if it doesn’t work our. The upside [Reward] is 1000 times return and risk [Downside] is losing two years salary.
Upside/Downside; Upside = Reward – Downside = Risk.
There is something utterly wrong with this theory. The real risk here is not the downside.
You missing out on the multi-million dollar opportunity is a way bigger risk than losing two years salary [Downside].
Still there are a lot of elements missing out in both of the definitions above.
Personally speaking, i have been called a Risk taker all my life. Especially after starting my startup LetsLunch.com . Slowly i started understanding the elements of risk taking.
Why some people can go on taking risks after risks, while others have a hard time even once doing something out of their comfort zone. In my previous post i talked about how habits are formed and retained as a group and not as isolated goals.
I have found that risk by itself doesn’t exist!!!
What we do is simply apply one of the fundamental positive qualities in the right given context.
That comes across as risk. For example: Many opportunities are lost because of indecision.
Making a decision means also being ready to take the blame. We’d rather take advice, wait for the complete proof and safety, form a consensus, watch for proof from other people and then once it feels responsibility will not be put on you for your decision, then we make the decision.
Someone who is not afraid of being wrong – We call him a risk taking person.
In this Context, simply being able to make decisions fast enough, we appear to be a risk taker.
Risk = Decision making.
Here is a list of all the attributes- when used in the right context, comes across as Risk.
1: Saying no: Every act of saying no has elements of risk involved in it. Your competitors are doing -this, that and those – you are expected to do it for your friends, employees, investors, peers etc. If you don’t plan to do it then you risk missing out the opportunity, appearing foolish/lazy. Ironically not following suit with your competitor might be the best strategy in some scenarios. The risk here is offending who you work with, Risk taking here simply becomes saying no.
2: Burning desire: You all know the story of Socrates and how a young man approached him wanting to be like him. Then how he ducked the head of the man under the water, leaving him gasping for air. Telling How badly he wanted oxygen while ducked in the water equally bad he should desire knowledge, if he wanted to be like him.
This is the opposite of saying no, Here you want things pretty bad and pursuit of it appears risk to everyone. I always wanted to backpack Europe. However, it used to appear so risky to me. How will i figure out where i will stay, i don’t know anyone there, what places i will see, what if i get lost on the freeway somewhere. This appeared such a risky thing for me!
Until i met a guy on LetsLunch.com who barely 23 yrs old, told me how he backpacked Europe, made friends in the Train, lost his wallet and still made arrangement for the money from his hotel.
I told him how i too wanted to backpack in Europe, but couldn’t do it so far. He said its simple- you don’t want it bad enough!!! That was my Socrates moment. I planned my European trip later that year with 24 hours between booking time and departure time.
Here Burning desire and acting on it equates risk. For everyone else it appears risk.
3: Will Power: Years before man landed on the moon, someone asked President JFK – What will it take to put a man on the moon. He answered “Will power”. After few years we had our first moon landing.
Its middle class thinking to think something is achieved by knowledge,intelligence and skills. A world class person has tremendous will power and belief that something can be achieved. Champions are driven to win, in most cases, because they believe they can.
4: Facilitated introspection: The most effective form of learning is self-discovery. Most people are unaware of what makes them tick in terms of their emotional motivators. Facilitating the introspective process, helps people rediscover what they already know. The only way to help a person discover the hidden power locked in their psyche is through asking PROBING questions.
The risk here is coming across your weaknesses and accepting it. Wait that’s not big risk: Taking responsibility of working on improving it is the biggest risk. Since Hardwork, patience and time are to be invested.
What can be measure can be improved.
I would rank this element as the most difficult aspect of risk taking as it involves seeing through your own ego, defense mechanisms, identity and blind spots. Becoming aware of it and gradually working to improve it demands swallowing your pride or ego, recreating your identity, belief system Plus Having patience and doing the dirty hard work.
Risk –> Self Discovery.
Conquering oneself is truly conquering the world!
5: Crucial Conversations: Level of success in life is directly proportional to the number of difficult conversations you are willing to have. Each day i am faced with the choice of having that crucial conversation with some of the people like- Investors, advisers, employees, journalists, consultants, partners, vendors, attorneys, users, mentors…Etc
Biggest risk here is stepping on someones toes, micromanaging, alienating someone, starting a fight, appearing greedy, appearing foolish and what not.
Risk == Having crucial conversations.
Getting comfortable with crucial conversations is such an art in itself. It can only be improved by putting yourself in those situations- day and night perfecting your skills.
Most of us would rather miss out on something, be taken advantage of, get coaxed into something than take the risk of having difficult conversations. It takes courage and confidence.
Key here is to become a master communicator with focus on tact, diplomacy, learning to fight fair, leaving things unsaid when required, giving constructive criticism and forgiveness.
6: Not Rationalizing: One of the biggest drawbacks of analyzing is when it leads to rationalizing.
I have been guilty of this all the time. Coming up with a book full of excuses.
I don’t have enough connections, they are biased towards…, i don’t have knowledge of, i’m not extroverted, when i have X then i will do Y, if only i find an engineer…..
One day one of my friends was asking me how do i travel around the world with such ease.
Where as he doesn’t have any knowledge or skill of planning for big trips.
This is a friend who is excellent when it comes to knowledge of mobile phone. He knows what are the upcoming new cellphone models, which cellphone manufacturing company takes what strategy. What are the differences between android and IOS platform.
He also knows about different makes of bed foams, pillows and thread counts…
I told him learning to plan travel is no different from learning about cellphones.
Researching cities, flights, places of attractions, days to travel are no different than the skill he is using to find out all about the cellphone universe.
It takes same amount of time, skills and IQ to do it. Its just that it requires different muscles of memory and moreover willingness to do it.
A simple conversation like this led to a paradigm shift and from then on that friend has been able to use this skill to accept the challenges and responsibilities of many areas of his life he was avoiding by rationalizing. This helped me too and i was able to start addressing the things in life i was hiding behind the excuses.
What is not risk?
There are some bad qualities too which when used in the wrong context makes you appear risk taker when that is not the case. They are just that – some qualities.
1: Impulsive thinking: Taking actions without thinking anything is not risk, its just an impulsive thinking.
For example, what if you had a GOAL of becoming a great actor/actress? Now then, what if you live in Iowa, and have never taken a course, not signed up for one, never tried out for a play, and haven’t planned to, never bothered to talk to working actors to “borrow” some of their “street smart” experience, and had not thought of moving to NYC or LA? Do you have intention to be a great actor? NO!
￼But if you lived in Iowa, made a security deposit on an LA apartment, planned on attending acting classes in LA and had already talked to some actor friends there, and even scheduled some auditions for movie try-outs, do you have intention to be a great actor? You certainly DO! Because you are not acting impulsively
For some people this appears risk ,its not. Its just impulsive thinking.
2: Facing the wrong fears: Suppose you are on a 5th floor. A monkey charges towards you, you jump from the 5th floor. This can’t be called as act of courage. Taking credit that you jumped from 5th floor. You were avoiding facing the monkey rather than fighting it. Jumping from 5th floor hence is not a risk you took but you took a safety action which comes across as Risk. Wrongly.
Now you know there are no risks in life -Only a set of solid fundamentals applied in the right context to give an appearance of risk.
Life is full of risks, risk it!
PS: I had my Socrates moment two years ago and went to Europe. What are you going to do today?
Take that risky decision in your startup, learn that new skill – Let me know in the comments below