Can you take a risk when you need to?
What if the ability to take risks is the key ingredient of success?
I’ve just finished Scott Adam’s book – ‘How to fail at Everything and still win Big’. Loved it. Would definitely recommend it.
Scott Adams is the creator of the Dilbert comics. And on any measure, he’s made it. He makes a fortune out of his comics and speaking tours. He has several best-selling books under his name. He has his own tennis court. He seems genuinely happy.
He’s a success.
And I like reading about success from successful people.
Anyway, the thing that I connected with, is that he downplays the importance of ‘talent’ in success.
Skills are important, and it’s always worth investing in yourself, but you don’t need world-class talent to enjoy world-class success.
Success emerges out of a soup made from a number of factors – like skills, timing, luck etc. Talent is part of the mix, but not such an important one. (One editor suggested Adams find someone else to do the drawing – someone talented.)
But there does seem to be a catalysing factor in success. And that’s the ability to take risks.
Adam’s has not had a play-it-safe life. He took big gambles when he needed to. (I love the story about how, just when he’s about to get fired as a bank-teller for being incompetent, he goes over his manager’s head and applies to the President for a promotion – and gets it!)
And I’d agree with this. If I look at where I am today, a willingness to take risks has been much more important than any talent (remember, I dropped out of high-school… twice!)
And the way I see it, it’s about showing up. When I’m taking gambles I’m in the game. If I’m in the game, things can happen. If I’m out of the game, nothing can.
And my experience in life is that if luck knows where to find you, it will. This seems to be how luck works. “Fortune favours the bold.” That saying exists for a reason.
So if a willingness to take risks is a key ingredient of success, how do we work with that?
How do we increase our appetite for risks and gambles?
People think that we need to be ‘braver’ or more ‘courageous’. I guess that’s kind of true, but I don’t know how you do that. Maybe you could imagine yourself in a more heroic light, but the hero-mindset has it’s own problems, as I've written about before.
But at the end of the day, I’m not a big fan of advice that involves somehow magically re-engineering our souls.
So, I’ve tried to break it down into something workable, and I’ve come up with something I call the ‘Risk Ratio’.
The risk ratio (RR) is how the risks compare to the benefits. R:B .
I think this gets to a calculation we’re all sort of doing at some level already. We weigh up the risks.
Take driving a car. We know there’s a chance we could have an accident. But the probability is small. And the benefits we obtain from driving our car, in terms of convenience, are huge.
R is small and B is large. So the risk ratio RR is very low. It easily passes our risk thresh-hold.
Now take jumping off the Harbour Bridge. It might be exciting, but there’s a high probability you’ll die. R is large and B is pretty small. RR is high and it doesn’t pass our thresh-hold. We don’t do it.
The way I see, we’re all using a RR to steer our lives – at some level of consciousness. But most of the differences between humans comes from the way we “perceive” risks, not so much about differences in threshold levels – differences in ‘courage’.
My hypothesis is that successful people are not ‘braver’, they just perceive the risks and benefits differently. And if it’s about perception, then we can work with that.
Let me break it down further.
Risks (R) really has two parts. Our sense of risk is really the probability that stuff goes wrong (pR) multiplied by the crap you have to deal with (CRAP) if it does. It’s the probability of a car accident multiplied by the consequences of a car accident.
R = pR.CRAP
Now we can start to work with it a little. Because we know that humans aren’t very good at dealing with probabilities. Evolution has made us cautious and pessimistic by nature.
(Are you sure there’s no crocodiles in the water?)
So unless we really sit down and think about how likely it is that something will go wrong, we will tend to overstate it’s chance. We exaggerate pR.
Likewise, we tend to overestimate how crap it will be if stuff does go wrong. A survey of football fans reported that most expected they’d be “devastated” if their team lost the finals. In reality, it wasn’t that bad. It was nowhere near as bad as they’d imagined.
So unless we really sit with it, we will naturally over-state both pB and CRAP and R will be massively inflated.
The solution? Sit with it. Put some actual numbers on the probabilities. Imagine living with the worse case scenarios. See that it’s not as bad as your imagination wants you to believe.
Also, anything you do that increases your confidence – your sense of safety, and the feeling that you can handle anything that comes your way, will reduce the amount of suffering you imagine is attached to failure. Back yourself. It reduces CRAP.
That’s R, bute can also look at B.
Likewise, B is the chance that something will go well, multiplied by the perceived benefits.
B = pB.(BENEFITS)
And again, we’re programmed to understate pB. But we can work with that. Make a list of all the times in life that things have gone your way – that life has delivered something great in to your life, and I guarantee you’ll be surprised at how long that list is.
We can also work with BENEFITS. We’re programmed to be on the look out for dangers more than we are for opportunities. So we don’t give opportunities as much mental space.
But we can deliberately give the benefits more space. If we imagine the fantastic future that’s waiting for us… if we just sit around and have a good old day-dream about how awesome life will actually be when our gambles pay off, then our sense of BENEFIT will increase.
(Adams recommends day-dreaming as a way to get energised and motivated.)
And so if we recalibrate our sense of pB, and we let the future we’re creating live more vividly in our heads, then we’ll naturally increase B, and naturally increase our appetite for risk.
And so in this framework, we have a workable method for increasing our thresh-hold risk ratio, without having to work on anything magical like “courage”.
We can:
- Work on pR by sitting with the actual probabilities of life
- Work on CRAP by imagining the worst case scenarios and seeing they’re not that bad.
- Work on CRAP by increasing our confidence and sense that we can handle whatever comes.
- Work on pB by sitting with the actual probabilities of life
- Work on BENEFIT by day-dreaming about how fantastic your future is going to be.
So there’s 5 practical tips on how you can increase your tolerance to risk.
Which, if Adams is right and I think he is, is probably the most important ingredient in success.
You’re welcome.
What's your risk tolerance and how is it affecting your ultimate success?
Do you fear failure?
If so, why?
ron says
hi jon, i had to laugh at all that CRAP!!! you are right though…but what happened? you said you dropped out of high school twice….and then you come up with magical formulas that i can’t get my head around…straight away of course…i will read your article again…thank you for such marvelous insight. i will sleep better tonight or maybe daydream more than before…now i know that it is ok and not a waste. also i never fear failure ..i’ve had so much i am a failure junkie (on steroids…yes a failure junkie on steroids..no..not a druggie)..
cheers, ron
Jason says
The probabilty is that if you worry about the crap that may happen,you will never recieve the benefits….anyone know a good plumber?
Traveller says
My motto is that “You make your own luck” with the corollary “Make the opportunity, then take the opportunity”. It works for me. As a result I have worked in 29 countries all over the world. I have come across so many people that don’t take an opportunity, even if I’ve given it to them on a plate. I assume they are buried in CRAP and can’t see the benefits.
BTW Jon’s reasoning aligns with the risk analysis used when managing projects.
You look at these two dimensions:
– likelihood that something bad will happen
– and the severity of the effect if it does happen
Based on the two probabilities, risks are then classified as red, orange and green. “Just do it” for green and see what you have to do to turn reds and oranges into green. If you can’t then there’s something drastically wrong with the project. Better move on before CRAP hits the fan!
Leo says
Q? Do you fear failure? If so, why?
In my experience I see the fear is based on “not having enough resources or time to recover from the failure (loss)”. I call it the ‘LACK’ theory. Lack of money (low income). Lack of knowledge (don’t know how to do it, or how it works) Or (what is needed besides lots of money to make it work). I still hear people say, “I will invest when I’ve paid off my home, because I can’t make two mortgage payments at the same time”. Or, “If something goes wrong I’ll lose e-v-e-r-y-thing”. Of these two it’s obvious that ‘LACK’ of knowledge is the principle reason, followed closely by ‘LACK’ of resources (ie. income) to dig oneself out of an unfortunate unforeseen situation. The second is ultimately caused by the first and vise versa.
The ‘flight or fight’ syndrome.
Flight, move away from perceived danger.
Fight, (not to advance ones position in life) but to protect yourself/family from perceived danger.
It seems for many people unless they have ‘weapons’ (money and knowledge) to protect themselves, they stay away from what may seem to be dangerous activities, (Investing).
Many believe that only people ‘armed’ with money get ahead in life.
They are not aware that it is the knowledge that is what is needed above all else.
Knowledge conquers almost all situations.
I received an email many years ago, with a footnote that read “Having knowledge and not using it, is the same as not having knowledge at all!” I’ve never forgotten that.