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”.
- 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.
What's your risk tolerance and how is it affecting your ultimate success?
Do you fear failure?
If so, why?