LIFE IS FULL OF RISK
December 13, 2010 4 Comments
Taking calculated risk is a key part of life in general, and business specifically.
I don’t mean risk associated with gambling whether this is on horse-racing, greyhounds or visiting casinos. These represent emotional risk taking, and whilst it is fun to occasionally have a day at the races (I still love the whole pomp and buzz of Ascot), or an evening at a blackjack table (which has the best odds for the gambler versus the house), it is important to remember that the house always wins in the end.
As WC Fields said « Horse sense is good judgement which keeps horses from betting on people ».
In the personal context we take risk at every step in our lives starting with how and who we choose as friends, who we choose for a life partner, what job we do, where we choose to live, and where we invest our time and money.
As risk taking is such an integral part of our lives, we could expect that we would become skilled at it just through constant experience, but the reality is that most people are quite poor at it, and rather than take calculated, well thought out risk decisions, are driven more by emotions and by circumstance as opportunity knocks at our door, or will just procrastinate for longer than the decision deserves.
When it comes to investment decisions people tend to overlook the maxim that « if it looks too good to be true then it probably is », hence the success of super-swindlers like Bernie Madoff, who managed to extract billions of dollars from unwary investors in the largest ponzi scheme ever.
In the same way, despite it being a seemingly obvious scam, many people have been taken in by the promise of sudden riches coming out of Ghana and/or Nigeria on the death of a wealthy government official who just happened to have hidden tens of millions of dollars before his untimely death, now just waiting to be gathered in by any investor daring enough to provide his banking details to a previously unknown benefactor in that country who has just happened to have found you via email … what a great opportunity !
Notwithstanding the scams, risk is just about weighing up the pros and cons of the many opportunities in front of us, and using our experience and decision making criteria to pick a particular path to follow.
Many people can spend years agonising over a specific decision, and some will never make it, yet I believe that most times the decision that we take is less important than what we do after taking the decision.
If we assume that we are all intelligent, deductive people (at least the readers of this blog), then when faced with deciding between a number of available options, it is unlikely that any of the final shortlist are totally unworkable anyway.
I have found that the success of the chosen path is more often based on our commitment to the decision taken rather than which decision to take. For example a young woman who decides to marry Fred rather than George, and commits herself fully to the Fred decision has significantly more chance of success in life than had she decided on Fred but spent the rest of her life wondering how her life could have panned out had she chosen George.
In the same way, I have found that business decisions that may be a 70% fit at the start, that are driven by people with passion and commitment, have a significantly better chance of succeeding than forcing a 90% solution onto someone who doesn’t really believe in it. It is one of the reasons that « top down » decisions often don’t work as well as collaborative ones that involve the key stakeholders, and why in most instances managers should overcome their need to override an enthusiastic and workable idea from subordinates with their own. Giving people freedom to act (and make mistakes) means greater commitment to the decisions taken and hence greater chances of success.
I believe that we should try to spend less time worrying over what to do, and more time making sure that we are committed to what we are doing, by focussing on making it the right decision and on its succesful execution.
As Amelia Earhart said « The most difficult thing is the decision to act, the rest is merely tenacity ».