Risk is a part of life. Tolerance for risk is an individual choice. Starting a business, expanding a business, leaving a job, and skydiving all fall on the risk spectrum. Where it falls on the spectrum depends on the individual.
In a previous blog, I mentioned that I made responsible choices for most of my life. I tried to mitigate risk often which was a good thing. But was it the best thing?
My first major life decision was selecting a college to attend. The decision was between Manhattan College, which was thirty miles from my hometown and close to my family and friends, or James Madison University, a beautiful campus in the Shenandoah Valley of Virginia and six hours away from home.
I chose JMU and I set foot on campus without knowing a single person. It was an exciting and anxious time, but I am not sure it was particularly risky. After all, there were about 12,000 students my age on campus. Surely, I would find my people. Looking back on that decision 25 years ago (!), I can say that was one of the best and most important decisions of my life. It gave me confidence as I relocated three times early in my career. Each time to a new state (North Carolina, Iowa, California) without knowing a single person.
Present day campus of James Madison University
Risk can be easier when youth is on your side. As Bob Dylan sang, “When you ain’t got nothing, you got nothing to lose.” It was easy to move across the country when I was pursuing my professional dream and only had to worry about myself.
The biggest professional risk I took was in 2004 when I changed the name of the Modesto Professional Baseball Club from the A’s to the Nuts. I will save the specific details for the book, but this was the first time I put my career on the line. I made the choice I thought was best for the future of the organization and I stood my ground. It took arduous work and resolve by a talented front office staff but shortly after, the team started breaking records, winning awards, and the franchise was set up for long-term success. The risky decision made success the only option and we met the challenge.
Slowly over time, my mindset began shifting towards loss aversion. Loss aversion is when a real or potential loss is perceived emotionally as more severe than the potential gain. This manifested in two ways for me:
1) I pushed myself and others so we would not “fail.” Sometimes this behavior elevated the performance of the team. Sometimes it put too much pressure on all of us. I do not think we ever failed but we certainly did not have as much fun as we could have.
2) I took less risks. We achieved a level of success that exceeded our initial expectations. I did not want to go backwards so I took a safer route than necessary at times. We always had an extremely high floor, but we might not have ever hit our true ceiling. The potential gain was not as attractive as the potential loss if it failed. I settled for singles and doubles rather than swinging for the fences and risking a strikeout.
I had something to lose, and I held onto it tightly. Maybe at the expense of something even greater.
Motivational speaker Les Brown has said,” People don’t fail because they aim too high and miss, but because they aim too low and hit.” If you aim high and miss, you gain experience. Experience that can help you as you reach for the stars the next time.
Finding the right balance between risk and reward in a business is challenging. Prepare, know your risk tolerance, and give me a call if you need assistance.
The lyric of the week is from Norwegian pop band a-ha’s hit single “Take on Me” – “It’s no better to be safe than sorry.”
You might remember the innovative video that received major airtime on MTV in the mid-eighties. Take a stroll down memory lane by viewing the video. I also linked an acoustic version of the song. Notice how the lyrics hit differently depending on the tempo of the song.
If you are thinking about making a change in your business or professional life, email me to schedule a time to review your goals and so we can put a plan in place to exceed them and gain experience.
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