What’s The Right Kind Of Risk To Take?

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Monday, 8.47pm

Sheffield, U.K.

Risk comes from not knowing what you’re doing. – Warren Buffett

I had a look again at David J. Schwartz’s The magic of thinking big yesterday – and was struck by a section on why some very clever people don’t achieve as much as you think they should.

As Robert Kiyosaki put it, A students end up working for C students, and B students end up working for the government.

Why is that?

One thing, Schwartz writes, has to do with attitude, the kind of person you are.

Early in your career people will pick you and promote you more on the basis of how you approach tasks and whether you get things done than how smart you are.

Being smart helps.

Knowing things is good.

But being useful is important.

If your managers find that you are useful you get more responsibility and are exposed to more opportunities than someone who is not.

But what is it about attitude that makes the difference – and how do you decide what kind of attitude is best?

Let’s take an extreme of the positive approach – the kind of person who always promises to deliver and is certain they can get things done, no matter the obstacle.

You find such people in many places, bull headed people who believe in themselves and are ready to push themselves to the limit.

You might think of such people as risk takers, the kind of person that would take a running jump across a canyon, the kind of person who will shoot for the stars.

Some of them make it.

Some of them don’t.

Those that make the leap might then tell you all about how you need to leap and then the net will appear, when one door closes another will open.

But while you listen to them you must keep in mind survivor bias – you’re only getting the message from those that got across.

You don’t hear from the ones who took the jump and for whom the net failed to appear, or the ones for whom the door turned out to be a window.

The other kind of person is the one who knows what can go wrong with anything and everything.

These people stand on the sidelines, watching the jumpers – knowing why they will fail – and why they would never themselves take the leap.

It’s a form of negative thinking, if you want to demean it, and a form of realism, if you want to accept it.

Either way such people choose to be safe – to do what should be done.

They live their lives but because they take no risk at all they perhaps don’t achieve what they could have done.

They’ll never know.

And then there is the image of the tightrope walker – a person who takes a calculated risk.

Someone who steps out into the void – but a step at a time feeling for safety.

Someone who trains and practises and has the skills needed to balance and maintain a precarious footing.

Someone who knows what can go wrong and takes the trouble to learn how to do things and get the right tools to help along the way.

Perhaps the way to think about this is as follows.

Some people take a leap and some of them succeed.

Some people search for reasons why doing something will fail – and so rarely achieve anything.

And some people try and work out how to make something succeed – and improve their chances of doing so as a result.

I’d put the three in a particular order – using a red, amber, green approach.

The wild leap, for me is the riskiest approach – and gets a red.

Staying put is better than jumping – and gets an amber.

Knowing what you’re doing gets a green.

Cheers,

Karthik Suresh

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