5 ways to harness the power of positive risk-taking
Let’s talk about risks. Even if you’re not contemplating a risky new move, you’ve probably taken a few risks to get to where you are today, and chances are you’re not done taking them.
In a recent podcast for Harvard Business School, Twitter co-founder Jack Dorsey defined entrepreneurship in terms of risk-taking. “The definition of entrepreneurship is actually taking on significant risk, usually financial, in order to build something,” he says. “That means anyone can really take on an entrepreneurial attitude. An entrepreneur does not necessarily create a business. It’s just a very bold attitude of taking on risk.”
Taking on a bold attitude for a risky next step isn’t as difficult as it sounds. Here are a few ways to harness the power of positive risk-taking.
1. Fight the negativity bias. The world is full of uncertainty. Take, for instance, the business world, which is especially prone to unforeseen disruptions. In the past 50 years alone, we’ve seen the rise and fall of Fortune 500 companies and the creation of entirely new industries. Every decision, including the decision to do nothing, carries some element of risk. “The problem is the negativity bias—we tend to exaggerate the riskiness of certain moves and underestimate the opportunities of others,” entrepreneur and productivity expert Tim Ferriss writes on his blog.
Risky behavior is everywhere. Instead of fixating on the consequences of a risk you’ve never attempted, try to evaluate the entire scenario, including any potential hazards of maintaining the status quo. “Risk is an unavoidable constant of life, so your focus should be on taking the right kinds of risks that offer the right kinds of opportunity,” Ferriss says. Some questions to ask yourself: Which risk is worth taking? Which risk would impart more meaning or happiness to my life? Which risk would pay off more in the long run?
As Facebook co-founder and Harvard dropout Mark Zuckerberg famously stated, “The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”
2. Build self-efficacy. As the popular Ralph Waldo Emerson quote goes, “All life is an experiment. The more experiments you make the better.” Researchers have found that Emerson was onto something. In their 1994 study on risk and decision-making, entrepreneur researcher Norris Krueger Jr. and strategic marketing professor Peter Dickson discovered that small, measured risk-taking behaviors can increase confidence and self-efficacy, the “I think I can” positive psychology that enhances goal achievement.
So the more experiments you make, the better you get at making them. And the more risks you take, the more positive your risk experiences become. If the idea of risk-taking still makes your palms sweat, try to increase your comfort level by taking a small risk before embarking on a bigger one.
3. Be intelligent with your risks. It’s important to add that building confidence in risk-taking doesn’t necessarily mean you’ll take smart risks. It might be helpful to build in parameters or conditions for each risky decision. When Todd Goldberg, co-founder of digital event organization platform Eventjoy, left his job in August 2013 to pursue his startup, he gave himself one year to generate significant revenue or funding.
It turns out that Goldberg was uncannily perfect in his one-year limit. In September 2014, little more than a year later, Ticketmaster purchased Eventjoy for an undisclosed amount. “We had more lows than I can count—getting no’s from dozens of investors and the product breaking at critical moments, just to name a couple,” Goldberg says. “Despite all that, we’ve had an amazing year that included being accepted into Y Combinator’s winter batch, raising funding, making great progress on the product, and most important, growing at a good rate.”
As a football player for the Philadelphia Eagles, Emmanuel Acho fully understands the varied risks that come with his job. “The dilemma many athletes face: Is it worth maximizing capital now, maximizing my talent now with the small window of time I’m in the NFL, or should I try to focus on opening doors for the future?”
Acho currently focuses entirely on football, but during the off-season, he invests his time in earning a master’s degree and running an online community startup, Be Neighborly. “Startups are hard,” Acho says. “They are miserably hard, yet it’s in our blood to just be challenged and pursue something risky. In the off-season, people were traveling and having fun, and I was just studying and working. Hopefully that pays dividends in the long run.”
4. It’s OK to “fail.” While the “Fail fast!” mentality of startups might sound strange, expecting failure could actually be seen as a method for success. New York University conducted a gambling experiment in which some participants were told that losses were completely inevitable and acceptable, while others weren’t given the same pep talk. At the end of the study, participants who expected losses didn’t become dejected when losses occurred, and they were able to outperform their peers by taking more intelligent risks.
Know that failure is an option and come up with a plan on how to handle loss. Being mentally prepared enables you to make positive risk-taking decisions without fear of the unexpected, which can be the most crippling component of taking a risk.
5. Just do it. After you’ve analyzed a risky opportunity to death, sometimes it’s best to listen to your gut and just do it. “Now that I’m on the other side and have started Eventjoy, I’ve learned that creating, and even joining, a startup is not as risky as it seems,” Goldberg says.
“You’ll learn more in two years than you would have in five years of a ‘normal’ job. You’re forced to be resourceful, which can be a powerful thing when it comes to creativity and execution. You often have a large role in something that will hopefully impact millions of people. Plus, if it all falls apart, you can always go get another job.”