It is often said that no worthwhile reward comes without risk.
Mark Zuckerberg recently said that “in a world that’s changing so quickly, you’re guaranteed to fail if you don’t take any risks.”
Classic startup and entrepreneur ‘motivation speak’. Also true, in my experience.
Muhammad Ali once declared that “he who is not courageous enough to take risks will accomplish nothing in life”. An attitude that is shared by most sportsmen and women.
The critically acclaimed French novelist, Andre Malraux famously believed that “often the difference between a successful person and a failure is not one has better abilities or ideas, but the courage that one has bet on one’s ideas, to take a calculated risk – and to act.”
These are just some of the many variations of the same statement: risk is involved in the pursuit of every worthwhile reward.
But is it really true? Does everything worth having come with risk?
If you’re not a unicorn entrepreneur, world-class sportsperson or controversial political satirist, do you really need to take a risk to get where you most want to be? Or even before that, to take a risk just to discover what it is that you really want most?
It’s not something that I had considered much until two things happened to me recently.
First of all, I took the leap, left the corporate world and set up my own business, (Farill.io).
Second, the excellent team at Bulldog Drummond challenged me to write a piece on risk and reward – or more specifically, is there no reward without risk?
So I sat down and thought about it properly. I considered it from 3 angles: wearing my own newbie startup hat, in relation to my earlier 20 year career (mostly as an intrapreneur in far larger corporate organisations), and as a daughter, wife and mother.
What I concluded, quite simply, is that all life is risk. And that pretty much everything worth having really does come with risk.
And I guess that shouldn’t come as any surprise. It’s always been so, since the beginning of time.
Our very first ancestors knew this, even as we lived in woods and caves and scratched a primitive existence from the land. As we worked out what was safe to eat, how fire can hurt as much as it can comfort, what caused and cured illness, how to climb, swim, hunt…so we encountered risks. And we took them.
Although these days, the nature of the risks we take are quite different, the lives that we live today are no different in the quantities of risks that we take daily. Much of the time, we even take them unthinkingly.
Risk-taking is how we grow and evolve. And over-thinking risks can even be a bad and progress-impeding activity.
“If we listened to our intellect, we’d never have a love affair. We’d never have a friendship. We’d never go into business, because we’d be too cynical. Well, that’s nonsense. You’ve got to jump off cliffs all the time and build your wings on the way down.” Annie Dillard, author
Without taking risks, we never discover what we’re really capable of achieving.
We may fall down, things may not always work out, and some of us will be more risk-averse than others. One thing, however, is very clear: it is innate within humankind that we will take risks. We are not a species to sit tight and accept the status quo.
So if is true that everything worth having comes with risk, how much risk should we accept, before that risk becomes too high?
Some risk is clearly good. The incontrovertible tide of well-written support in favour of stepping out of comfort zones, pushing ourselves to try new things and striving to change the world, makes that clear.
But the consequences of taking risks, when the gamble doesn’t pay off, can be profound. At the nastier end of things, well, for example, there might be burgeoning debt and damage to credit-ratings, damage to reputation, loss of confidence, loss of motivation, being socially ostracised or publicly humiliated, divorce, even dangers to yourself or others – when was the last time you broke the speed limit?!…
For some of us, the knowledge of those risks is enough to keep us from trying anything new, from stepping outside of our own comfort zone, from breaking the rules.
But speeding offences aside, for many intrapreneurs and entrepreneurs, even in spite of the known risks and the inevitable scepticism of others, it’s not enough to dissuade us from pursuing novel and disruptive ideas.
And the exhileration when it all comes together is addictive and self-perpetuating.
“When you take risks you learn that there will be times when you succeed and there will be times when you fail, and both are equally important.” Ellen Degeneres
The trick, I have learned, is in taking ‘calculated’ risks, as Malraux himself pointed out. It was an approach practised by a former CEO of a business in which she and I both used to work.
She drove excellent sales and business development results through insisting on excellence from the team, while ensuring that perfection, or the pursuit of it, was never a criterion for excellence. We worked together over 10 years ago, but it’s only very recently that I realised she was probably one of the earliest promoters of the Minimum Viable Proposition.
Get to market fast with something great and saleable that’s been created by the right people, she’d emphasise. Then iterate and by all means refine afterwards. But don’t waste time making what you’ve created perfect or worrying what happens if not everybody loves it, or if somebody feels upset and complains because they aren’t eligible to buy it.
If it sells from the outset, then it will sell even better when you’ve made it even better, and you can deal with the sceptics and the disgruntled sensibly later on. Take the calculated risk that you’ll be able to handle the consequences once you’re in market and banking the returns. The far greater and unforgivable risk, she’d point out, is that you don’t get to market on time – or ever – because you were so busy trying to address every risk and requirement and please every possible customer.
Be prepared to fail, even in spite of your best efforts. Failure is important too.
Degeneres’ advice above is highly relevant. Part of taking calculated risks is absolutely in recognising that you may not achieve exactly what you set out to do.
So have a realistic plan that you can activate if success is not the end result. And don’t beat yourself up (or let anyone else do that to you), if things don’t always go to plan.
It’s very easy to fall into the trap of a knee-jerk and emotional reaction to failure: “it happened because I’m rubbish and I’m giving up now”.
Failure may well be the stepping stone to future success. Just look at Edison. It’s pretty well known that he once confessed that it took 1,000 attempts before he managed successfully to invent the light bulb. When he was later asked by a reporter how it had felt to fail that many times, his response was to dismiss the notion that failure had come into it. “I didn’t fail 1,000 times,’ he apparently stated, “the light bulb was an invention that took 1,000 steps.”
According to best-selling leadership author Seth Godin, tons of failure is actually the best way to succeed with something really ground-breaking. There’s a great summary here of some of his advice in relation to handling failure, including why he feels it’s so powerful for achieving success, especially when that failure is experienced by those who learn from the insights that they gain and who remain undeterred from striving for their goals.
“Of course I make mistakes. I’m human. If I didn’t make mistakes, I’d never learn. You can only go forward by making mistakes.” Alexander McQueen
Know when to let go…
So failure can ultimately be a positive, that’s clear. But it can also be a very damaging outcome from which some businesses and their founders or managers do not recover. This is all the more so when that failure results from a weak business proposition or imprudent risk-taking. These are not the stepping stones to great breakthroughs and ultimate success.
Bouncepreneur’s Mike Allen knows a thing or two about these risks too. Mike is committed to supporting business founders in the UK who have experienced failure. He helps them to take the right, practical and positive steps to get themselves personally, as well as professionally, back on track. And that track might not be a dive back into entrepreneurialism, he says.
Mike talks of the very real grief that failed ideas and initiatives invoke in their founders, as well as the sometimes paralysing fear of social stigma if others discover that something has failed. In these circumstances, while quickly letting go of a failed initiative and minimising damage is crucial for these entrepreneurs, just as essential is their ability to recover and move on with sufficient confidence and perceptions of self-worth.
“I’ve thought I was going to fail many, many times. Each of those times is when I rely on mentors and friends to discuss crawling my way out. There are more quantitative failures, which happen all the time–where you have to be careful is not letting it affect your sense of self and self-worth. I think if you can shield yourself from that, it helps a lot. But it’s not easy to do.” Meredith Fineman, founder, Finepoint Digital
Happily, Mike – a ‘comeback entrepreneur’ himself and a published author on the topic, is building a structured programme to help others to handle this grief and recovery stage and to succeed in time with other projects, self-development activities and ambitions.
At least 50% of all startups fail, according to many of the established commentators and research organisations. Some set the threshold far higher (Forbes recently estimated it at 90%). Mike’s programme and the fact there is real need for it, serve as a reasonable reminder that uncalculated risks, or holding on to something that’s failing for too long, can carry very heavy penalties…
What is the biggest risk that you’ll take in life?
This is a huge question and one that’s unavoidable in measuring risks and rewards: is the biggest risk you can take going to be worth it?
I turned to my good friends on twitter and asked them this very question, giving the voting choices set out below. You can see the results from the scores:
Start a relationship 7%
Become a parent 19%
Set up a business 56%
Other (please tell me) 18%
In the ‘other’ category, voters mentioned taking on a mortgage, and, very interestingly, not taking any risk at all.
That last one really struck a chord for me and I agree with it, since, as business founder, Hannah Martin (who was responsible for it), points out, ‘not taking any risk is a far bigger risk than any of the others, because you risk missing out on so much’.
It was a sentiment strongly endorsed by business coach and presenter, Chris Pollard, who tweeted in response to Hannah’s observation that ‘calculated risks are important to move forward and ‘live’ your life’.
Setting up a business was, however, the biggest risk identified by those who voted. Based on my own personal experience, while having kids was (and remains!) a challenge that I don’t think any parent ever feels fully prepared for (and there have definitely been moments when I’ve felt truly rubbish at it), my vote would also have gone to the ‘setting up a business’ category.
The highs and lows, successes and challenges, to-do lists and juggling acts that are crammed into a typical business week, definitely represent the hardest and biggest risk I have ever taken on. Putting your savings and your reputation behind an ambition that you passionately believe in and that may look and operate very differently from conventional businesses in the same market, is a risk the size of which I don’t think can be overstated at times.
So… if the consensus is that we need to take risks and that setting up a business is the biggest one:
How do you best manage those risks to ensure they’re not a real gamble?
Here you’ll find my top ten tips, gleaned from personal experience and the extensive collective wisdom of the far more accomplished and wise folks amongst my network. The tips are as relevant to startups and new businesses as they are to anyone running and growing a business or a part of it.
Because life is risk. Embrace it and grow.
“Startups are not just what you read in the press. The real story is much more volatile and human, and we do our community a disservice pretending otherwise. I don’t celebrate failure for failure’s sake, but I think there is something amazing about trying to do something at the edge of possibility and potentially failing at it.” Christina Wallace, VP branding and marketing, Startup Institute, former co-founder of Quincy Apparel (source)