I’ve decided to do a series explaining each point that I made in my first post entitled “8 Ways to Avoid Mediocrity“.
#1 – Take Risks
It may sound trivial when someone says “you’re so young, you should take more risks”, but, what does that really mean? Each of us have a risk tolerance and unique circumstances associated with the risks we can take. However, I thought it may be interesting to share some of the ways I’ve adopted in helping me to learn how to take risks.
Here are 5 ways to be a better risk taker:
1. Don’t have a Plan B — Will Smith said it best — “There’s no reason to have Plan B because it distracts you from Plan A”. I think this is very important especially for people in their 20s. I find that we’re pretty hardwired to think about worst case scenarios and try to plan for them. From an investment strategy perspective, we’re taught to diversify our portfolio. However, at this point in your early life, you have relatively low levels of risk to diversify away. So why diversify? To quote Andrew Carnegie, “Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket.” As a young person who knows what you want to go after early on in your career, go after it with laser focus.
2. Attach your goals to your livelihood — It follows to reason from #1 that when someone puts it all on the line, that’s when he/she has to make it happen somehow, someway. If your livelihood depends on your every action, that pushes you to be more creative, resourceful, aggressive, and persistent. These traits are necessary, or you just won’t survive.
3. You don’t have to know all the facts — Learning to be ok with not knowing all the facts is definitely something to get used to. Many times in life we are presented with limited information, but need to make important decisions based on available information. I’m not saying not to do any research or try to gather as much information as possible, but part of learning to take risks is not always knowing everything or knowing how every last outcome will turn out. Sometimes it even comes down to just trusting your gut instinct.
4. Be apt to change — Part of learning to take risks is being able to change when you need to. What sort of change am I talking about? Change could be needed in your strategy to a current problem that you’re facing. It could be with respect to the direction of your company. It could be in the graduate degree that you’re currently working towards. Change is good and we should embrace it. For me, over the past couple of years that I’ve been working on my startup, we’ve had to change the direction of the company 3 times. Each time, for all good reasons. However, it wasn’t easy as there wasn’t enough info to determine whether each change would be successful. We were aware of the risks we were taking; regardless, we knew change was needed to move forward.
5. Fail fast — A great lesson to learn that I’m actually trying to adopt in my startup at the moment is being able to focus on learning and failing fast. A startup that recently shared this lesson openly with the public was Eventvue.com. Learning to take risks is being able to quickly learn from your failures. We’ve all heard that we shouldn’t be afraid to fail, but furthermore, we shouldn’t be afraid to fail fast. The faster you fail, the faster you learn, the faster you change course — this minimizes the time it takes for you to reach or to not reach the goal you’re trying achieve, which is a good thing in either scenario.
Conclusion — Once you’ve determined your goal and committed your livelihood to it, work towards achieving it. You might not have all of the facts or information that you like, but making work with what’s “good enough” is important so you can roll with it. See what doesn’t work as quickly as possible, understand why, and move forward with the changes.
These are just a few of the ways I believe you can learn how to take risks. What have been your experiences?
Great post for the week ahead… I’m pumped and I have just hard-wiped plans b and c from my mental archive! Plan A all the way!!!! It’s very reassuring to read these types of articles because often I think to myself I’m too arrogant or over-confident with my approach to school work and indeed career-path. I’ve bookmarked this :)) as proof i’m neither.
Glad to hear it was an encouragement to you 🙂
I LOVE the “No Plan B” point. It almost anticipates failure. And sure, failure will come sometimes. But when it comes you can just create another Plan A.
Here’s to success! Keep moving everybody!
I have to somewhat disagree with the “put all the eggs in the same basket, and watch the basket” mindset, at least for certain area: the stock market.
While that can work when day/swing trading big board stocks, where a good deal of capital is required to do anything worthwhile, on the micro-crap world (junk stocks / hyped frauds / Chapter 11 bankruptcy plays) you have to diversify because of market liquidity issues, common sense, and to increase the chance of hitting a supernova.
Fair point. I must say that I’m not a big stock market investor, however, even in the micro-cap world, if you’re not investing a good amount, then, you’re not going to hit a supernova, because you didn’t have enough invested in the first place. I would probably stick to companies that you can learn enough about and really decide whether you’re going to follow that company for a while. I’m not talking about overnight stock jumps, but rather long term value creation.
In general though, I do believe it works for much larger stocks than micro-caps.
The video with Will Smith is awesome. I love his in energy in the clip. I saw that video clip awhile back and I never get tired watching it.
Taking risks is a scary thing but if you don’t take them you’ll never find out what the outcome is. I rather live a life of taking risks then a like of “what if(s)”
One of the best pieces of advice I’ve ever heard is that you have to “learn to live within the question”. This is most true when you’re in a start-up environment — it doesn’t matter how much market research you do or how many focus groups you test, you’ll never really know how well it works until you let the market decide.
Right on, Albert. There is absolutely no way to know for sure what the outcome will be until you put yourself out there.
2 things that come to mind for me:
1) Plan big, act small. Know what your long term vision is, but for God’s sake, get started with the first step. Find something you can get out to the world, get feedback, adjust accordingly. Don’t get caught up thinking every step has to be some HUGE venture that you’ll live or die by.
2) Get your goals crystal clear before you even start or you’ll have no idea if you succeeded or failed. There shouldn’t be any “I guess it worked” or “It might not have turned out.” Set up your measurements and a deadline and when that day comes, you either succeeded or failed. Adjust accordingly.
I’m actually starting a writing project soon that deals directly with taking small, calculated risk to improve your life. My name above links to my twitter account and I’d love feedback if anyone would like to chat.
I like your list Andre. I remember hearing Will Smith say that and it reminds me of the idea of “burning the ships” so if you want to go home, you have to win the battle. Much like Sylvester Stallone never got a job because he feared becoming complacent.
This flies in the face of conventional personal finance, but if everyone is doing it, it’s not remarkable.
Make your goal your purpose and align it with your meaning so you believe in it with your soul.
Indeed, many people keep checking facts before going self-employed that by the time they may have enough it’s time to retire.