How to take the right risks

Individuals and organisations can both benefit from a more entrepreneurial approach.  Starting a new business, solving difficult problems in an existing organisation, or living a more fulfilling life are all examples of entrepreneurship.  In this column we will explore the traits of successful entrepreneurs, drawing from theory and direct experience as a coach of Founders and their teams.  We will also look at how you can learn and apply these characteristics to your own company or your job, and most importantly to your life. Fundamentally being an entrepreneur is about meeting the challenge, moving from passenger to pilot.

A central theme of entrepreneurship is risk taking.  In essence anything different involves some form of risk, of uncertainty.    Treading a new path at work or at home means there is no clear map.  How do you make risk more palatable?  

Firstly ask why am I taking this risk?   Are the potential outcomes important to me, are they enough to make it worthwhile?   Am I taking this risk because someone else thinks I should take the risk?  Unless you really understand and believe in the reason behind the risk you are unlikely to be summon up the motivation to keep going.  How will you feel if you do manage to make the risk pay off vs doing nothing?  If the risk is not in some way exciting and meaningful to you, then it will be hard to keep going through the inevitable setbacks.

Think of it as an experiment.  The word risk stops many of us in our tracks and keeps us trapped in lives and work that we are not happy with.  An experiment can be exciting.  Yes, we do not know what the outcome will be, there may be dead ends along the way, but we can refine our experiment as new information becomes available and keep moving forwards.  Experiments involve failure, discoveries often result from failure.  Seeing failure as an inevitable and important part of risk taking can reduce the fear associated with it.

Often we do not even start because we catastrophise the potential outcomes.  What is the worst that can happen?  Sit down and really think through this question.  We tend to stop short of a specific answer and instead wallow in a pond of non-specific anxiety.   Once you have these answers then apply the idea of a pre-mortem rather than a post-mortem.  Imagine in 6 of 12 months time that the plan has not worked out as you hoped.  What has gone wrong, what are the mistakes you made?

Once you know what the potential pitfalls are then how can you reduce the risk?  At a talk recently the astronaut Tim Peake was asked what he really feared.  His answer was simple, he feared running out of options.  In their training astronauts and test pilots are endlessly imagining and rehearsing the worst things that can happen, and then developing and practicing options to deal with these scenarios.   What options can you have ready if your experiment does not go as planned?

Could you start in a smaller way.  Not many entrepreneurs put their house on the line despite the mythology around this.   Start with a risk that feels like a stretch to you but does not make you panic.  At work could you ask to do less of one activity and more of another rather than asking for a whole new job?  If you are starting something new, could you find a way of testing the concept without putting all of your resources into it on day one?

The final step is to turn all this thinking into a plan.  Taking a risk without a plan is reckless.  Write a simple one-page outline.  Why the risk is important, what the desired outcome is, what are the key goals along the way and when will these be achieved.  What are the options when the plan does not progress in a straight line and who else do you need to have involved to help?  Talking through your plan with others and enlisting their help provides a useful sense check and crucial allies for maintaining progress.

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