Say an opportunity arises that piques your interest and passion? But what if this opportunity only has a 50 percent chance of success? Would you still take the risk?
If you wouldn’t take it, you would be like most of us. Many of us have responsibilities that keep us following the status quo and not taking risks with our careers in order to maintain what we’ve worked hard for, what has been entrusted to us.
We know that the world needs people who take initiatives to turn their visions into reality. Without them, nothing would ever improve. Without people who think innovatively and push us forward into new directions by challenging the status quo, our world wouldn’t get better.
But how can you make the differences you desire to make, without risking it all? Can you balance both thinking with an innovative, entrepreneurial mindset and successfully changing your career outlook, while simultaneously making sure you don’t throw everything away?
Thankfully, there is a way. Calculated risk-taking involves planning and strategizing in the right timing, without risking it all and possibly losing it all. However, even the most calculated of risks is still a risk, and involves stepping out and facing the fear of failure to achieve success.
Whether you’re thinking about becoming an entrepreneur, spearheading a new initiative in your current position, or looking for ways to alter your current role into something more meaningful and rewarding, you can learn how to take risks well to pursue deeper meaning in your career and life.
Most think that in order to be successful, you have to go all in and take the plunge. But it’s proven that living out the career you desire actually happens by playing it safe. The trick is knowing when and how to take calculated risks.
Dr. Bruce Schooling, professor of management at Point Loma Nazarene University (PLNU), believes the real difference lies in the word “calculated.”
“Almost everything we do involves some risk and therefore, we are always making decisions based upon our level of risk aversion,” said Schooling. “What moves a decision away from recklessness is the amount of thinking we bring to bear upon the decision; a decision without thought would be reckless. A decision where the variables and possible outcomes are given reasonable and responsible consideration would not be reckless.”
Take a look at Warby Parker, the online-based eyewear company that uniquely features a free home try-on program. The founders started the business not by quitting their jobs and fully committing to a risky venture, but by playing it safe. Keeping their day jobs allowed them the freedom to do something completely original; if they had risked everything, they may have felt pressure to release a product immediately instead of taking the time to come up with their ideas. Their success was due to this calculated risk-taking, and as a result, Warby Parker topped Fast Company’s Most Innovative Companies list for 2015.
Adam Grant, author of New York Times bestseller Originals: How Non-conformists Move the World, was approached with an offer to invest in the eyewear startup, but declined because of his then perception that “you have to be all in” in order for your business to succeed. Now, he is open about his regret and newfound understanding. “To become original, you have to try something new, which means accepting some measure of risk,” wrote Grant.
“But the most successful originals are not the daredevils who leap before they look. They are the ones who reluctantly tiptoe to the edge of the cliff, calculate the rate of descent, triple-check their parachutes, and set up a safety net at the bottom just in case.”
Those who are successful don’t just leap, but instead have manageable risk portfolios, described Grant. Though they may take many risks in one area of their lives, they’ll compensate by following the status quo in other areas. For example, if a person is going to spend a few hours playing poker, he or she may drive slower than usual on the way to where the game is held. In other words, individuals who are successful in their risk-taking tend to balance out their overall amount of risk.
Great entrepreneurs are still afraid of failing, just like the rest of us. The only thing that differentiates them is the fact that they are even more afraid of failing to try. This doesn’t mean that every time they’ve tried, they’ve been successful. Becoming an original takes a willingness to risk, and also, a willingness to fail on the way to success.
“Understanding that failure is a part of risk and often unavoidable is an essential component to being comfortable with risk,” said Dr. Randal Schober, associate professor of management at PLNU. “Nearly every entrepreneur will tell you they failed more than they were successful, but it’s how you fail that makes the difference. Successful entrepreneurs fail fast and fail forward. They learn from their mistakes and pivot accordingly.”
Failure Is A Key to Success
In a recent Fortune article, “What Every Company Needs to Stop Being so Afraid of,” author Ryan Smith, founder and CEO of Qualtrics Survey Software, discussed the role failure plays in his company.
“One key lesson I’ve learned in my 14-year journey at Qualtrics has been that as a leader in any role, you have to make it safe to fail,” said Smith. “When taking on ambitious projects, you have to treat failure as part of the learning process, because if you are going to get anywhere worth going, you have to stick your neck out. You have to experiment and iterate. Often that means failing on your way to success.”
He went on to share about a weekly meeting segment his company calls “whoops,” during which employees volunteer to share recent failures or embarrassments at work. They then vote on a winner, who gets to keep the company’s stuffed animal monkey named Whoops for a week. This provides a safe place to fail, and therefore, empowers employees to take risks.
“Some of my biggest regrets are when I had a big idea and didn’t hop on it fast enough or go all the way because I was afraid of failing,” he shared. “If every bet, every hire, every product release, and every acquisition is safe, it’s pretty clear that we are not going to change the world. We don’t always need the smartest, most talented, and most experienced employees. What we do need is to have the fastest learners. We need people who are willing to take smart risks and help us stay on the cutting edge.”
According to Schober, facing the idea of failure head on is necessary for success.
“A business’s inability to take risks is like a skateboarder who wants to be an X-game gold medalist but is fearful of falling off his or her board—it will never happen,” Schober said. “Only when you push the limits of what is possible will you be able to create new value and capabilities that will be awarded by market success. With startups, I have failed numerous times with marketing strategies and targeted demographics, but the key is to immediately measure impact and modify or pivot as soon as possible.”
Many well-known entrepreneurs have shared publically about their downfalls, in order to share insights about what they’ve learned. In a Fast Company article, titled “11 Famous Entrepreneurs Share How They Overcame Their Biggest Failure,” some big-name business owners opened up about what it’s really like to fail.
1. ARIANNA HUFFINGTON, CO-FOUNDER OF THE HUFFINGTON POST
When HuffPost was first created, Arianna Huffington received many negative reviews, including one from a writer who called the site “the equivalent of Gigli, Ishtar, and Heaven’s Gate rolled into one.” She also experienced rejection from 36 publishers when trying to publish her second book.
“But my mother used to tell me, ‘failure is not the opposite of success, it’s a stepping stone to success,’” Huffington shared. “So at some point, I learned not to dread failure. I strongly believe that we are not put on this Earth just to accumulate victories and trophies and avoid failures, but rather, to be whittled and sandpapered down until what’s left is who we truly are.”
“Failure is not the opposite of success, it’s a stepping stone to success.”
2. BENNY LUO, SERIAL ENTREPRENEUR AND FOUNDER OF NEXTSHARK, NEWROCKSTARS, DISCOVERME, AND THE OTHER ASIANS
Benny Luo has attempted to grow many businesses, some of which are thriving today, and some of which ended up failing. But Luo learned from those failed attempts and gained valuable lessons along the way.
“Before I found success in my first company, I dabbled in many ‘get rich’ ventures, including network marketing, online poker, and affiliate marketing,” shared Luo. “While I did find some minimal success, all of these ventures eventually turned into failures. But, one day I realized that after each failure, I always gained some valuable knowledge of things I could apply to or avoid in my next project. That was the attitude I adopted after every failure from then on. I focused on what I had gained instead of what I had lost, because that’s what really matters in the end.”
3. CHRISTINA WALLACE, VICE PRESIDENT OF BRANDING AND MARKETING AT STARTUP INSTITUTE AND FORMER CO-FOUNDER OF QUINCY APPAREL
After Quincy Apparel shut down, the startup’s co-founder Christina Wallace stayed in bed for three weeks. After this difficult period, she chose to talk about the realities of her experience in hopes of helping and encouraging others.
“… I learned to be as open about my failure with my friends and family as I was willing to be about my successes,” said Wallace. “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. Senator McCaskill … said at a Politico conference that ‘winners are those who are willing to lose.’ I really like that mentality.”
So Be Afraid – And Then Do It Anyway
While it might be helpful to read examples of real-life failures, even still, the fear of failure is a big one. Though many of us know it’s better to try than to fail, the fear we experience can be so daunting that we still don’t take risks and move forward, but instead, stay paralyzed.
“An individual’s relationship with risk is founded on two main factors: one’s inherent comfort level with taking risks and the degree of consequences if one doesn’t take risks,” said Schober. “These are often referred to as ‘sinking the boat’ or ‘missing the boat.’ And sometimes, the latter can be even more devastating.”
For many successful people, whether they are starting their own company or implementing meaningful change in an existing one, the fear of missing the boat or experiencing regret can be even more impactful than the fear of failing. As author John Acuff puts it in his Fast Company article, “How to Balance the Fear of Failure with the Prospect of Regret,” “If fear is a tidal wave, large and loud and temporarily very powerful, regret is a small stream that cuts a canyon into your heart slowly over time.”
Business Insider recently shared insights from a commentary thread on Reddit, an online networking service. This included an impactful story of two girls at a public pool when they were young. One of the girls had been loudly voicing her fears to her older sister about diving into the pool. Overhearing the fearful girl, a 75-year-old woman who was swimming laps stopped to interject and share wisdom. With her fist in the air, she shouted, “So be afraid! And then do it anyway!”
“That was 35 years ago and I have never forgotten it,” the writer said. “It was a revelation—it’s not about being unafraid. It’s about being afraid, and doing it anyway.”
Making an impact, whether that’s by launching a startup company or speaking out within your current profession to change the status quo, requires facing an inevitable fear of failure. By taking calculated risks, you can face that fear while simultaneously making sure you don’t lose everything you’ve worked hard for. This will allow you to advance your own ideas, live out the career and life you want, and better our world—with no regrets.
6 Steps to Take Now
1. BROADEN YOUR VIEW
Based on his observations, PLNU professor Dr. Bruce Schooling believes it’s important to be well-rounded when approaching any kind of business venture.
“It’s necessary to think, read, observe, and consider across a wide range of cultures and experiences,” he said. “The broader the background information you have to draw upon the more likely you will see the pitfalls and the changing environment.”
When this comprehensive evaluation or “due diligence” is combined with a vision for the future, (looking at what has happened, what is happening, and what may happen that might impact your venture), it creates a clear direction to take your idea or business.
2. VET OPPORTUNITIES WISELY
In the Entrepreneur article “4 Steps to Taking Calculated Risks That Move Your Business Forward,” author Elise Mitchell wrote about the need to turn down good opportunities in order to pursue great ones. And this process can be difficult.
“A trusted consultant told me, ‘You have so many ideas, but you can’t realistically pursue them all. You have to learn to say no to most of them so you can say yes to the very best,’” she said. “Over time, I’ve seen that saying yes to everything would mean going wide but not deep. It’s better (and more profitable) to be an expert in a few areas than to offer shallow knowledge in everything.”
3. LEAD WITH WEAKNESSES
“At some point, we’ve all considered voicing a minority opinion, protesting a policy that doesn’t make sense, championing a novel way of doing things, or standing up for a disadvantaged group of people,” wrote Adam Grant in Originals.
The key to successfully going against the status quo is found in knowing how to speak up effectively without jeopardizing your career or relationships. When presenting ideas to people with more power than you, lead with weaknesses, in order to disarm your audience.
“Rampant confidence is a red flag—a signal that we need to defend ourselves against weapons of influence,” shared Grant. Being upfront about the downsides of your idea makes you trustworthy; presenting negatives can ironically make it more difficult for audiences to think of them. And make sure to repeat ideas. It’s proven that if an idea is familiar, people tend to like it more.
4. TEST THE WATER
In the Inc. article “A Business Owner’s Guide to Taking Calculated Risks,” author Drew Hendricks suggests finding out how far is too far for your business, and starting off by taking small risks.
“Determine what you can afford to lose,” he wrote. “Companies that know they can’t afford a large flop should start with baby steps. Take small risks to test the water and gain confidence. This should help you build a higher tolerance for risk, which means your business will trust itself enough to take larger risks in the future.”
5. GAIN MARKET FEEDBACK
According to PLNU’s Dr. Randal Schober, when you move forward with a business or idea, constant communication with your market or customer to modify your strategy or product is essential.
“Customer and market feedback is the most critical variable that will determine the potential success of a business and correspondingly eliminate as much risk as possible,” he said. “The difference between a good idea and a good opportunity is market demand. The best way to know what the market wants is to ask them.”
6. SPEAK NOW TO AVOID REGRETS LATER
Adam Grant reiterated the importance we all place on speaking up. He wrote, “… in the long run, research shows that the mistakes we regret are not errors of commission, but errors of omission. If we could do things over, most of us would censor ourselves less and express our ideas more.”
If you feel a call to change the status quo and make a difference through your business, you may want to consider earning your MBA. Many successful business professionals and entrepreneurs have pursued graduate business education to help them gain the skills necessary to take their original ideas to the next level.