Taking risks is a cultural value that many companies are openly aspiring to live, especially within the tech industry. For those of us who are more risk-averse, it might be hard to understand what’s so inspirational about the idea of taking risks. In the end, making huge, risky decisions can have an equally huge, detrimental impact on your business (and/or team). We don’t want to blindly jump into every risky situation. It’s likely that doing so would cause damage that might be impossible to come back from.
Taking risks is viewed so positively because it opens the doors to innovation. A risk is any kind of situation that might turn out badly, thereby exposing the subject (whether it’s an individual or a business) to some kind of danger. For example, if you as an individual buy property that turns out to have extensive damage and needs a huge upfront cost, you took a risk that didn’t pay off. If you run a business and decide to invest 100% of your funds into the production of a new product and that product doesn’t sell, you took a risk that didn’t work out. It’s easy to look at the negative consequences of any decision and say that it was an avoidable risk.
The important thing to understand is that you can never be truly successful as a business if you take no risks at all. If you operate in the kind of environment in which everyone only does exactly what’s expected of them and makes the most modest, low-impact decisions they can, you’ll never have the kind of culture in place that enables you to make big strides in any direction. Every single person who stood for something took a risk of some kind. Every single person who pioneered something new or tried to do something that’s never been done before took a huge personal risk. Companies want to tap into that innovative drive and ambition because this is inherent to every successful business.
As a manager, you might have to make risky decisions occasionally. For example, as a product manager, you might want to add a new feature to your product line-up and see how it performs. As a support manager, you might want to expand the channels that you cover. Every decision that you make will likely have consequences, some of which might be great, others not so much. To some extent, being in the place to make decisions like that is a rewarding and satisfying experience. You’re under pressure, because others are relying on you to make good decisions. It’s a challenge, because you can never be certain how it will turn out. However, the payoff is amazing if you manage to get it right.
I can rationalise myself through any decision like this but, by nature, I’m not someone who’s happy to jump into risky situations. These are some of the ways I’ve managed to make myself a little more comfortable with it, through experience and practice.
The moment you figure out that making a certain decision is making you uncomfortable because it’s risky, the first and easiest thing to do is to try to assess the risks properly. You can go through these step-by-step:
- What are the different options that you have?
- What are the risks associated with every single option, both big and small?
- What’s the absolute worst-case scenario in each case?
This might seem a little counterintuitive, since focusing on the worst-case scenario can make this experience a little more anxiety-inducing. I’ve found it the most effective way to face the problem head-on. It’s much better to be consciously aware of the consequences of your decisions than it is to make a decision on blind faith and hope that it will pay off, then deal with the fall-out if it doesn’t. The only way to become comfortable with taking risks is by becoming comfortable with the potential of a bad outcome.
Think of it this way: if you decide to go ahead with something and it turns out badly, you’ll have had the opportunity to come up with ways of tackling or reducing the risk. If you’re only able to take risks by being ignorant of the potential consequences, you haven’t actually developed that skill. You’re rather relying on trying to avoid the situation as much as possible. That’s why I always start by thinking of the worst-case scenario. Ideally, you want to weigh the likelihood of that happening against the likelihood of your best-case scenario. To ultimately make this decision, you have to be comfortable with the idea that the former might happen because the latter is worth going for.
Once you have a list of every potential thing that could go wrong, you can start going through them one-by-one and seeing what you can do to mitigate each one. It’s important to realise at this point that you can’t avoid everything. How to mitigate each one depends completely on your situation. You could maybe build some things into your research or process to at least reduce the likelihood of something happening. Maybe the best you can do is come up with a plan B, so that if that turns out to be the case, you’ve already thought about how you’ll react to the situation and how you’d handle it.
If you get stuck at any particular point, that’s a good time to think about how important that risk is. There’s no point in spending hours thinking about how you’ll deal with it if the impact is pretty small. At that point, it’s better to just accept that it might happen but if that’s the worst to happen, then you’ll just live with it. If it’s a pretty big risk, then it’s worth the time investment to come up with a way of handling it. One of the best things to do would be to give yourself some time and just sleep on it. You might be able to come up with a better solution at a later point. Alternatively, ask around in your network, do some research, see if you can get external information that would help you move forward.
Ideally, once you’re done with this, you should feel much more confident about the decision. Even if you haven’t figured out exactly what you will do yet, you should hopefully be a lot more prepared to deal with the situation, no matter which direction it ends up going in.
The pros and cons of each decision are heavily impacted by the risks you could come up with in the earlier steps, which is why I usually do this part at the end. One of the cons you write here might be: it’s a risky decision. The focus at this point is to build out your pros so you have a very clear idea of what your best case scenario might be. It’s much easier to make a decision, especially when it’s a risky one, if you have a crystal clear impression and understanding of what you’re doing it for. Ultimately, you want to take a risk because there’s a high likelihood of the payoff being worth it, of you being able to achieve something that you would never have been able to otherwise. Taking a risk might seem scary and you can only overcome that fear if you know what you’re working towards. That’s why it’s worth doing this step in as much detail as you can.
Eventually, once you’ve listed everything you can possibly come up with, you’ll need to weigh them against each other. Maybe one of the cons has such a high impact, that you can’t ultimately justify going ahead with the decision. Or one of the pros is so compelling and would make such a meaningful difference to you that it outweighs all of the cons. There’s nothing that you can do to make this step easier. In the end, you can only rely on your best judgement. Your judgement can only grow and develop with experience, time, and exposure to new ideas. As long as you’re aware of what the primary things that are holding you back are, you’ll be able to make a better decision.
The great thing about going through a process like this systematically is that it forces you to rationalise and justify your way of thinking. It’s much easier to notice that you’re uncomfortable with the situation and why you’re uncomfortable with the situation when you have a plan like this to fall back on.
By the end of this part, you should know all the risks involved, how you can mitigate them, what the pros/cons of each decision might be and how they relate to each other. In an ideal situation, you’d be able to make a decision now, even if it’s risky. But maybe you still don’t feel ready yet. Then what?
At that point, I’d call in outside help and get a second opinion from someone who isn’t involved in the decision already. I’ve often found just the experience of having to explain the situation to someone else can help with sorting out how you feel and what decision you want to make. Because you have to articulate it in a way that’s hopefully coherent and structured enough for someone else to follow, your own thoughts end up coming through a lot more clearly.
If you find someone who’s especially different from you when it comes to risk-taking, that might be even more valuable. At the very least, it’ll help you understand if someone else perceives that as a perfectly reasonable decision to make and whether you’re holding back because you ultimately want to avoid the risk.
Whatever you do, don’t let feelings hold you back if you can’t back them up with reasonable, conscious choices. There’s so much truth to the idea that you have to make the most of the time you have available, and that the only person who will be harmed if you let fear dictate your life is yourself.