You've got to risk to grow
What are your views about risk? Are you comfortable taking them? Do you manage them or avoid them? Your concept about risk will determine whether you are able to develop a growth mindset or not.
In my previous two articles, I spoke about the Learning and the Bounce Back Dimensions of the growth mindset. Today, I will discuss the third Dimension, Risk Taking.
What type of risks?
Before we jump into the impact of Risk Taking on the growth mindset, we need to qualify what risks we are talking about. Obviously we are not talking about being reckless. There are some people who are more than willing to just throw pearls at swine. That is irresponsible and not what we are talking about. Especially when it comes to money, we want to take a more measured approach, as we shall discuss later.
So, apart from loss of capital, what else do we risk?
Well for one, you risk being wrong. As we discussed earlier, the Learning Dimension embraces failure for its learning richness. Hence, one needs to risk being seen as wrong, a failure, or even as incompetent in order to learn. I suppose the question is - which do you value more, knowledge or pride?
Not only did we lose a 5- to 6-figure revenue for next year, we also lost the relationship that came with it, and that was more painful.
We may also risk our relationships. I recall during the Covid19 lockdown, we could not run any face-to-face training. But one of our customers wanted to continue with training and would like to try online training. While I knew that our strategic thinking programme won't do well online, without trying, we will never know if that were the case. So I risked our continued relationship by trying it out with them. Well, we tried our best, but the sessions bombed and we have not heard from them since. Not only did we lose a 5- to 6-figure revenue for next year, we also lost the relationship that came with it, and that was more painful. But, we did learn a lot!
We also risk our reputation, our social standing, our intelligence and our pride. Wow! That is a lot of things we are risking, isn't it? But if you look deeper, these are not catastrophic risks, are they?
Some are very comfortable standing at the precipice of failure, looking into the abyss of defeat, and still take that next step.
Why is Risk Taking a growth mindset Dimension?
When you think about it, if indeed "failure" is the means to learning, then we will need to take that first step to learn, risking our personal name, pride and all those elements we spoke of earlier, to "fail". Now, you may recall in my previous article where I spoke about TEFCAS, saying that there is no such thing as "failure" so long as we continue to get up and try again. But there is still risk. And we do need to take that risk, to strike out and find out what we know and what we don't know. The higher our tendency to take risk, the higher the potential learning payoff. Of course, different people have different propensity for risk and failure. Some are very comfortable standing at the precipice of failure, looking into the abyss of defeat, and still take that next step. This may be because the person has high Bounce Back abilities to allow him/her to risk a little more than others. Yet, we want to remind that person that there is a fine line between confidence and hubris, and one should not risk too much even if one were able to recover from that fall. Hence, there CAN be a situation where too much risk taking is no good. However that tipping point is different for different people. This means that we all have to learn to manage risk.
How do we manage risk?
The reason why people fear taking risks is because they are afraid of the downside. So the first thing one needs to do to take the risk is to identify all the potential downsides. Back to my example of the online training, the risks that I faced were:
being labelled a bad trainer
participants saying that the content is no good
our feedback scores are way below our normal face-to-face feedback scores (which are typically above 6.0 on a 7-point scale!)
there is no engagement with the learners
we lose the customer and the potential 5- to 6-figure revenue for 2021
For some people, the downside would have been too great a risk to take. Each of these points can be "catastrophic" to them; but it does not need to be, if we know how to mitigate it.
So the next step basically is to do just that - mitigate the downside. By this we mean taking steps to ensure that these downsides are lessened or eliminated. Now, some risks cannot be mitigated, and that means that you either have to accept them or you have to avoid them. Avoiding the risk means you don't do anything, and that would defeat the purpose of learning. But indeed, if the price of the "failure" and hence the learning, is too steep, then one should avoid it. But there is another way to deal with those, which we shall discuss shortly. Coming back to my example, let's see how we can mitigate each of those risks:
looking at the upside, the downside was small. Of course, I could have lost it, as I did. But that is the price of risk-taking. We have to pay to learn.
being labelled a bad trainer? - well that is a matter of opinion and I understand that each participant has the right to think that way. They may be right, which will allow me to improve. They may be wrong, which does not change my self-perception. So, I think this is something I can accept.
participants saying the content is not good - again, this is a matter of opinion. Since our content is research-based, and has been adopted by many different organisations prior to this training session, I know that it is good. This is something that I, too, have to accept. As it turned out, they did say the content was not good, and that has challenged the construct of the programme. It has given me opportunity to pause, relook how the programme is put together, with the idea to perhaps relax some design constraints that have been there since its inception. So, that is a good outcome too.
poor feedback scores - and that did happen. This was the one thing I tried very hard to protect against, but in my heart of hearts, I knew I could not maintain, since personal engagement was the KEY to keeping our face-to-face programmes humming, and hence the high feedback scores. However, I also know that we are not defined by one poor feedback or one poor event. Remember TEFCAS? So, if I did get poor feedback scores, then, so be it. The intent was to learn if indeed we could run our strategic thinking programme online. That was more valuable than poor feedback scores. Ultimately, the answer is no - we cannot run the programme online.
no engagement with learners. This was something I worked hard to address. So, instead of having one facilitator, we had many co-facilitators, and they went into the breakout rooms on Zoom to engage with them and help keep the discussion on track. While this did produce its outcome of better engagement, there was a downside where the participants in the breakout waited for the co-facilitator to lead the session, and they did not apply the content themselves! So, we learnt a lot about having co-facilitators!
losing large potential revenue for 2021 and beyond. This was the largest risk, of course. This customer had consistently spent this amount of money with us the previous years, so we know that this will come in next year too. Yet, I was willing to forgo this revenue to learn if indeed I could turn my programme from offline to online. This might have given us more potential revenue than what I might lose. So the upside was more attractive than the downside. In the end, though, the upside did not materialise. But how did I overcome the disappointment of losing that potential revenue? Well, for one, we had other customers who had already committed to 2021. We also had other streams of revenue, which were larger than what we were risking. And we also had other programmes to offer, not just our strategic thinking. In other words, losing that money would not be have been catastrophic to the company. And looking at the upside, the downside was small. Of course, I could have lost it, as I did. But that is the price of risk-taking. We have to pay to learn. As such, we should not pay too much to learn a lot. This brings me to....
Since we don't know what we don't know, we must engineer our learning quickly and cheaply so that we can enlarge our knowledge base and get to success faster
Fail Fast, Fail Cheap
Millennials these days consume content in bite-sizes. This is how you should also take your risks, in bite-sizes. Imagine you are a venture capitalist, and you know that the base-rate of startup failures is 50% - 65%. This means that more than half of the investments you put money into will be lost. About 20% - 30% of those investments will breakeven, and only 5% - 10% will make spectacular returns. So how are you going to invest? Just try to search out the 5% companies? But how does one do that? In order to get the 5%, you also need the other 95% (otherwise you will get 100% which is impossible!). As such, you need to take a calculated approach to this; putting in a small amount of investment in the beginning, seeing how it turns out. As a VC, you are prepared to lose your money should the businesses fail, because that is the nature of the game - it is all a numbers game. With enough small bets, one will be a big winner. Hence, you need to fail fast and fail cheap. Since failure is the route to learning, all VCs will want to learn as much as they can, and at the fastest possible time. Hence, fail fast. But they cannot bet the moon to learn, since their success base-rate is just 5% to 10%. Hence, every "bet" they take is a cheap bet; going in bigger only when potential grows.
And this is how you should handle all your risks. You have to "fail fast, fail cheap". Never put down more than you can lose. And never regret losing what you put down. If you lose that, look at it as the price to pay for learning. Since we don't know what we don't know, we must engineer our learning quickly and cheaply so that we can enlarge our knowledge base and get to success faster - and before all our resources run out!
For them, resources are limited, or fixed, and with each "failure", there is a diminishing entity on their hands. Hence, they feel that they are one failure away from disaster, and, therefore, hold back.
A diminishing entity?
And how does the fixed mindset react to Risk Taking? Basically, they are afraid of failure, afraid of people laughing at them, afraid of losing their investment in the risk, afraid of being found out as a "fraud". These will impact their Forward Dimension, which we will discuss in my next article. For them, resources are limited, or fixed, and with each "failure", there is a diminishing entity on their hands. Hence, they feel that they are one failure away from disaster, and, therefore, hold back. But is it really diminishing if we learn what we don't know, and use that to build something new and valuable? I don't think so. But in the end, it is their mindset that determines how they interact with risk. But don't be mistaken - risks have always been around, and how we deal with them either helps us grow or accelerates our failure.
The choice is yours. What's your response?