Are You Risk Tolerant or Risk Averse? Really?

I never thought this question was important, until…

At a leadership breakfast the other day the presenter posed it to the audience. She had us work in small groups to discuss:

  • Where we lay on the continuum from Tolerant to Averse
  • An example where we had operated opposite to our comfort level on this
  • What we learned from that experience

The groups really got into the task and the plenary discussion afterwards was rich and energized. This told me that this question is an important one. It had hit a nerve.

I place myself slightly on the risk tolerant half of the continuum. I recall an incident quite early on in my career as a professional speaker. I presented at a luncheon gathering of local association executives. I did not prepare sufficiently, believing that if I thrust myself out on the edge and took a risk, I would rise to the occasion.

I didn’t rise. I bombed. And 50+ potential clients for speaking engagements at their conferences walked out just shaking their heads. Oh yeah, and did I mention that these people talk to one another and to other colleagues who were not present that day?

What did I learn? That I have to over prepare. That I have to be perfect when I present and, for that matter, I probably should never allow myself to speak to such a high profile group again. I battled this tendency for years until I finally found my sweet spot on the scale.

Accept excessive degrees of risk and you will make unwise, costly decisions. Avoid risk and you will never take decisions that make you high performing. The outcome: mediocrity.

There’s a lot behind our general comfort level with risk:

  • Our relationship with fear. Can we take action and hang in even though we are anxious or scared?
  • What payback we value. The entrepreneur is by nature a risk taker. He/she feels a buzz from taking on a risk situation and great pleasure from succeeding.
  • (What psychologist Martin Seligman calls) our “explanatory style.” What do we say to ourself when we take a risk and fail or fall short? Do we blame ourself? Or do we, like the best entrepreneurs, respond with something like, “Well, that didn’t work. What can I learn for next time? (And next time , BTW, I will do better.)”

This issue held me back over too many years. It’s important to come to terms with it if we want to excel in business, career, and life.

To Sell Is Human What I’m Reading

We hear a lot about today’s and tomorrow’s leaders needing to deal with complexity. This book shows clearly what that looks like. Author Bob Johansen lays out the major external forces shaping the world and ten critical skills that will enable leaders to function effectively in this emerging environment of “VUCA” (volatility, uncertainty, complexity, and ambiguity.)