Risk Muscle


When skill and training is equal, what differentiates a great athlete from the rest of the pack? According to Michael Schwalbe in “The 40-30-30 Rule,” the answer is who ever takes the best risk.

While this surprised us when we first read it, it makes sense. And it applies to business as well. If two companies have roughly equivalent talent and spend the same on marketing, sales, development, research and other crucial areas, their points of differentiation will be wherever they take a risk. 

There is no innovation, no true originality, without some measure of risk. In developing his or her risk muscle, a DEO works to find a balance between fear-dominated inertia and foolhardy gambling. The optimal risk posture is not a static position, but rather an iterative, ongoing journey between choices that are too safe and ones that end in failure.

Workouts to build risk-taking ability:

Take steps.
As with making change, it’s best to start with minimal risks where failure isn’t life threatening. Identify a small personal fear and try to conquer it. Your small but notable risk might be singing karaoke or riding a Ferris wheel or telling a joke. Reward yourself each time you take these chances—even if you don’t succeed in overcoming the fear. Rinse and repeat until the risk seems minimal.

Play games.
Strategy games are an effective exercise in risk taking. Sign up for online versions or buy the old-school board games. Checkers, chess, Risk, Monopoly, Civilization, World of Warcraft, and dozens of other choices simulate real-world risk taking within an abstract or fantasy world. Add in money and increase the realism.

Tag along.
Join a team that seems more comfortable at risk taking than you are and force yourself to keep up. This can be at work or at play, but if it involves your head, wear a helmet.

Build buffers.
Buffers, like having extra money in the bank or a second job, can raise your risk-taking aptitude by lowering the consequences of failure. Examine your reasons for avoiding risks and find a way to compensate for them.

Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein
Chaos: Making a New Science by James Gleick
The Wisdom of Crowds by James Surowiecki
Little Bets: How Breakthrough Ideas Emerge from Small Discoveries by Peter Sims