Dawn Gibbins MBE believes that many would-be entrepreneurs suffer risk aversion. In this article she examines the causes, proposes a "Dare" solution and looks at how people working in a high risk environment cope.
In his book, Your Money and Your Brain, Jason Zweig poses two questions. Try answering them:
1. In the US, which of the following animals causes the most deaths each year:
Alligator, bear, deer, shark or snake? (Go on, guess)
2. Match the cause, worldwide, of fatalities with the numbers below:
Cause: war, suicide, murder
Numbers: 310,000 815,000 520,000 (guess)
Answer to Q1:Deer.
They cause 130 times more deaths than all the others combined! Though they don’t have sharp teeth or an aggressive nature, they do tend to step in front of vehicles.
Answer to Q2: Suicide.
In most years, as many people commit suicide as the number of demises through war and murder combined.
Surprised? The reason almost everyone gets the answers wrong is that we tend judge the odds of something happening by the ease with which it comes to mind or the vividness of the mental image. Most find it easier to think of someone else dying violently than to think of killing themselves. Easier, then, to assume more deaths from war or murder.
The same can be true of business decisions. Of new products launched (and presumably the figure is similar for new businesses launched), only one in seven ever really makes it.
The odds are stacked against success.
The mistake most would-be entrepreneurs make is, when assessing the pitfalls, they visualise and then make provisions against the most graphic risks rather than the most likely risks. Fixated by the vivid fear, they set their strategy around an unlikely "big" event, rather than addressing the truly more likely mundane risks (things like people taking longer to pay invoices than planned).
First, we have to accept risk. It’s a fact of business life. Dare to do it. That’s how, as entrepreneurs and senior managers, we make our money. Just think how the pharmaceutical industry has to live with risk. When researching new drugs, of every 12,000 chemicals they initially investigate, only three ever make it to market, and that’s after 12 years of exhaustive and incredibly expensive clinical trials. Of the three that see the light of day, only one ever makes a profit. Pharma companies have learned to assess risk, how to live with it and how to work with it.
For the individual, one secret is to recognise your own psychology and work with someone who can bring an element of balance to your decisions. I am blessed with a manic personality, which can be great for an entrepreneur – walls are there simply to be leapt over and obstacles to be brushed aside. But I do recognise the dangers of being manic. Rather than visualising potential risks or dangers, I tend to turn to my husband who can always point out the everyday potential pitfalls because his more measured, analytical personality provides a touch of balance.
What of the stresses? How do people who constantly live with risk cope? People like professional gamblers?
Bob Rothman made his name in the UK 20 years ago by "breaking the bookies". Since then he has earned a very healthy living backing literally thousands of pounds each day on the horses. But what happens when he has a succession of losses? "I leave the country and take a short holiday and forget all about the horses," says Bob.
"After a succession of poor judgment, the whole psychology goes wrong. You see it with politicians after they have made two or three questionable decisions. So, go away, put work out of your mind and then, a few days later come back refreshed and start anew."
I highly recommend you all read the book called The Secret. Yes, it has had controversial cover in the press, but for me it is a brilliant concept for living, a brilliant concept for business and a brilliant concept for addressing risk – ie, don’t – only focus on the success.
To find out more go to www.thesecret.tv Enjoy!
So, there we have it. When developing a strategy, don’t be distracted by vivid but unlikely possibilities at the expense of planning around more mundane but more likely obstacles. Try to find a "sounding post" for your plans – someone with a diametrically opposite personality to yourself. And, following a succession of poor judgments (we all make them), take a break. Declutter the mind and then return afresh.
Easy really (if only!).
For more views on business, visit www.dawngibbins.com. For my new ventures, visit www.barefoot-floors.com and www.barefoot-laundy.co.uk. And if you would like to see more of Bob Rothman in action, visit www.horseracingpro.co.uk.
If you want help in focusing your mind on success, appoint Marie-Claire Carlyle as your personal coach – I have – she is amazing. www.themiraclecoach.co.uk
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