Dr. Doug Hirschhorn is a partner with the University of Miami Alumni Association, providing insight on excelling in your life and maximizing your potential. Send him your thoughts, comments and questions at email@example.com.
March 22, 2007 - A Journey to Greatness
April 19, 2007 - Why?
May 17, 2007 - Gaining Self-Awareness
June 21, 2007 - Taking the C.H.A.M.P. Approach to Setting Goals
July 19, 2007 - Taking Smart Risk September 20, 2007 - It All Comes Down to Accountability
July 19 , 2007
A Journey to Greatness
Taking Smart Risk
By Doug Hirschhorn, Ph.D.
Thank you all for your emails. I wanted to focus this month’s article on a question that I received. I have edited it a bit to protect the person’s identity but the core remains intact.
Dear Dr. Hirschhorn,
I am a UM alumnus and currently work at a commercial real estate brokerage firm in Florida. I have been offered an opportunity to move into a newly created sales position at my firm but it will mean giving up a steady income and instead being paid based solely on my production.
Given my experience, I have no doubt I am capable of doing the job but my concern is really how to stay positive while, initially making less than I need to in order to pay my bills. I really want to take the risk and advance my career but I am constantly reminded about how tough this business is. I believe this is the biggest challenge of my life and any help you can offer would be appreciated.
Thank you for your time,
Scared to be Great
As you know by now, I am all about helping people Dare to be Great and with that comes a price. There is a reason why very few people actually achieve greatness and it is not because of lack of desire, effort or even talent but rather because they are paralyzed by very real fears (such as how to earn enough to pay bills). I get it. I hear you and believe me, I live it.
With that being said, I wanted to be the first to offer you a hearty Congratulations! You are human and I would like to give you an honorary life-time membership to the largest, most popular organization in the world, the S.C.C (a.k.a. “Scaredy Cat Club” – I have been the President of it for many years now and some of the most successful people I have ever worked with have and continue to be active members as well.
You are scared? Good. You should be because we get one shot at life and no one wants to mess it up by making a bad decision along the way. The fact is sometimes we do but I have learned two things. The first is that bad decisions are rarely final and second, it is always better to go for it and miss than to regret never having gone for it.
Now I realize these are just words. Some might say they are recycled and nothing new – and they are right, others would say these words are inspirational – and, well, they are right also. Either way, I am not a Rah-Rah, feel-good, motivation coach; instead, I am a peak performance coach whose one goal is to help you reach your potential. With that said, I want to outline a strategy that will enable you to not only take risk but more importantly, separate yourself from others by taking Smart Risk.
What is risk? Basically, risk is any situation where there is a possibility of several outcomes. Most people make decisions by only thinking about the odds of something happening or not happening.
Let me give you an example by asking you a question.
“If you had a 95% chance to win at a game, would you play that game?”
How many of you, after hearing this question, quickly want to respond, “Yes of course!”
If you are one of those people – the good news is you are among the huge majority of people who like to win and hate to lose. The bad news is you are guilty of taking “Bad Risk” and here is why.
Ok, so you have energetically committed to playing this game where the risk is that you have a 95% chance to win (which implies a 5% chance to lose). Great. Now here are the rules….every time you win, I will give you a penny and every time you lose you give me a $1000.
Would you still want to play that game?
Oh, now you are not so sure. Yeah, that is what I thought.
Let me ask you another question, “If you had a 1% chance to win at a game, would you play that game?” Careful….before you rush to say, “No!” think for a second.
I realize that in your heart, mind and gut you want to say, “No! that is a bad game, the odds are bad. I will end up losing a lot more than I would win. I don’t like to lose; therefore I would not play that game.” You are absolutely correct on all of those things except there is one piece missing – and that is how much will you make if you win and how much will you lose if you lose.
What if the rules were as follows: every time you win I will give you $10,000 and every time you lose, you pay me $1. Sounds to me like if we play that game 100 times, with those rules, then you will end up making $10,000 while only losing $99 giving you a net profit of $9901,. Hmmm, not a bad return for having to cope with feeling like a “loser” 99 out of 100 times.
Hopefully now you get my point but just in case, here it is again.
Bad risk is when you just focus on the odds of something happening and then make a decision without the rest of the information. On the other hand, Smart Risk is when you consider the odds as well as the potential payout for winning and for losing.
Bad risk is making a decision on part of the information, while smart risk is making a decision based on all the information.
So back to the emailed question about whether or not to take this career risk despite the fear of not being able to make ends meet in the beginning? What you need to do is first, table your fears and emotions for a few minutes and then second, look at your situation objectively, as if you were a scientist studying something for the first time. To help you do this, ask yourself the following four questions:
Given my skill set, experience, personality, environment, etc, what are the odds of me being able to successfully build a book of business in this new job?
What are the odds of me failing to do this?
What is the realistic upside for me if I do it?
What is the realistic downside for me if I fail?
In the end, my fearful friend, if the combination of odds and payout is in your favor, then you will be taking “Smart Risk” and as we have learned this month, Smart Risk really isn’t much of a risk at all, is it. Welcome again to the S.C.C. You should be receiving your membership card in the mail any day now – cherish it. I do.
Thank you all for your emails and please check back in next month as we enter the next stage in our Journey to Greatness where I will discuss the importance of being held accountable.