Unreasonable risk-takers are individuals who tend to over-emphasize the resources they have available or can acquire to accomplish their objectives. Or, they’re people who under-emphasize the barriers that are likely to get in their way.
There’s been a lot of emphasis in the past decade or so on risk-taking as a positive trait of high achieving individuals. Most corporate environments don’t encourage risk-taking. Neither do government bureaucracies. So “unreasonable risk-taking” might not seem like much of a problem, except that we’re talking about increasing power and influence with others. That demands that you take risks, provide leadership, and create visions for others. So risk-taking comes with the territory of adaptability.
This is just a note of caution to take reasonable risks. Psychologist David McClelland and others who have researched high achievers say the most successful individuals take moderate risks which have a 30 percent to 70 percent chance of being accomplished. Taking a risk on something that has less than a 30 percent chance of success is considered reckless behavior rather than reasonable risk taking. This is especially true if you’re risking the resources of other people in the process.
Accomplishing something, which has over 70 percent chance of success, is essentially not taking a risk in the first place. Assessing risk involves both looking at what positive factors are in the plan, as well as the negative factors that stand to get in the way. There’s usually no way to do an ironclad assessment of a plan. Oftentimes the factor that weights the balance in one direction or the other is the person taking the risk. How much follow-through do you have? How much energy are you going to bring to the enterprise? If the going gets tough, can you count on yourself to keep going?
A great majority of businesses begun by individuals in this country fail within the first 5 years. Starting a new business is always a risk, but a good business plan upfront will help assess the chances for success. According to Michael Gerber, who runs a nationwide training company for fledgling entrepreneurs, the number one reason for the failure of startup businesses is under-estimation of the resources it takes to keep a business going. Under-estimate of the capital required, under-estimate of the time it takes, and under-estimate of the expertise it takes to run your own business. Yet every year, hundreds of thousands of people hang out their sign, print their business cards and wait for their first customer or client.
And the good news is that tens of thousands of those businesses do succeed. Because they’ve taken a reasonable risk.
Dr. Tony Alessandra is a behavioral and communication expert, and author of 17 books including The Platinum Rule, Collaborative Selling and The Art of Managing People. Today he is a leading business motivational speaker on communication, customer loyalty and sales.
