How to Max­i­mize Your Tal­ent for Risk-tak­ing

Rotman Management Magazine - - QUESTIONS FOR -

1. Know what you do know and what you do not know. Un­der­stand the lim­its of your knowl­edge. Rec­og­nize the pref­er­ences and bi­ases in­her­ent in your world­view that can af­fect your judg­ment about the re­sults you ex­pect. Re­sist pre­dict­ing out­comes based on lim­ited ev­i­dence. Gather all rel­e­vant in­for­ma­tion be­fore you take ac­tion.

2. Take risks in­cre­men­tally. When ex­plor­ing a new ven­ture, a new mar­ket or a new prod­uct, min­i­mize risks by mak­ing a small ini­tial in­vest­ment and eval­u­at­ing the idea at suc­ces­sive stages in the de­vel­op­ment process. Con­sider it an ex­per­i­ment. Build a pro­to­type, test the mar­ket and col­lect in­for­ma­tion. Then de­cide if the idea is worth in­vest­ing in fur­ther.

3. Be­ware of con­fir­ma­tion bias. Your ex­tremely pos­i­tive self-im­age may lead you to favour in­for­ma­tion that con­firms your be­liefs and opin­ions, while dis­count­ing in­for­ma­tion that con­tra­dicts your view­point. Do not let this bias in­flu­ence your de­ci­sion mak­ing. Ask peo­ple with op­pos­ing views to counter your ini­tial idea or con­cept.

4. Con­struct dif­fer­ent sce­nar­ios to guide your de­ci­sion-mak­ing process. En­vi­sion how things will un­fold in the fu­ture, an­a­lyze the dif­fer­ent direc­tions a project can take and es­ti­mate the out­comes in all direc­tions. When you bring po­ten­tial risk fac­tors to light, you can choose the least risky path.

5. Don’t gam­ble. Take care­ful, cal­cu­lated risks. Be­fore an ex­cit­ing idea sweeps you away in an­tic­i­pa­tion of what you will ac­com­plish, im­pose a cool­ing-off pe­riod of a few weeks be­fore you com­mit any funds. This will give you time to cal­cu­late the odds of suc­cess and put a plan in place to mit­i­gate the risks.

6. Kill unim­por­tant projects. You might over­es­ti­mate your abil­ity to suc­ceed at mul­ti­ple projects si­mul­ta­ne­ously. With your team, an­a­lyze all the projects in your or­ga­ni­za­tion. Keep your fo­cus on the ones that strengthen and build your core mis­sion and pur­pose. Ditch the rest.

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