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How risk can help or hurt you

Blog

Scott Miker is the author of several books that describe how to use systems and habits to improve.  This free blog provides articles that to help understand the principles related to building systems.  

How risk can help or hurt you

Scott Miker

Most people misunderstand taking risks.  When I was younger I thought taking risks meant that I needed to take chances in order to expand my knowledge and abilities and grow.  But I also naively assumed that taking a risk didn’t have consequences.

Looking back now it seems ludicrous.  But I really thought that I could take risks and by working harder than others I could avoid the downside of those risks.  In other words, I thought I would immune to the failure part of taking a risk because I would work harder.

Let’s shift for moment and then come back to this idea of risk.  When I was in high school my favorite band was a trio from California called Sublime.  Sublime played a unique combination of multiple genres but incorporated reggae music like I had never heard before. 

I started to listen to the music more and more.  I started to read about the band and watch documentaries on them.  One thing that really stood out was that the singer was a heavy heroin user. 

They said he deliberately started taking heroin in order to be more creative.  He wanted it to be a short-term, 1-year experiment. 

I’ve often found myself wondering if that experiment worked or failed him.  He did eventually put together an album with the rest of the band that had enormous success.  But he also died of a heroin overdose before it was even released.  He left behind a wife and young baby and became another tragic example of the devastation that can be caused by drug abuse. 

Would his success have come if he hadn’t used drugs?  Or did the drugs provide a mind and body altered state where it made him more creative and free to create music?

Using drugs to alter our state can be looked at ethically and morally but right now let’s take a systems thinking look at what is going on and ignore those manmade judgments. 

Basically the situation has an individual taking a risk in order to get ahead.  He takes a risk by using drugs to be more creative musically just as one might cheat on a test in school in order to get a better grade.

If we isolate the risk part, we can see that he was willing to take a risk that could have a very positive or very negative outcome.  It actually becomes very straightforward.  It shows that taking larger risks has the potential for positive and negative outcomes and sometimes a mixture of both together. 

But where it gets confusing is when we want to talk about this ethically or morally.  We seem to want to pass judgment on something without really understanding the full system. 

If we see someone lose all their money at the casino we look at them differently than someone who wins a large sum of money at the casino.  We look at the successful business owner differently than the failed one.  We look at the singer of Sublime differently than the drug-addicted singer of a band that didn’t have any commercial success. 

But should the outcome change how we feel about the risk?  Or should we be better able to evaluate a risk without this hindsight bias?  If he or she succeeds we say the risk was worth it.  If he or she fails we say the risk wasn’t worth it.  But the risk has to be weighed with both the successful outcome and the unsuccessful outcome because that is the basis for risk – which can go either way. 

Yes we can work harder or smarter or find some other way to think we are getting around the risk.  But the risk still exists.  We may be trying to control and minimize the risk but we are still taking a risk.  This means that there is an element outside of our control that will have an impact on our success or failure. 

We have to be better at seeing this risk and not just finding all the people that ended up on the success side of a particular risk without looking at the failed side as well.  We can’t grab all casino winners and ask them how to win.  We also have to look at the failures to see if those same strategies were used and if there really were differences in their approach or simply luck. 

Life is all about how we approach risk.  There is always risk involved.  Driving to work means taking part in an activity that kills tens of thousands of people a year.  Avoiding that risk and quitting your job to stay home means that you risk not making money to pay your bills, which has its own consequences. 

But by looking at risk systematically we can start to uncover more than the superficial “was it worth it?” reaction and get to real strategies for improvement. We can start to see both the positive and negative outcomes together and can realize that it isn't just about the outcome that occurs but the outcome that could occur.