A while ago, I was working with one of my executive coaching clients, a senior partner at PwC. He’d recently turned down the opportunity to be #2 in a government agency, and now he was second-guessing himself.
“If they’d asked me ten years ago, I’d have jumped at it. Now, here I am, and I can’t understand why I hesitated.”
As we spoke more about it, he told me that when he was younger, he didn’t have a problem taking risks and trying new experiences. But as he grew older he got more risk-averse, and he missed that younger, more carefree self.
Now, whatever age you are, you can probably relate to that.
Risk aversion is a problem for a lot of professionals, and it gets in the way of a lot of things.
For this client, it stopped him taking what most people would think of as their dream job, but other clients have told me that they didn’t want to raise their fees because it was too risky, that they didn’t want to publish a book because they were worried what other people would think, that they didn’t want to approach their dream client in case they said no…
As I spoke to that client, I explained what typically causes that rising risk-aversion.
When we’re at the start or our career or our business, we don’t have much to lose. In our early twenties, we probably aren’t married, we probably don’t own an expensive house, and we don’t have much in the way of capital.
As we get older, we acquire responsibilities: a mortgage, a family, a business… and if we have a business then suddenly we are responsible for the prosperity of staff, suppliers, customers…
We also acquire prosperity: a house, savings, our reputation,…
And it’s the need to meet our responsibilities and preserve our prosperity that makes it harder for us to put it all on the line: the more we have (of either), the more risk-averse we become.
So, how do we get back some of our risk tolerance?
Well, first, language is incredibly powerful. The words we choose determine everything from how we feel about something to what we actually perceive. Risk is a very negative word, so start by changing your language: rather than “risk,” talk about chance or even opportunity.
Second, figure out how much you are prepared to stake if it means you have a shot at the result you were after. Risk aversion doesn’t mean we can’t tolerate any risk—it just means that there are limits. So, we need to figure out what that limit is for you.
Third, ask yourself what is really at stake. Often, we inflate the potential downside out of all proportion.
- Will raising your prices really leave you with no clients? And if all your current clients leave you, is it truly realistic to assume you’ll never be able to get more clients at the new rate?
- If you write a book and it’s not the very best book ever written about your field, will you really become a laughing stock? Or would people respect you for trying? And in the very worst-case scenario, couldn’t you simply unpublish the book and start again?
- If you approach your dream client and they don’t hire you, so what? Get a bigger dream, work on your pitch, and try again with a new client.
Fourth, find ways to reduce the chances of failure.
- Test out your new fee structure with new prospects and see what happens to your conversion and (more importantly) to average client value.
- Give advance review copies of your book to a selected group of people for feedback.
- Do as much research into the target client as you can, so you can tailor your pitch as much as possible. If appropriate, test your pitch out with other prospects first.
Fifth, and finally, risk tolerance is like a muscle: we strengthen it by exercising it. So, expand your risk tolerance by a taking small chance at first, and note that, even if it doesn’t work out, the world doesn’t cease. Over time, gradually take more chances with a little more at stake.
Now, let me sound a word of warning. I’m not telling you to become reckless. I’m not telling you to “bet it all on black.” There’s a difference between taking a cool, calculated risk and leaping into the unknown with your eyes shut. Never put more on the line than you are prepared to lose, and think carefully about your chances of success: taking a chance on something is one thing, hoping for the best is another.
The big thing, however, is to be open to opportunity when it appears. Don’t say “no” as a reflex and then end up second-guessing yourself later: no-one looks back at the end of their life and celebrates the risks they didn’t take. And a life dominated by what ifs and if onlys is no life at all.