When Risk Is An Imaginary Stop Sign
One day I plan to write a book about the notorious scheming and machinations of little boys. My sons, worthy of a few volumes themselves, provide constant material. This week, my seven-year-old decided to cook up a new scheme for making money. He is always trying to swindle us into paying him for doing things he is already supposed to do like sleeping in his bed, cleaning up after himself, etc. Yet because our neighbor once gave him a dollar to remove sticks from the front yard, he now believes compensation is owed to him for every idea he concocts. This week's enterprise has to do with trash collection and litter.
"Mom", he starts. "I know how to make five hundred dollars. I can get paid five hundred dollars for littering. OH YES, I CAN! I read it on a sign. It said, 'Five hundred dollars for littering!'
He still hadn't quite worked out who was going to pay him this five hundred dollars. Yet he was adamant that we were mistaken when we tried to explain that the five hundred dollars would come out of his pocket rather than the other way around if he opened his doors for business. Still, he doesn't care to try anything his mind can cook up. Even if it ends up embarrassing him a little later. His steadfast curiosity and inability to sit still, fuels his determination to experiment. Most importantly, he is undeterred by any fear of failure. If I laugh at him, he just laughs as well and carries on. What is it about being an adult that makes me care if others see me fail? Why can't I just laugh, learn, and carry on?
Laying Out All Of The Pieces
A book I'm reading called, "Show your work", by Austin Kleon has inspired me to re-think the value I place on others' opinions. This is doubly reinforced by the financial advisor Dave Ramsey's mantra that has been cemented in my head over the years. Ramsey says,
"If you want to be broke, do what broke people do. If you want to be rich, do what rich people do." - Dave Ramsey
Why should I ever take advice or care about the opinions of people who never attempt anything new, uncomfortable, or different? Perhaps I need to take a page out of my son's playbook. My success or failure won't depend on other people's opinions. It will depend on how willing I am to try, fail, improve, and repeat. Here's a quote from Kleon's book.
"Amateurs are not afraid to make mistakes or look ridiculous in public. They're in love, so they don't hesitate to do work that others think of as silly or just plain stupid…
On the spectrum of creative work, the difference between the mediocre and the good is vast. Mediocrity is, however, still on the spectrum; you can move the mediocre to good in increments. The real gap is between doing nothing and doing something." Amateurs know that contributing something is better than contributing nothing." -Austin Kleon
My working hypothesis from Kleon's book arises from how one goes about sorting priorities for improvement.
In ranking priorities, the action to do something rather than nothing is more important than the transition from mediocre to excellent.
One of the opinions discussed in Kleon's book uses artists as an example. He insinuates there are two kinds of art. There is the art that you see when the work is complete (end product), and then there is the art of creating the work (process). If artists live in the second (process), we as spectators, only see the first. By this philosophy, your business, your writing, or your art is in the process of doing the work, and not the result. I was kicking this idea around for a day or so trying to decide if I agreed. Two thoughts kept occurring to me that might be worth distinguishing: goal and process.
GOAL:
Arnold Schwarzenegger fantastically outlines the necessity of a goal in one my favorite inspirational speeches. He claims,
"The first rule of success is to have a vision. You see if you don't have a vision of where you're going, if you don't have a goal of where you go, you drift around and never end up anywhere… Because when you have a goal, when you have a vision, everything becomes easy. So I felt so blessed that I knew what I was doing… Everything I ever did, the thing I heard out of people's mouth was, 'that's impossible', or 'that can't be done', or 'NO!'_ … I'm a strong believer of what Nelson Mandela said: that everything is always impossible until someone does it. Well I'm going to be the one, I said to myself, I'm gonna do it and I'm going to show it to them. Maybe it's never been done before, that's perfectly fine with me, but I'm gonna do it. And I did not listen to the naysayers… It's all about the hard work that you put it… All day long, I worked and I worked and I worked…But I didn't listen to those losers. It is a very important lesson for all of you. So when someone says NO, this is a stupid idea, you in your mind (you don't have to say it), but in your mind, you just say to yourself, YOU! You, *&#@, what do you know?" -Arnold Schwarzenegger
PROCESS:
If the "goal" is on one side of the coin, then consider that the flip side is the "Process" or "System". James Clear wrote the book, “Atomic Habits”. In what at first seems contrary to Schwarzenegger, James Clear writes that success is not about the goal, but the process necessary to achieve it. Clear writes that 'goals are good for setting a direction but systems are best for making progress."
Clear's writing indicates that having a goal is like making a new year's resolution. It's something we want but lacks any plan for action to achieve the desire. As a result, New Year's resolutions, like goals, often remain a fantasy. His emphasis on the value of a dedicated system of action rests in its ability to yield returns that are not limited by the endpoint of an achieved goal. I gather from Clear's analysis, that processes are scalable. A goal is only a result.
I'm going to parse these two notions (goal vs. process) out a little that seems to be at odds. I'm still not fully convinced I've learned enough to assemble an acceptable model. So my theory remains in development. When re-reading Schwarzenegger's speech, he mentions Reg Park, the bodybuilder who inspired him. He said that Reg Park had laid out a blueprint for the life Arnold wanted. The blueprint was the plan, the steps needed to get there. The thing that gets overlooked in his speech was Schwarzenegger's psycho-like dedication to the process of getting to work every day. He thought about the work every day. He changed his perception to love the work every day. The discipline of his dedication to throw away distractions, leave his country, leave relationships, or do whatever was necessary to keep moving along that blueprint was his process. He scaled his system into acting and even politics. This was his system, and I want to believe systems are scalable.
Building A Theory
One plausible resolution from this seeming contradiction in terms (goal vs. process) was best stated by a quote used by Les Brown.
"Without a solid, realistic, and detailed plan, the goal is nothing more than a pipe dream. And without the commitment to follow through on that plan and put forth the necessary effort, the dream is nothing more than a good intention."
I'm going to tease this out a bit using a different icon of success. Warren Buffett, the CEO of Berkshire Hathaway, says that he and his partners probably spend the least amount of money on due diligence research than any other investment firm. He says that they simply only invest in things that they can understand and within their circle of competence. If the potential investment is too difficult for him to understand, he takes a pass; and moves on. Warren Buffett excels at what he does because he has a process. He has scaled this process for decades and he keeps at it. This is his system.
"I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business." - Warren Buffett
Warren Buffett pours over the financial filings of companies for many hours every day. Warren sits in his office like a stoic philosopher and turns the mental gears of his system. When he finds a gem that others have overlooked he pounces on the opportunity with large amounts of money.
As adults, we see the risks associated with responsibility. Considering the adage, "nothing ventured, nothing gained," I notice they left out the part that reads, "Something gambled something lost!" While adults fret over the lack of an 'undo button' when making real real-life decisions, kids, on the other hand, have next to nothing to lose. Any venture is a potential gain for them especially when they see no danger in anything they try. What I'm dancing around here is the real definition of the word, "risk". Risk is a word in the doublespeak dictionary. We need to break it down and be specific about what it means.
RISK (Oxford English Dictionary): noun.
The possibility of something bad happening at some time in the future; a situation that could be dangerous or have a bad result
RISK (Google): noun
1. A situation involving exposure to danger.
2. The possibility that something unpleasant or unwelcome will happen.
3. The possibility of financial loss.
Risk is a very subjective term. It may be the case that in many instances what one person defines as a risk, another person defines as an opportunity. What is the best way to assess risk vs. opportunity? Risk is not always the same thing as danger. Taking action is not the same thing as taking a risk. Risk only appears as a negative (bad idea) when the potential downside is too great. However, actions, uncomfortable feelings, responsibility, work… I don't see these as risks. My egotism over the years has paid very few dividends, and yet I tend to guard it like treasure. If I'm honest, I often tend to associate risk with potential loss of pride.
Warren Buffett doesn't like to take risks, He tries only to invest in something he understands, and sees what he thinks has been overlooked. When the odds appear massively in his favor he invests big. Otherwise, he simply remains patient and holds off on deploying his capital. Buffett was quoted as saying, "Risk is doing something you don't understand." Buffett doesn't see investing as a risk. Not knowing what you are doing is a risk. He invests when he understands the business he is investigating, trusts the CEO and its managers, believes the market has mispriced the value of the company (it's on sale), and then calculates how drastically on sale it has to be for him to pull the trigger in case he is wrong. He is looking for something with the lowest risk possible.
Mohnish Pabrai is another fantastic investor who shares his knowledge, philosophy, and insights. He realized that his odds are better if he fishes in ponds where few fishermen are competing with him (investing in companies followed by very few analysts). He also never wants to take what he identifies as, "a risk". Again, action and risk are not the same things.
The subjective perception of risk should be determined by knowledge and ability, not fear.
As an example, Pabrai says that one of his ten commandments for investing is, "Thou shalt not use Microsoft Excel." If the investment opportunity isn't so simple that he can do the math in his head, he isn't interested. For him, his philosophy states, "Heads I win, tails I don't lose much." He doesn't take what others might call, a risk. He is taking action, responsibility, and having faith in his ability while not overestimating his competence.
Putting the Pieces Together
Ok, so circling the wagons again (my seven-year-old son, Schwarzenegger, James Clear, Les Brown, Warren Buffett, Mohnish Pabrai), there are a couple of 'takeaway' ideas that merge.
A process for action (system) and goals must be tethered. Otherwise, you have a hobby and pipe dream.
A process is useless unless you commit to it, no matter how good it is. You can change your process, modify it, improve it, etc. to make it actionable, but it is useless if you don’t commit to it.
Child-like fearlessness to act.
The icing on the cake is remembering my son cooking up ways to invent jobs and schemes. He is just going to keep doing what he is doing. He fearlessly takes joy in being an amateur.
Mind you, this is just my working theory, but I think the first and most important evolution of a good process toward any goal starts with the willingness to be an amateur. The process must encourage childlike curiosity, wonder, and willingness to try something new and fail. It must foster and nourish momentum and persistence. The decisions we make to do something new and worthwhile may come with a real risk (downside loss). Personally, however, many of my decisions can be arranged so that, "heads I win, tails I don't lose much!"
My interest when I evaluate the word, "risk", focuses on situations where the only thing I truly stand to lose are my ego and my time. The adult fear of change, self-image, self-worth, etc. seems to me little more than vanity and pride. That is the reason I've tried to think and write about this. It's what I want to try and remember. It's what I want to share with my friends and my children. I may be wrong. However, provided that's all there is to risk, then I want to encourage others (and remind myself) to shed a little bit of the pride, jump in now and then, and be an amateur with the same child-like enthusiasm as my seven-year-old litter-bug. Identify a goal that matters. Develop a plan and a process to move toward it. Get to work being an amateur.
"That's all any of us are: amateurs. We don't live long enough to be anything else". (Charles Chaplin)
D.W. Eversole