5 Ways to Increase Risk Tolerance for Entrepreneurs

You only need one word to describe John F. Kennedy’s tolerance for risk: moonshot. We know Kennedy understood the enormity of his moonshot gamble from a 1962 speech:

“(I)f I were to say … that we shall send to the moon, 240,000 miles away … a giant rocket more than 300 feet tall … made of new metal alloys, some of which have not yet been invented, capable of standing heat and stresses several times more than have ever been experienced, … carrying all the equipment needed for propulsion, guidance, control, communications, food and survival, on an untried mission, to an unknown celestial body, and then return it safely to earth, re-entering the atmosphere at speeds of over 25,000 miles per hour, causing heat about half that of the temperature of the sun … and do all this, and do it right, and do it first before this decade is out — then we must be bold…. And, therefore, as we set sail we ask God’s blessing on the most hazardous and dangerous and greatest adventure on which man has ever embarked.”

The people assigned to execute JFK’s vision didn’t know exactly what they’d face on their path to the moon; only that they would face something huge and unknown. As we guide our products to market, product managers and entrepreneurs also travel an uncertain path. Human beings naturally crave comfort, so when confronted with uncertainty, some gravitate to paths so well-traveled that there are ruts in the road. There’s little new to see on such a road; that’s the allure of certainty — nothing surprising or disconcerting. But traveling this beaten path has a toll. If we don’t get off it, we lose the chance to discover new things, missing opportunities. Instead of traveling safe, rutted paths, great product leaders, like JFK, must be willing to explore new roads. We must learn to be the best risk-takers around — as long as we make sure that the risks we take are smart ones.

The Beaten Path Isn’t Safe Anyway

Wait, you might be thinking, my responsibility is to not be irresponsible — to not gamble with company resources. A lot of money is at stake; we’ve got to stay on schedule. I’ll need to stick with the safe bet.

But there’s no such thing as the safe bet. Traveling the tried-and-true path has its own dangers. For one thing it dulls the senses since there’s no need to stay truly alert. This is how people sometimes miss their exit ramps on roads they’ve driven a thousand times before: The brain goes on autopilot and attention wanders. Next thing you know, you’re in the wrong lane for your turn off, futilely putting on your turn signal, hoping the sharper drivers in the lane you need will show mercy and let you in. (And if they’re your competitors, they won’t.)

As a product leader, think about how the autopilot approach to product management could hurt your product and company. Autopilot is a static state; you won’t evolve to find solutions to new challenges on cruise control. Being lulled into complacency robs you of the awareness and responsiveness you need right now.

The fact is, product leaders need challenge, not comfort, to grow and evolve. On the beaten path there’s no need to be resourceful, inventive, or creative. As I wrote in my book The Other Ideas: Art, Digital Products, and the Creative Mind, there is risk in comfort:

“We need uncomfortable situations in order inspire exceptional ideas. When we place ourselves in a position of discomfort, we will begin to feel a sense of urgency. This urgency will help us solve the problem at hand, because it forces us to be our best and tap into our most inventive capabilities.”

Imagine the sense of urgency felt at NASA as the team rocketed forward in its quest to reach the moon in under a decade. And they did it — because they took risks.

The Proven Rewards of Risk-Taking and Tolerating Uncertainty

At NASA, questions and risk-inspired traits such as resourcefulness and inventiveness didn’t just land a man on the moon, they sparked a slew of solutions that had impacts beyond their applications in space travel. Freeze-drying, cordless vacuums, food safety systems, enriched baby food, temper foam — these came from an environment where risk, experimentation, and uncertainty were a constant. Risk can give us unforeseen boons.

Risk-takers are often rewarded with a competitive edge because they have a greater chance to innovate. If you’re off the beaten path, you must blaze trails and leave everyone else to play catch-up.

Of course, risk-takers and organizations must face the option of failure, but, as Amazon.com founder Jeff Bezos wrote in his 2015 letter to shareholders, “failure and invention are inseparable twins.”

As a product leader, you might experience a twist in your stomach at the notion of failure; here are some tips to help you with it.

5 Ways to Cultivate Risk Tolerance

1. Choose the right things to put at risk. In his shareholder letter, Bezos described two types of decisions. The first type he compared to a one-way door in that they are “irreversible or nearly irreversible.” These consequential decisions, Bezos warns, “must be made methodically, carefully, slowly, with great deliberation and consultation.”

The second type of decision Bezos compared to a two-way door. If you make a wrong call, you don’t have to live with it — “You can reopen the door and go back through,” says Bezos. “Type 2 decisions can and should be made quickly by high judgment individuals or small groups.”

Bezos observed that as organizations grow, there’s a tendency to treat all decisions as if they are one-way doors, resulting in “unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.”

Yes, some risks deserve long and sober consideration, and you’re right to feel their weight. Others decisions, though, should be undertaken with care, but not fear.

2. Practice embracing uncertainty in your personal life. By getting used to take small risks in your everyday life, it gradually feels more normal and induces less anxiety. Your tolerance for risk and uncertainty increases as does your confidence in taking risks.

Now, I’m not saying you should make life uncomfortable or create large-scale conflicts. But if, for instance, you always travel the same route on your commute, why not try a different road? If you see a dish you’ve never tried on a restaurant menu, why not order it for the first time? You might gradually become a discoverer and find yourself looking forward to uncertainty as opposed to running away from it.

3. Question everything, even your own assumptions. When you challenge your own assumptions, it might feel as if you’re exposing your very foundation to seismic events. Naturally, your instinct might be to quake in response. But questioning opens a door to new insights, despite the unsettling feeling of exposing yourself to uncertainty. Questioning can give you a completely new perspective, and that can become your competitive edge. So, question, reevaluate, play the Devil’s advocate. Open yourself up, be willing to see in new ways. Doing so releases you from dogmatic thinking and self-imposed thought limitations that may be hindering your ability to evolve as a product leader.

4. Be flexible. Since change is a given feature of tech ecosystems, it’s better to embrace and guide the change rather than ignoring it and being at its mercy. Embracing change as an ally is the only way to innovate and improve, and that’s crucial in a world where disruption is the new normal. Some companies are only just waking up to the Internet of Things and cyber warfare. Meanwhile, AI, VR, and self-driving cars are coming out of the future and into the present, taking some by surprise. Are you talking about wearables? What about implantables? Some people are already being chipped. Tomorrow, we might wake up to a revolution. As a product leader, you need to be on the front lines. In the best-case scenario, you are leading the revolution in your product or even your industry.

5. Be ready to fail. By nature, some experiments succeed, others fail. Elon Musk’s SpaceX suffered a spectacular failure in September 2016 when its Falcon 9 rocket exploded on the launchpad. Yet, months later, in March 2017,SpaceX made history by reusing and re-flying a rocket — the rocket reentered the atmosphere without burning up, and then landed on a ship in the Pacific.