Risk

Nick's Journal

This week I find my mind turning to the topic of Risk.  Probably a bit of a holdover from the obscene Vegas winnings from my last trip south, and the constant texts I receive to return there (for those of you who are risk-averse, never get a reputation as the ‘Always Down for Vegas’ guy – it’s not good for the wallet).  That said, worry not - I’ll keep it focused on the non-degenerate gambling side of the equation for this article.

Why the focus on Risk?  I find this topic to be a very difficult one for the less experienced to properly understand, and one where it helps to provide perspective that they might otherwise not consider until it is too late.

A lot of what people observe in the workplace is muddled by all sorts of false signaling, and the ‘official’ story that normally is lobbied about to explain outcomes is often so far from reality that it may as well have been randomly scripted by a monkey.  And yet, especially early in your career, that is the nonsense that you are constantly fed and that you then incorporate into your understanding of cause and effect.  “Such and such was really good at entering invoice details and that is why they got double-promoted”.  “WhatsHerFace was incredible at journal entry selection and that is why she is making ten thousand dollars more than you for the same role.”  Oh my, what a sad farce.

The real reasons are obviously nowhere close to that, but the official ones need to be something that is palatable, that allows everyone to accept an outcome and not quit en masse or get out their pitchforks and revolt.  This means that you are often sifting through a ridiculous amount of bullshit in an attempt to decipher the true root causes and to align your behavior accordingly.

With the above in mind, I have previously laid out the importance of competence and influence in being able to navigate the world in a way that at least allows some measure of agency and sanity.  If you accumulate sufficient competence and influence, the cost of dealing with you negatively will outweigh the benefit of keeping you happy until you have progressed quite far within an organization. And without those two focuses, you will likely find yourself beholden to someone else for your success and that will open up all sorts of potential for abuse and disappointment.  Are those the only things that matter though?  Certainly not, and another really important one is Risk.

The larger the organization, the less it values openness, as that adds additional burdens to its desires to achieve its goals without explanation or friction.  They achieve this through secrecy and obfuscation, adding even more layers of bullshit to the signals that you are receiving through observation early in your career.

Part of the reason to seek out mentors that you feel you can really trust, and to speak with those further down your career path and who seem to align with outcomes that you yourself are seeking, is because they can at least try to impart these lessons to you. Unfortunately, you normally are not really at a stage of development to fully absorb or appreciate these lessons.  Still, they can at least try to show you the ‘Wizard Behind the Curtain’, the smoke and mirrors that make up most of what you will be dealing with.

What does this have to do with Risk?  Risk-taking is one of those factors that even under ideal circumstances is hard to observe, and in a corporate or institutional setting is often so veiled as to be almost completely undetectable.  And yet it is happening constantly for those who are actually moving ahead in their careers and getting the outsized outcomes that you are hoping to achieve.  Almost always what the masses will attribute to ‘luck’ is actually more fairly attributable to risk-taking.  This is certainly true on the entrepreneurial side but it is equally important if you are climbing the corporate ladder.

And that is not to say that all risks are rational or well-reasoned. The outcome should never dictate the analysis of the behavior.  In gambling, for those good souls who are smart enough to avoid this behavior and might not have heard of this, the concept is known as Expected Value.  What were the odds and value that would have been calculated BEFORE the outcome is known is how you should judge the action.  Winning the lottery does not a genius make.  If you had a 1% chance of winning the hand and a 99% chance of going broke when the chips were put in, the fact that you ended up winning does not make it a good choice to have made.

What you are often not observing, due to the aforementioned obfuscation, is a lot of the maneuvering that is at play.  The careful consideration of where the levers of power are resting at any given moment.  Who to curry favor with, and how to do so in a way that doesn’t completely erode your relationship with the other groups who wield power, lest the pendulum shift and end your ambitions prematurely.

The careful consideration of when you are meant to stand still and act oblivious, and when you are meant to cast the dice and force the conversation.   And without this piece of the equation, the proper consideration of Risk, and when and how to apply it, all of the competence and influence you might have obtained will simply go to waste.

Those who make the best Risk plays in your life will also be those who are the most successful.  It will overtake any other factor.  It will also mean that their lives are normally the most volatile, as they WILL also undoubtedly experience failure way more often. That is, after all, the nature of Risk. Yet, if they have competence and influence as a backstop, their floor will often be higher than your ceiling and over time their outcomes will outpace your own.

I have seen this happen again and again within my peer group.  The 'crazy' (in reality, carefully thought through and endlessly strategized about over numerous bottles of wine) power play that pays off will outweigh every other decision you make in life.  And when it doesn’t pay off, if you have the skills and value to back it up, you won’t have nearly as big a setback as you probably fear.  You simply aren’t considering many of the options that exist and you won’t until you are placed in that position.

How to utilize this in your life?  Make sure you are consciously considering Risk in many of your day-to-day career decisions.  Most important of all, you need to really nurture your ability to perceive when an opportunity has presented itself.  And it is those moments where you need to learn that you need to go ‘all-in’. Drop everything, figure out how to make it happen, and let nothing get in the way.

Knowing when you need to start to take risks and actually taking them will likely be one of the most important factors, if not THE most important factor, in getting those out-sized outcomes.  And another basic truth is that your current position often creates the new floor for your career.  If you hit a title of X, then that is the title you will almost certainly get as a bare minimum going forward.  So, a risk that pays off is basically setting you up for the remainder of your life. Risk compounds and grows, creating a career that could never have existed otherwise.

If you walk the same path as everyone else, don’t be surprised when you arrive at the same spot.

Much love as always,

Nick