Do you have the stomach for risk taking?

Excerpted from highwire management: Risk Taking Techniques for Leaders, Innovators and Trailblazers by Gene Calvert, copyright [c] 1993, $24.95, Jossey-Bass Publishers, 350 Sansome Street, San Francisco, CA 94104, [phone] Reprinted with permission of the publisher.

Risk-taking mastery begins with self-assessment - appraising your risk-taking beliefs and perceptions. This first step toward risk mastery requires only about a half hour or so to read this chapter and complete three self-inventories, the first of which is published here. Be prepared to appraise yourself honestly.

DISCOVER YOUR RISK-TAKING QUALITIES

A truthful self-assessment improves your risk mastery in several ways. First, it assesses your risk-taking traits. What qualities and attitudes displayed by effective risk takers do you have already, and which ones do you need to develop? Second, it measures how your need to be in control of your risks influences your willingness to take financial risks. Third, it affirms or contests your assumptions about the long-term consequences of risk taking for managers' careers. If, for instance, you believe it is rare for a manager who initiates risks to get to the top and you possess that ambition, you are less likely to be open to taking optional management risks yourself. And fourth, it reveals several widespread myths about risk taking. These myths bias your risk decisions and actions, endangering you and your organization. In sum, these self-assessment tools help you strengthen and develop the beliefs, attitudes, and skills of risk-taking mastery.

When you do the exercises in this chapter, view the results as feedback, rather than as a scientific diagnosis of your risk taking. Forego labeling yourself permanently as a risk taker or risk avoider. Instead, use the exercises to credit yourself with your risk-taking assets and to motivate yourself to correct your risk-taking deficits. Resist second-guessing the "right" answers, as this distorts the feedback and weakens its value in identifying areas of growth with the greatest payoffs for you. Use these tools as a starting point for building your risk-taking skills. Allow them to become a springboard for your growth as a risk taker.

INVENTORY YOUR RISK-TAKING ATTITUDES

While no particular set of attitudes consistently distinguishes all risk takers from avoiders, research data and expert opinion suggest many of the ways in which they frequently differ. The following exercise, "Risk Attitudes Inventory," will help you determine which risk-taking attitudes you possess. Completing the exercise will increase your awareness of attitudes you do and do not share with active risk takers.

The higher your score, the more your risk-taking attitudes resemble those of risk takers studied by social scientists. A score of about 11 or higher indicates strong to very strong pro-risk attitudes; about 6 to 10, medium strength pro-risk attitudes; and 5 or less, low strength pro-risk attitudes.

RISK ATTITUDES INVENTORY

Read each trait description. Assess yourself on the basis of the degree to which the trait description applies to you (most of the time) in your management work and circle the appropriate answer. Be aware that looking for hidden meanings will not improve the value of your self-rating. Your first reaction is probably your best. A guide for scoring and interpreting your responses follows the exercise.

1. Taking management risks makes
   good sense only in the absence
   of acceptable alternatives.               Agree   Disagree

2. I generally prefer stimulation over
   security.                                 Agree   Disagree

3. I have confidence in my ability to
   recover from my mistakes, no
   matter how big.                           Agree   Disagree

4. I would promote someone with
   unlimited potential but limited
   experience to a key position over
   someone with limited potential
   but more experience.                      Agree   Disagree

5. Anything worth doing is worth
   doing less than perfectly.                Agree   Disagree

6. I believe opportunity generally
   knocks only once.                         Agree   Disagree

7. It is better to ask for permission
   than to beg for forgiveness.              Agree   Disagree

8. Success in management is as
   much a matter of luck as ability.         Agree   Disagree

9. Given a choice, I would choose
   a three-thousand-dollar annual
   raise over a ten-thousand-dollar
   bonus, which I had about a one-in-three
   chance of winning.                        Agree   Disagree

10. I can handle big losses and
    disappointments with little
    difficulty.                              Agree   Disagree

11. If forced to choose between
    them, I would take safety over
    achievement.                             Agree   Disagree

12. Failure is the long way to
    management success.                      Agree   Disagree

13. I tolerate ambiguity and
    unpredictability well.                   Agree   Disagree

14. I would rather feel intense
    disappointment than intense
    regret.                                  Agree   Disagree

15. When facing a decision with
    uncertain consequences, my
    potential losses are my greatest
    concern.                                 Agree   Disagree

Give yourself one point for each of the following statements with which you agree: 2, 3, 4, 5, 10, 13, 14. Give yourself one point for each of the following statements with which you disagree: 1, 6, 7, 8, 9, 11, 12, 15. Calculate your total.

Your score will tell you more about your risk-taking attitudes when you compare your responses with those of a risk taker. Someone giving a pro-risk response on all inventory items would agree with the following beliefs and assumptions about risk taking, which correspond to the items in the inventory:

1. Disagree. Risk by choice, not just by necessity; chosen risks usually benefit you much more than forced ones.

2. Agree. Security is a myth; professional stimulation (challenge, growth, or excitement) is worth the cost.

3. Agree. A way out of almost any risk-taking problem can probably be found or created, including a way to survive "the worst," if it actually happens.

4. Agree. Conventional personnel management practices like promoting someone on the basis of past experience, produce average results, if more certain performance; unconventional management practices like promoting someone on the basis of his or her potential, produce unconventional results, such as outstanding, if less certain, performance.

5. Agree. Risk taking is typically a messy, fast-moving, make-it-up-as-you-go, very imperfect process, no matter how well you plan or implement it; waiting until you can risk near-perfectly means seldom risking, or missing the best window of opportunity for risking.

6. Disagree. No matter how many times your risks fail, there will always be another opportunity to risk again, and perhaps succeed the next time. The ratio of wins to losses matters little in the end. Risk takers know that what counts most is the net value of wins as compared to losses in an acceptable period of time, such as a budget cycle or an average time span at a management position or level.

7. Disagree. While getting permission is always a smart approach, some management risks have to be launched without prior approval; if it succeeds, no apologies are needed; if the risk fails, and it was legitimate and responsibly undertaken, you will probably be forgiven anyway.

8. Disagree. Luck always helps, but you create your own luck by taking risks and betting on yourself. Your own ability contributes to making things happen the way you want them to happen. As the state lottery ad puts it, "You have to play to win"; for managers, that means taking risks and not depending on random circumstances, events, or other people.

9. Disagree. The bigger the risk, the bigger the reward, so go for the riskier choice if it offers a greater payoff; believe in your own ability to produce results, especially when you have pivotal control of the outcome, as with your job performance.

10. Agree. Failure and loss should be viewed as learning experiences that will pay off in the long term. What you learn from your risk-taking mistakes is what makes risks worth taking. Learning anything new is a matter of doing things wrong until you get them right.

11. Disagree. For a manager or an organization, achieving anything worthwhile requires venturing into unsafe territory. Being satisfied with average achievements, a standard of mediocrity, allows you to stick with the safe, sure, and secure; being dissatisfied with anything less than outstanding, a standard of excellence, forces you to relinquish the safe, sure, and secure.

12. Disagree. Succeeding as a manager means having a modest share of failures, if only because producing outstanding results requires taking risks, many of which will fail. The trick is not to fail too catastrophically.

13. Agree. Ambiguity and unpredictability permeate and complicate risk taking; those able to cope with these constraints will do well at risk taking, or at least better than those who can't.

14. Agree. You always feel good about yourself when you risk sensibly and boldly, even when you fail, for you sustain and expand your self-esteem and earn the respect of others. Risking and then failing means never having to blame yourself for lacking the courage to try. Better to feel the disappointments of risking than the regrets of not risking.

15. Disagree. When risking, keep one eye on the potential losses and one on the potential gains, instead of focusing obsessively on what you can lose. Risk to secure gains, as well as to prevent losses.