Doug Sundheim - Taking Smart Risks: How Sharp Leaders Win When Stakes are High

Copyright 2013 by Doug Sundheim. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

ISBN: 978-0-07-177820-6
MHID: 0-07-177820-9

The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-177819-0, MHID: 0-07-177819-5.

All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps.

McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. To contact a representative please e-mail us at bulksales@mcgraw-hill.com.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

TERMS OF USE

This is a copyrighted work and The McGraw-Hill Companies, Inc. (McGraw-Hill) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hills prior consent. You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms.

THE WORK IS PROVIDED AS IS. McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting therefrom. McGraw-Hill has no responsibility for the content of any information accessed through the work. Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise.

To my wife and sons, Daryn, Eli, and Shai

Think for a moment about your relationship to risk. Most of us never do, in any rational, systematic, ongoing way. Instead, we instinctively avoid risk wherever we can, only to occasionally and impulsively overindulge it, usually to no good end. Risk is built into every choice we make, but few of us know how to manage it to our advantage.

Then along comes Doug Sundheim, arguing in these pages that the answer lies in something called smart risk,a paradoxical notion that significantly increases our odds of success in any given endeavor, he says, and can also make our lives richer and more vital.

In the 1960s, the psychologist Mihaly Csikszentmihalyi described the experience of flow as the sort of total immersion in an activity that generates a feeling of effortless energy, and well-being. Flow, he went on to say, lies somewhere between boredom and anxiety.

So does smart risk. Too little risk eventually prompts boredom, complacency, and, ultimately, atrophy. Too much risk, by contrast, prompts anxiety and ultimately leads to failure. Sundheim is interested in the territory in betweenthe smart-risk zonewhere he argues the greatest learning, growth, and progress occur.

All my instincts tell me hes got this just right.

In large part, I know this from all the experiences Ive had of living outside the smart-risk zone. On the one hand, some of my unhappiest times have been those Ive spent squarely in my comfort zone, collecting a solid paycheck to do some job, but feeling trapped, stuck, and a bit stir crazy. At the other extreme, I can remember frightening times when I simply overreached and took stupid risks, ignoring the evidence that I didnt have the skills necessary to accomplish the task Id agreed to take on.

Using risk to our advantage, Sundheim says, begins with the mindset we bring to it. What he terms the Paralysis Perception is grounded in the fear-based question What might I lose if I do this? What he calls the Power Perception is grounded in the opposite inquiry: What might I lose if I dont do this? If youre not moving forward, he concludes, youre probably moving backward.

At the heart of the capacity to take smart risks is genuine passionor what Sundheim calls Something Worth Fighting For. A SWFF, he says, must be simple, stir emotion, lend itself to a story or narrative, and inspire action. The SWFF that worked for me in founding my own company at the age of 50 was the notion of changing the way the world works meaning creating a new kind of workplace. It has proved galvanizing for me even in very tough times.

The necessary counterbalance to passion, Sundheim goes on to say, is the capacity to look into the future and predict the points at which youre at risk of failing and how youll handle them should they occur. Far too many of us get derailed from taking smart risks by overly focusing on the immediate obstacles and insufficiently planning for future ones.

In this same spirit, a key to taking smart risks is to envision the worst-case scenario and ask yourself soberly, Could I live with that? For me, the worst-case scenario was that the business I had launched would fail, and Id have to go back to journalism. I decided I could live with that, but, perhaps more important, asking the question made me realize I was prepared to considerably scale back the level at which I lived if thats what it took to persist in following my passion.

Counterintuitively, perhaps, much of this book is about learning how to live with failuresince its both an inevitable by-product of taking risks and the reason that most of us are loathe to take them.

Smart risk takers, it turns out, learn how to embrace failure. I missed more than 9,000 shots in my career, said Michael Jordan. Twenty-six times I was trusted to take the game-winning shot and missed. Ive failed over and over and over again in my life. And that is why I succeed.