According to Malcolm Gladwell, there are two different types of risk: Operational and Social.
The 2007 sub-prime mortgage debacle is a good example of operational risk-taking. Banks strayed from their core competencies – an operational risk. And they went for the big return without respecting the possible consequences – another operational risk. According to Malcolm Gladwell, large companies are more likely to experience operational risk-taking.
Social risk-taking, on the other hand, involves risking the approval of one’s peers. Returning to the sub-prime example, there was very little social risk-taking. All of the banks followed suit. Despite the fact that some individuals in these banks felt that the investments were ill-advised, they did not take the social risk of being the person to point this out to their peers or supervisors. They feared the risk of being seen as foolish and out of the loop. They feared social risk-taking.
Entrepreneurs seem to be more comfortable with social risk-taking. They believe that the status quo could be improved. In fact, entrepreneurs see this as an opportunity to do things differently. They frequently stake their future, both financially and socially, on their idea and fearlessly go off to change the world with their new product or service.
I believe that it is this fearlessness of social risk-taking that makes the entrepreneur powerful and most likely to succeed. It translates into a passion for her business that infects others. It becomes infused into her product or service, making it an authentic offering. It is what drives the entrepreneur to ‘prove them all wrong’ and succeed despite the barriers and difficulties she may encounter. And it is this drive that brings many of the great leaps in technology, creativity, etc.
Are you a risk taker?
I started my business being risk averse. I knew I had something unique to offer, but I was afraid to stick my neck out and be unique. What if my approach was rejected? So I did my best to blend in and shared my differences only with those I knew and trusted.
My approach changed the summer I almost quit and went back to work in a conventional job. In my efforts to make myself fit into others’ preconceived molds I had failed miserably on a project. As a result, I started questioning myself and everything I believed in.
My life and business changed the day I decided that I was going to continue in business but I was changing the rules. I was who I was - a quirky individual who I was now going to embrace. I was going to be authentic in all I did. And this has made all the difference.
I share this with you so you know it’s not too late. You too can become a risk taker if you want. As an entrepreneur, social risk-taking distinguishes you and gives you the opportunity to excel and change the world. Operational risk-taking is healthy when approached with open eyes. So let me ask you again…
Are you a risk taker?