Inside the Mind of Risk-Takers

Risk-taking is a curse and a blessing. It can make you rich or it can ruin your life. It can make you popular or it can make you toxic. Risk-taker's mind is messed up. It's wired to either build marvels or burn the house down, especially when it comes to business.

Most business decisions are based on assumptions. We make decisions based on what we think we know. From executives at large companies to entrepreneurs at startups, we see a reward system that is based on experience and achievements. We constantly seek advice from those who “been there … done that.” This is why large companies and even startups bring in "experts" to show them the way to growth and prosperity. These experts plan and execute purely based on past knowledge and performance.

Risk-takers can care less about experience and achievements. They make decisions by only considering what they don’t know. They don’t see things in the context of “This will happen if I do that!” A risk-taker's mind processes information by asking, “How badly will I blow shit up, if I do that.” This kind of thinking can greatly reduce paralysis by analysis.

Here is an example that differentiates the thought process between a typical corporate executive and a risk-taker:

Let's say that your mission is to drive a supercar with 700hp down an extremely dangerous road that weaves along sheer cliffs and between tight canyons. You must hit 200 MPH at some point and make it down the road in record time. The catch is, the car is not well-maintained and has all kinds of mechanical problems. Should you make it down to the finish line, you'll be awarded a lucrative contract with a multi-national company.

Here is how a traditional executive processes information and makes decisions: "Analysis clearly show that going down this road at top speed in a car that can fall apart at any moment can be problematic ... not to mention expensive and outcomes can be catastrophic. If something happens along the way, I'll be blamed and shareholders will not be pleased with bad publicity. Regrettably, I do not see a strong synergy and I'll have to pass on this opportunity as I believe that risks outweigh the rewards."

Here is how a risk-taker's mind processes information and makes decisions: "Well, the car is crap and may come apart when I hit 200 MPH; heck, it'll probably blowup when I hit 60. But, the roll-bar looks solid and seatbelts look ligit. I might be able to avoid flying off the cliff by slamming the car to the mountain. If I don't die and manage to make it down the road in one piece, I'll have a nice contract waiting for me. How bad can it be?! Let's find out!"

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