At RPX2 Ltd, we are passionate about helping people and companies realise their potential.
In this latest episode of the ‘Bite-sized conversations – What makes people tick?‘ at Realising Potential Fiona Brookwell and Michael Jones delve into the inherently different approaches that individuals have towards risk and decision making.
Risk is commonly defined as the “possibility of danger or threat, inherent in a situation or activity which may be anticipated to some extent”.
Fiona and Michael chat about those who are naturally perfectly comfortable with – or even excited by – the possibility that their actions my result in things going wrong. On the others side of the risk tolerance spectrum are those who have a deeply rooted fear of failure and meticulously plan every move. Then there are those in the middle who are happy to take a calculated risk after weighing up the options.
Who needs what environment to thrive? How does the approach to risk affect decision making? What are the complexities when navigating the spectrum of risk-taking behaviours?
What is your own approach to risk? Do you know whether your employees need a strong framework of rules, whether they are happy to operate outside the box or need to at least check some things out before making a decision?
Why not contact us and try the Predictive Index Behavioral Assessment for free to find out what makes you and your people tick?
Do also check out or blog on the topic of ‘risk’.
If you’d prefer to read a transcript, here is a summary of the conversation:
Neale James: Here’s what’s on today’s edition of Realising Potential with Fiona Brookwell and Michael Jones.
Michael Jones: Some people are naturally orientated to come into the world to find different ways of doing things. Some people are excited by doing things and bizarrely excited by the fact that it might not work out.
Fiona Brookwell: There are people out there that do have self-confidence, and they do want to make new things happen.
Michael Jones: Some people are very much driven by a need to be successful. They want to challenge, they want to do things differently, they want to bring their own way to doing things, and they’re also really comfortable with that whatever I do, it might not be perfect. It’ll be good enough, it might be fabulous, it might not be.
Neale James: Michael, why do some people find risk an exciting way to work, yet others will do whatever they can to avoid that four letter word.
Michael Jones: This is a fairly enormous topic, really, and we’ve talked in previous conversations that the importance of an environment can have a positive or a detrimental effect on an individual, and it’s possibly when we look at the topic of risk that we see that most emphasized.
For example, if you are somebody that’s comfortable around risk, and we put you in an environment where we’re saying to you ‘follow the rules, do as you’re told, and don’t take any risky decisions’, you’ll struggle with that, and similarly, the other way around.
But I think some people are naturally orientated to come into the world to find different ways of doing things. Some people are excited by doing things and bizarrely excited by the fact that it might not work out. But you know what? That’s fine. I’ll own it. I’ll take charge of the decision.
And it’s not the end of the world because nobody died. So, we’ll find a way around it. And as part of that process, we’ve learned something, haven’t we? We won’t do it again, but it’s really important that we just kind of pick ourselves up and we move on because sometimes that type of creative approach, which could mean it hasn’t worked out, next time it might be absolutely fabulous.
So, I think some people are very much driven by a need to be successful. They want to challenge. They want to do things differently. They want to bring their own way to doing things. And they’re also really comfortable with the fact that whatever I do, it might not be perfect. It’ll be good enough. It might be fabulous. It might not be.
So, as a consequence of that, risk is something they’re very comfortable with. They make easy, simple, quick decisions. They take control. They own the decision. And if it goes wrong, they deal with the consequences of it going wrong.
Fiona Brookwell: Better we try and fail than not to try it all.
Michael Jones: Let’s give it a shot. Let’s see what happens.
Fiona Brookwell: Just do it. Just do it.
Michael Jones: Whereas, of course, there are other types of people, and this is a huge generalisation and two ends of a spectrum here. There are people that come into the world driven by a fear of failure. So, everything they do has to be done to a high standard.
It has to be done right. It has to be done properly. And the idea of things going wrong horrifies them. They work exceptionally hard to make sure that things don’t go wrong. They check, they double check, they get somebody else to check their work, and then they check their checking because it has to be done right. It has to be done properly.
So, I think if you are that way orientated, by definition, you can’t be a risk taker because a risk taker assumes that failure is a possible option, and it’s not something that I should shy away from. And both of those, I think, two ends of the spectrum, there are people who sit somewhere in the middle of all of that. But for people who are super comfortable with risk, life tends to be somewhat more straightforward – decisions are made easily.
Things are not overly complex. And talking to a client of mine who’s an exceptional risk taker, I was saying to him, ‘gosh, you’re such a risk taker, aren’t you?’. And he said, ‘I know what you mean, but I don’t see it like that’. He said, ‘people say to me, oh, my goodness me, what a risk’. He said, ‘it was just obvious, I just made the decision. And people go, I’m a risk taker. I go, well, I suppose I am, but everything is quite straightforward and easy for me’.
Whereas if you are differently orientated and driven by this need to do things properly, to dot the i’s and cross the t’s, you will need to make decisions based on your knowledge base, your technical expertise, the rule book that’s important to you.
So, as a consequence of that, decisions tend to be more complex. They take a little bit more time because the decision I’m about to make has to be the right decision. And I think if doing things right, doing things properly, dotting i’s and crossing t’s are important to you, the chances are there will be a complexity in your approach and relationship to risk.
Fiona Brookwell: And then in the middle aspect, you have those that you would class as calculated risk takers and calculated decision makers, and that’s finding the middle ground in what Michael has just said there.
So, you know, you’re not a maverick, you know, it’s not risk without consequences, but then it’s not the opposite end of the scale where the fear of failure dominates and therefore will hold you back, because there are people out there that do have self-confidence and they do want to make new things happen. They don’t want it hugely to go wrong.
A little story I have on this one is somebody who, uh, from a behavioural perspective is somebody you would class as a calculated risk taker and a calculated decision maker. And I had a conversation with them once about being this calculated risk taker and he actually said to me, ‘so I don’t know about calculated, no, I’m a risk taker. I’m a big risk taker. He said, you talk to any of my friends, and they’ll tell you I’m a big risk taker’. And I said, ‘oh, interesting, help me understand what do you mean by risk? What’s your definition of risk?’
And he said to me, and this was quite a significant number of years ago, ‘the wife and I, we’ve just taken out a million-pound mortgage’. I said, ‘woah, certainly a huge decision’. ‘That’s a big decision’, I said.
But knowing that his behavioural orientation was towards some element of caution, I said to him, I said, ‘can I just ask you a few questions?’ ‘So firstly’, I said, ‘how many different mortgage companies did you consult with before you decided which one to go with?’ He’s thinking. He’s thinking. And he said, ‘oh, I think it was about twelve’.
‘Okay. Interesting’, I said. ‘I was going to ask you another question. Did you take out income protection insurance before you took out this huge mortgage in case you got made redundant?’ He said, ‘don’t be stupid, of course, we took out income protection insurance. Took it out for myself, took it out for the wife’. He said, ‘we doubled our life insurance policies’. He said, ‘belts and braces’. He said, ‘of course, we had all of that covered before we took out a mortgage that size, it would be stupid not to’.
‘Interesting’, I said. ‘So, interesting. Twelve different mortgage companies. Took out all of your income protection. So really, there was ultimately no risk in taking on this million-pound mortgage’. I said, ‘you really had done your homework investigated your absolute best options and dotted the i’s and crossed the t’s’. I said, ‘so in my book, that sounds to me like a fairly calculated way of making this huge decision.
‘Yeah, yeah, now that you’ve mentioned it. I suppose it was a bit calculated.’ He said, ‘what I was thinking about is just that in comparison in those days to the type of decisions my friends were taking, then it was a huge decision to take in comparison to what my friends were taking on’. He said, ‘but actually in hindsight, you’re right’. He said, ‘yeah, it was a very, very calculated exercise’.
I just thought it was quite interesting. So, you know, even people who want to take huge big decisions, it doesn’t necessarily mean to say they’re maverick.
They can be very calculated in the process and there’s an underlying fear of failure there because they don’t want it to go wrong. But it doesn’t dominate their desire to make the big decision, and that tends to then bring them into the calculated risk taking and calculated decision making.
Michael Jones: Decision making becomes more complex because if you’ve got twelve different mortgage providers that you need to analyse on some inevitable spreadsheet, then it’s going to be a lot more complicated than for somebody who will maybe check one or two and go with their gut.
Fiona Brookwell: Time consuming, takes time, slows those things down.
Realising Potential with Fiona Brookwell and Michael Jones. For more information about our services and organisation visit www.rpx2.com
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