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“People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”

“People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”  – Peter Drucker

Talk about thought provoking. I’m curious if it’s true. A little more research into Drucker’s line of thinking revealed his four classifications of risk:

  1. The risk one must accept, the risk that is built into the nature of the business
  2. The risk one can afford to take
  3. The risk one cannot afford to take
  4. The risk one cannot afford not to take

Seems his quote specifically addresses risks #2 and #4. The people who tend to not take risks get hung up when they get to #4. It’s when they don’t take the risks they can’t afford not to take that they make mistakes.

Hopefully the risk takers are making mistakes on the risks they can afford to take rather than the risks they can’t afford to take.

That’s what I want to drill down into. Let’s assume we’re all taking risks, trying out new things, breaking new ground. There’s a big difference between jumping off a cliff with wings attached, the tools needed to build wings on the way down, or just a hope and a prayer.

In negotiations class in school we learned about the concept of BATNA, or Best Alternative to a Negotiated Agreement. It basically means the least you’re willing to accept before walking away from a deal. When it comes to deciding between risk you can afford to take and risk you can’t afford to take, knowing your personal and company BATNA is extremely important. I’m not talking about how much money is in the bank. If you need more, go get more. I’m talking about things like paying payroll taxes before anything else, what update you’ll send religiously or even which meeting you must have every week.

My 2015 theme is #levelup, so as I think about what that means in business, this is a really helpful tool. There’s no way for me to level up without taking a decent amount of risk. I just want to be smart about it so those two mistakes aren’t easily avoidable ones.

This quote was found in a great blog entry by one of Etsy’s engineers. I highly recommend checking it out if you’re scaling your team this year.

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