Taking Risks – How to Overcome Fear (Part 1)

If you want to make money in business, you can’t just copy what someone else is doing. You need to figure out how to create value. And creating value comes from solving problems.

How do you solve a problem? You have try solving it!

Analysis will only bring you so far in finding a solution to a problem. It is good to research what someone else has done, but at the end of the day, you need to take action. You need to attempt to implement the solution. Action will provide much more information and learning than research every will.

Sounds easy, but it isn’t because taking action is risky.

You have to be willing to fail, which requires you to overcome your own fear of failure. You have to put yourself out on a limb to try to implement what is your best guess at a solution that will work.

The key to learning to solve problems then is learning to overcome your fear of failure.

One way to overcome this fear is by limiting the downside risk of a decision. This gives you a bit of freedom to just go for it. Jeff Bezos calls this a “two-way door” decision because you can back out if it doesn’t work. Some attributes of this type of decision are:

  1. Limited financial exposure. You aren’t betting everything on this. If your idea fails make sure it won’t break the bank for you or your client.
  2. Limited time exposure. Try to break things down to the fastest amount of time possible so that you get feedback quickly.
  3. Limited reputation exposure. Warren Buffet says, “It takes 20 years to build a reputation and five minutes to ruin it.“ You don’t want to make crazy promises to customers until you have proven that it works. You also don’t want to bet your client’s reputation on the idea. Find a customer that likes your idea and be clear with them that you don’t know for sure if it will work. You might need to charge less or even do the work for free, knowing that the learning you will receive will lead to much more profitable work in the future.

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