Accomplishment = Risks you take + Risks you avoid
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.” – Warren Buffet
Welcome to this week’s blog where I revisit the importance of outsized focus on risk management while on a growth path. For, what you end up achieving comes down to the combination of the necessary risks you took (growth path) and the unnecessary risks that you avoided.
Two days ago, I came across a sports news headline which piqued my interest. It read “Jos Buttler: 'Managing risk is a big part of T20 batting”. The age-old success factors of the longer formats of the game are equally applicable here too. What really called out to me in that interview of Buttler was his insight on how important managing risk was, even in the action-packed “short” format of the game.
“The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch.” – Warren Buffet
Whether it be stalwarts of the game in Test cricket format such as Rahul Dravid, Sunil Gavaskar or Mike Hussey or the modern greats in the short-term format such as AB De Villiers, David Warner, Virat Kohli and Rohit Sharma, they all seem to put significant weight on avoiding unnecessary risk. As obvious as it may seem, the most important reason for their performances is the fact that they survived in the plays long enough for the performances to emerge. Equal or perhaps more talented players do not play up to their potential because they inevitably take undue risks early on in their innings and perish.
Quantum of accomplishment rather than the pace of accomplishment is the universal yardstick of success. One of the most celebrated investors of modern times and also the richest persons of the world, 92-year-old Warren Buffet’s current net-worth is about $100B but he was not a billionaire at the age of 55 and he was not even a Millionaire at 33. 99% of his wealth was created in the last 37 years of his life and 99.999% of wealth was created in the last 59 years. He took his time in creating his wealth and perhaps is among the greatest examples that demonstrates that once on the growth path, magnitude of accomplishment becomes proportional to length of survival. Once a game is chosen and an individual’s stance is decided, it is all about ensuring survival long enough for performance to accumulate (or burst through).
In my childhood there used to be a game called “Slow Cycling race” – whoever cycles a certain distance (typically 100 or 200 metres) the slowest wins the game. Inevitably the one who wins is the not the slowest cyclist but the one who completes the distance slowest. Many cyclists slower than the eventual winner just do not manage to survive the entire distance.
The objective of ensuring survival is to allow one to go after high alpha opportunities whenever they present themselves. For example, a start-up founder who sets aside funds for his or her daily living and obligations will be free to fully focus on the start-up. However, a founder who is constantly bothered by worries of having to pay school fee for his/her children will be too distracted to be able to focus fully on the start-up.
Even a stance of moderate risk on all your pursuits is not a great idea for this will ensure a sure condemnation to mediocrity.
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If focus is on survival, would one not become excessively conservative. There are lot of aspiring professionals in many organizations who having spent 10 or 20 years with their employer, have not grown professionally commensurately – granted few of them were not keen on growth and those who were keen on growth also may not have grown much.
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” – Warren Buffet
While Rahul Dravid and Jos Buttler focused on survival by minimizing risk, they capitalized on every bad delivery. Focus on survival will yield results only when favourable opportunities, no matter how far and few in between, are fully taken advantage of.
Taking up every high profile project that comes your way may actually hinder your career growth. You will more likely be remembered for the failure of one project than for the success of all the high impact projects that you may have delivered.
At the same time, successfully delivering several moderate impact projects – no matter how many, will not help in achieving extraordinary career growth.
“The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch.” – Warren Buffet
A career professional would be wise to go after very few high-profile projects, only those where one senses high probability of success. Rest of the time should be spent on seemingly mundane activities such as expanding professional network, keeping up with the trends of your industry, upgrading your skills etc.
An active and sharp mind is required to recognize these opportunities and conviction is required to take them up. This can be done by keeping relentless focus on improving one’s competencies (skills, capacities and capabilities), being current with one’s environment and changes there in, by following and learning from those who may already have blazed your aspirational path in the past, actively engaging with mentors and coaches, reading biographies, autobiographies and history etc.
Bottom Line
In the end-game, what matters is “how far” and not “how fast”. To be able to go far, one need not hit home-runs too often. All that is needed is to hit a few well-timed home runs. Well-timed home runs happen infrequently. So, it is important to stay in the game long enough and sharp enough to exploit these opportunities. Just remember that Warren Buffet is known for his large fortune and not for how fast he amassed it and Einstein is known for “e=mc2” and not for how quickly he discovered this.