Application in Business

You can emulate the Marines practices to encourage boldness in your organization. During training, devise creative ways to place your people in controlled situations of uncertainty and force them to make decisions; as a result of such practice, they will become more comfortable exercising initiative in actual uncertain situations. Encourage your people to speak up during the planning process and challenge well-laid plans with thoughtful and well-supported suggestions for improvement. Forming an independent viewpoint and challenging consensus requires considerable courage of conviction , and success in this endeavor will undoubtedly build a junior s confidence. Understand that an increased incidence of risk taking in your organization will inevitably result in a higher prevalence of mistakes; correct honest mistakes as quickly as possible and punish inexcusable mistakes, such as indecision, timidity, or lapses in integrity, ruthlessly. And recognize and reward both the successes and failures resulting from bold actions.

Above all, remember that boldness requires calculated risk taking: appropriately weighing risk and reward so that you avoid reckless behavior in your pursuit of breakthrough results. The following relationship will serve you well every time you evaluate a potential course of action:

The relationship itself is relatively straightforward, but the inputs themselves require considerable thought. Your experience will guide you in your estimates of these inputs, but also remember to leverage the expertise of the people with whom you work to refine your estimates and identify any considerations you overlooked. Other key factors to weigh are time to completion of the challenge at hand, the magnitude of your potential upside versus that of your downside, your ability to exit safely if events do not unfold favorably, and the cost of exiting the course of action if necessary.

When weighing risk and reward, remember to be patient and disciplined; wait for the opportune time to commit resources to decision, and, no matter how exciting the opportunity, always ask yourself, What s the downside? Be sure you have clear objectives and clear measures of success to quantify your outcome. If resource-constrained, pick your battles wisely. Manage the multitude of risk-reward trade-offs as a portfolio. Diversify your risk across your portfolio of risk-reward trade-offs; always pursue a handful of high-reward/low-probability breakout opportunities, but have more medium-reward/medium-probability opportunities and plenty of lower-reward/higher-probability opportunities in the queue as well. Finally, keep a journal of your past successful and failed risk-reward trade-offs to learn from your mistakes and accelerate your development as a calculated risk taker.