Are You Weighing Opportunity and Risk? By Marshall Goldsmith To...
Sometimes the opportunity overwhelms the risk, and your only risk is failing to accept that a great opportunity has walked into your life.
Let’s say you have the opportunity to buy 100 widgets at the distress sale price of $1 each. Because you follow the market for widgets very closely, you alone happen to know someone who desperately needs those 100 widgets and is willing to pay as much as $10 a widget for them.
Unlike you, this customer doesn’t know that they can be had for $1 a widget. The customer’s ignorance in this instance is your edge. You buy the widgets for $100, sell them for $1,000, and pocket the difference—a 900% return on your investment. Unless the widget market collapses in the brief interval between your acquiring and unloading the widgets, this is as close to an all-opportunity, no-risk decision as you can make.
This sort of thing happens thousands of times a day in bond markets and commodity exchanges. Someone believes pork bellies are underpriced, buys them cheaply, and sells them for a profit to someone else who urgently needs them (or believes you’re still underpricing them). It’s the sort of complex calculation, involving millions of dollars, that benefits from the backup of sophisticated software and high-speed supercomputers.
You’ll notice that in each of these choices where money is changing hands, and where financial risk is incurred, there’s a system and infrastructure, in the form of powerful technology rapidly delivering historical data for calculating the balance between opportunity and risk, that improves your ability to make a good choice and avoid making a bad one. A lot of business decisions are made with that data-driven advantage; it’s better than over-relying on emotion or intuition.
But in everyday life we don’t have the technology to help us weigh opportunity and risk when we’re choosing things such as whom to marry, where to live, when’s the right time to switch careers. We’re influenced by our memory of past successes and blunders, or by the opinions of others.
But you can use the Triple A’s of Action, Ambition, and Aspiration to help you figure out what might work best for you.
Aspiration refers to what we do in the service of a higher purpose in our life. It’s time horizon is infinite — we always aspire.
Ambition represents focus on achieving defined goals. It is time-bound, determined by how long it takes to achieve a goal.
Action represents our activities at a specific moment in time. Action’s time horizon is immediate, forever in the now.
The distinguishing characteristic of each variable for me is its time horizon. How far out from the present moment is each variable pointing? Is it minutes, years, or a lifetime?
Distinguishing these three time dimensions and seeing how well they serve one another (or not), I believe, can have a marked influence on how close we come to living an earned life.