Business often requires bold actions on important decisions such as launching an innovative idea, creating a new advertising campaign, or changing the direction of a company. These decisions offer a rare opportunity to acquire a valued “psychological currency,” in the form of a mental payoff: courage.
Courage might even be viewed as one of the psychological enticements of doing business. It’s a reward people receive for taking bold actions, whether it comes to buying stocks, becoming an entrepreneur, or changing the direction of the company. The motivational force of courage might even contribute to the recent spurt in new businesses being started at the fastest rate in a decade, hoping to capitalize on an evolving economy.
Conventional wisdom states that people are generally risk-averse, especially when it comes to monetary losses from gambling. People generally choose smaller, safer bets over larger, riskier ones. However, recent research that David Gal of the University of Illinois at Chicago and I conducted shows a different pattern of results when people make major or important life decisions. People exhibit a preference for larger and risky options, such as leaving the security of a safe job to start a business. A potential contributing factor is that people want to feel, see themselves as, and ultimately be, courageous.
Boldness is a fundamental requirement of pursuing high-risk, high-reward outcomes in many endeavors. In our research, we observed people were more prone to take riskier options such as putting themselves all in to win or lose by making a gusty call in a football game instead of playing for overtime, or opting for riskier medical treatments with more positive payouts versus safer alternatives with less-positive payouts.
Many faces of courage
Too often, people mistakenly assume courage is pursuing something without fear. Courage is not the absence of fear. Courage is acknowledging fear and going forward with your eyes open despite that. Business abounds with such opportunities: buying a risky stock, starting your own business, or engaging in a hostile takeover.
There are other aspects to courage as well. Aristotle linked courage to the pursuit of a higher purpose. For those in business, this could be accomplished by important decisions that allow growth, mastery, and realizing potential. Courage is enhanced by making the choice for yourself—an act of free will feels courageous.
Courage is not all risky actions. It’s the result of measured and appropriate actions. Granted, at times it’s hard to discern between pursuing something with heroism versus reckless abandon. Given the natural attraction we have to see ourselves as courageous, how can we help ourselves make good decisions over reckless ones? Here are five steps to take.
1. Stop and ask
Don’t do anything purely in the service of courage. Ask yourself: What am I doing and why am I doing this? This simple approach can help build the muscle of self-awareness. Balance the desire for boldness with business acumen. Weighing the risk/reward of your actions can increase your odds.
2. Seek out a neutral mentor
A useful person to give you feedback is a powerful ally. Even more important is to solicit that feedback from someone who is neutral—who is uninvolved in the outcome of your decision (e.g., not a partner or coworker). A neutral mentor increases your chances of receiving unbiased feedback.
3. Don’t just win, make the right plays
It’s easy to get caught up in the end goal. Even more important than winning the game, however, is the successful execution of every play. Focus on the success of each step in launching and scaling your business as opposed to purely the end objective.
4. Hold yourself accountable
Business decisions often include a number of options, each associated with different levels of risk. Weigh the risk/reward of each option to identify what straddles the line between feasible and fulfilling.
5. Always reassess
With each success or failure, reevaluate your decisions. If you’re diligent, you will likely see a pattern. Are you too focused on making big bets so that you appear bold? Or do you appreciate the importance of the smaller bets until that opportune big move comes along? Assessing your results will help you fine-tune your decision-making.
As a leader, you’ll need to instill courage throughout the organization to keep innovation alive and ideas fresh. However, it is important to assess whether your actions reflect blind obedience to the desire to feel courageous or reflect sound and wise business decisions.
Derek D. Rucker is a professor at the Kellogg School of Management at Northwestern University.