Startups

Why we do not take risks

As I begin my expedition into the world of startups and entrepreneurship, I have been frequently asked the same question/concern : Starting up is a huge risk, why don’t you mitigate it by doing something else first?

risk

The TL;DR answer to which is always the same : One cannot get the experience to run a company unless one starts and runs a company. Anyway, listening to so many people question taking risks, made me want to go deeper into the reasons of Why as a species we avoid taking risks.

The 2 main culprits who impair our ability to take any risk are :

  1. Fear of Being Wrong
  2. Impact Bias and the Pre Frontal Cortex

We hate being wrong. Most of us hate and constantly fear it. The reason behind this is simple, all through our education, we have been told from various ends that people who get things wrong / make mistakes are going to have trouble “succeeding in life”. This makes us strive for lesser mistakes. Wrong lesson learnt. How ironic.

This majorly inhibits our creative process.

“To lead a creative life we must lose the fear of being wrong” – Joseph Chilton Pearce

But the puck doesn’t stop here. Let me move onto how we are wired on the inside.

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Source : Wired

Pre Frontal Cortex is a vital region of the brain which regulates thought in terms of both short-term and long-term decision making. It allows humans to plan ahead. Turns out that the pre frontal cortex does a lot of things but the most important function is that of a simulator. Just like pilots practice in flight simulators so that they don’t make real mistakes in planes, we humans have this marvelous adaptation that we can simulate things before trying them out in real life. Dan Gilbert (Professor of Psychology at Harvard University) found out in their labs about a particular tendency called the “Impact Bias” which causes this simulator to work badly.

According to me, this very tendency is applicable to our risk taking abilities as well.

What is Impact Bias?

The impact bias is our tendency to overestimate our emotional reaction to future events. Research shows that most of the time we don’t feel as bad as we expect to when things go wrong. Now it seems obvious, how the impact bias can affect our simulations of the future based on the risk prone decisions we are going to take.

According to me, correcting for the Impact Bias and removing the fear of being wrong can lead to wonderful things. It can increase our risk taking ability and make us more creative, respectively. Both are things one needs in abundance while starting up a new venture.

So, what leap of faith are you taking today ?

 

 

 

 

 

 

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Startups

Finding the Blue Ocean of Life

Last semester was the first time I read about Blue Ocean Strategy in the Harvard Business Review and it really got me thinking. Was it just applicable to industries and their strategies ? Or could the same be extrapolated to the realms of everyday life?

To those of you, who do not know what Blue Oceans are, here’s a TL;DR : Business universe consists of two distinct kinds of spaces : red and blue oceans. Red Oceans represent all the industries in existence today—the known market space. Companies compete with their rivals to increase market share, in turn cutting profits and resulting into reduced growth rate. Blue Oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, new demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.

Blue-Ocean-Strategy-640x416

Those interested in reading more about how to create Blue Oceans can have a look at this (HBR Article). I found the concepts of Blue and Red Oceans quite similar to what has been defined in Economics as Competition and Monopoly. Peter Thiel talks about this in his book Zero to One

“Creative Monopoly means new products that benefit everybody and sustainable profits for the creator. Competition means no profits for anybody, no meaningful differentiation, and a struggle for survival.”

Well, after reading all these things, I became very intrigued. I wanted to know more and see if I could apply some of these concepts to our day-to-day life. I read a lot. I came across several articles with similar footings.

Here’s what I found :

Current scenario consists of two kinds of people, those who are looking for the “safe” routes and those who are looking for unconventional routes. Usually, everyone around us preaches to take the safe and validated routes. This usually means that you compete your way up the safe path. You accelerate on the freeway, trying to beat others till you finally run out of fuel and have to stop, only to question everything that you have done till now.

“Elite students climb confidently until they reach a level of competition sufficiently intense to beat their dreams out of them” – Peter Thiel

Historically, the people who have been the most “successful” have taken the unconventional path, made the competition irrelevant. But does success simply lie in doing what others aren’t ? Not exactly. According to Thiel, the most contrarian thing of all is not to oppose the crowd but to think for yourself.

So, what do we do ?

Oliver Emberton in his blog post titled “How to find your passion” talks about, well (you guessed it right) several ways to find your passion. He talks about how only a handful people even dare to try something new. Well, here’s our answer, we start looking. Looking for things that interest us, things we are amazing at and new things others usually won’t try. “Starting” is the first step and taking the first step itself improves our odds. Don’t look for formulas, start with basic first principles. In the post, Oliver talks about how we can find our passion by creating something. Then the question arises how should we create something?

Creativity is the process to have original ideas that have value” – Sir Ken Robinson

I believe solving a unique problem is a simple way to create a lot of value and hence be creative. Well, according to all that I have gone through above, one way to have a blue ocean strategy in life is to be an entrepreneur or at least think like one. This way, you solve a unique problem, be creative, find your passion and end up making a space/context of your own. This is my hypothesis and surely you could have other opinions !

My Hypothesis

My Hypothesis

Well, this was one of my first in the series of posts on Startups ! Many more to come 🙂

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