From JonathanFields.com:
I was recently giving a keynote before a room full of entrepreneurs and from the audience a voice yelled, “why are you telling this to us? We’re not the people who need to hear this. This is a waste of time.”
Pin drop…
Beyond the fact that a good percentage of the eyeballs in the rows in front were rolling, it was my first official keynote heckle. I was talking about mindset and entrepreneurship. More specifically, how we need to embrace uncertainty and recognize the creeping emergence of decision-making based not on optimism and opportunity, but on fear and the desire to prevent loss.
My friend in the audience was bothered because he’d assumed that, in a room full of successful entrepreneurs, this simply wasn’t an issue. They all got where they got by taking risks. They were the ones without fear. The idea marauders, innovators and envelope pushers.
And, indeed, when they started, nearly every person there was. But what about now? What about a few years into their ventures?
One of the biggest misses in the entrepreneurial process and mind is the assumption that mindset and willingness to embrace risk and creativity are fixed traits. In fact, the more successful most people become, the more they abandon the very mindset that fueled their success.
I call this the Entrepreneur’s recoil. Here’s how it works…
When you are just starting out, especially if you’re earlier in life and you don’t yet have significant responsibilities, it’s much easier to be hyper-creative, to innovate, put everything you have on the line and take risks. Because you have very little to lose. At least very little that isn’t fairly easily recoverable.
So when you start a business, you adopt a do or die, all-in mindset. You come up with and are open to crazy ideas in the name of creating breakout businesses. And you’re willing to act on them. Because, beyond ego, even if you fail, the fall really won’t cause that much pain.
But, then something happens. You succeed.
You begin to build a real business. You have offices, assets, overhead, inventory and employees. People, families, are counting on you to pay their rent and send their kids to school. Your own family begins to expect a certain lifestyle. And so do you. You get comfortable. And, along with your success, you now have the perception of so much more to lose if you fail.
So, instead of continuing to take risks, your mindset begins to shift into what famed psychologist and winner of the Nobel Prize for behavioral psychology, Daniel Kahneman, calls loss aversion mode.
Rather than being driven by what you can build, create and have, you are overwhelmed by a fear of losing what you’ve already amassed. Being an entrepreneur, and innovator, an artist or a creator does not make you immune to the often irrational pull of loss aversion. Because, as Kahneman’s research points out, it’s simply a part of human nature.
Two problems with this when it comes to creators and entrepreneurs…
One – The switch from seeking gain to loss avoidance cultivates a strong negative creativity bias that makes us say no to innovative ideas. Ones that come from our own minds, as well as from those around us. And ones that, embraced, could have been key drivers of innovation and growth.
Two – Because we set the tone as entrepreneurs, when we pull back, stop innovating ourselves and rebuff innovation and creativity from employees, we create an idea-killer emotional virus that destroys the very culture that got us where we are. It breeds loss-aversion, fear and scarcity, which is death to innovation and expansion.
So, what do we do about it?
If you’re an entrepreneur, or you work with an entrepreneur or a team charged with innovation, create a monthly mindset circuit-breaker check-up. Take a step back, preferably leave the office and take a few key creators with you. Maybe get out into nature and ask a big question -
“Am I operating from a place of creative opportunity or loss aversion?”
Be honest, and task your team with a “no-repercussion” opportunity to call you out on a shift to a prevent-offense when they see it. Because very often the person least well equipped to notice this shift is you.
Most important, never assume that the mindset that got you here is the same as the mindset that guides your efforts today. It may be. But, for many, once you’re sitting atop a mountain of success, possibility long ago morphed into fear.
When you see that, own it. Then do something about it.
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P.S. – I survived the heckling, shared the concept of the recoil, moved on and, after the keynote, spent nearly an hour fielding questions from a healthy crowd of attendees who thanked me for “opening their eyes” to this and other creative mindset phenomena and myths.
Then, I promptly went home, hugged my wife and daughter, meditated…and took a foam Kaboom bat to my couch.
Kidding…kinda!
I often wonder if we, as a city or as a country, have universally hit the point of comfort or too much to lose vs. the effort. It would be fun to explore this mindset beyond traditional business entrepreneurs.
John, the research points more to increased risk aversion from an aging population than to a declining marginal utility of wealth. Older people have been shown to have a bias away from loss and over-value offers with less risk.