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Do Entrepreneurs Hate Risk as Much as Professors?

risky ride | BIGG SuccessWe saw a great article over at Business Week by G. Michael Maddock and Raphael Louis Viton, respectively the CEO and President of Maddock Douglas.

They note a new phenomenon:

Large companies are hiring professors to teach them how to innovate.

The authors assert that it’s misguided:

“What big, process-driven companies need is to learn how to think like entrepreneurs. And it may surprise you that entrepreneurs hate risk, too. Unlike many professors, entrepreneurs feel comfortable not knowing what comes next, but they don’t see this as risk.”

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George KruegerI feel stuck between two worlds – I’ve taught entrepreneurship at our local University for years and I’ve been an entrepreneur even longer.

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Mary-Lynn FosterYou have the heart of an entrepreneur, though, George. It’s definitely where your passion lies.

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According to the authors, entrepreneurs mitigate risk by:

This is great advice for those of you thinking about starting your own business. Contrary to popular myth, successful entrepreneurs are not risk lovers. However, they are excellent risk managers.

They think differently. In business school, we learn that you have to take larger risks to earn a greater return.

Entrepreneurs know this isn’t necessarily the case. They focus on making the downside acceptable and let the upside take care of itself.

Do you have an idea for a business? Could you use some help reducing the risk? Check out our coaching packages.

Image in this post from mzacha

A Sure-Fire Way to Stop Innovation

island We read the transcript of a great speech, entitled How to Get Rich, given by Jared Diamond at the Museum of Natural History in New York City. It offers some great lessons in history, economics, and innovation.

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He asks the question, “What is the best way to organize human groups and human organizations and businesses so as to maximize productivity, creativity, innovation, and wealth?”

Now wouldn’t we all like to know the answer to that question?

He says that in the thirteen thousand years of human history, we have thousands upon thousands of “natural” experiments. To answer his question, he looked at extreme examples of societies in isolation.

The isolation begins

About ten thousand years ago, the places we know as Australia, Tasmania, and Flinders Island were connected – people could freely travel back and forth between them. Then the glaciers melted.

Even though they were only about 200 miles apart, the water-going craft of that era couldn’t traverse the rough seas between these three islands. So the 4,000 people of Tasmania and 200 people on Flinders Island became completely isolated from the rest of the world.

The isolation ends
In the seventeenth century, these two islands were “discovered” by the Europeans. The first to be rediscovered was Tasmania. It was noted that, at the time, the society was the least technologically advanced and most primitive group of people in the world.

They had no fire. They didn’t have any tools. They didn’t even know how to fish. In fact, archeologists have shown that they had less technology than they had ten thousand years before.

So, you ask, what about the 200 people on Flinders Island? When it was discovered around the same time, there were no people there. They became extinct.

Our islands

So we learn that small isolated groups don’t innovate. They may even regress. This historical example got us thinking about islands that we create, often without even realizing that we’re placing ourselves in isolation.

Field

Discoveries aren’t isolated to a single field. If you only talk to people within your field, if you only consume content in your space, you’re missing out on a whole world of ideas that may be fruitful for your field.

Media
Many people only consume media with which they agree. Seek out the opposing point-of-view. When you do that, you’ll either reinforce your beliefs or you’ll start to discover other alternatives.

People
Universities often don’t hire graduates of their own programs as professors. They fear it will lead to nepotistic thinking. Let’s learn a lesson from their policy. Get outside your circles of friends and business associates. If you work in the for-profit world, get to know some people in the non-profit world. If you work in government, make sure some of your influencers are in the private sector.

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georgeI’m a pretty social person. But looking back on my former businesses, I’ve come to realize that I wasn’t feeling fulfilled because I didn’t spend enough time seeking out ideas and alternatives outside my sphere.

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It’s so easy to get so busy running your business, working your career, or managing your life that you fail to invest important time in connecting yourself to people, places and things that expand your mind.

Islands are a great place to visit. Just make sure you don’t get stuck there.

What islands have you seen people create?

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Two Proven Keys to Happiness

happyThere’s a rising call for developed countries to track happiness, rather than just income and wealth. Economists say that the goal of a “rational actor” is to maximize his or her “utility” – their fancy term for happiness – over the course of his or her life. Perhaps governments are trying to catch up with the economists!

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Leicester University in England has tracked happiness for the past 30 years. Consistently, Denmark – not Disneyland – has topped their list as the happiest place on earth.

We wondered why … why are the people in Denmark so darn happy?

Is it the weather?

Average temperatures in Copenhagen are about 68 degrees in the summer and around zero in the winter. We don’t know about you, but that’s not our idea of great weather!

Is it the taxes?

Like her sister Scandinavian countries, Denmark has some of the highest taxes in the world. Now, granted those taxes are matched with some of the highest benefits for any citizenry.

Is it their lifestyle or their habits?

Danes are some the heaviest drinkers and smokers in the world?

Is it their diet?

One of the staples of the Danish diet is herring – this is a country that eats a lot of herring!

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marylynnSo it can’t be the diet, because … maybe it’s just my personal taste, but ick!

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georgeNow there a lot of theories about what makes the Danes so happy. One of my theories is that they drink so much, they don’t remember whether they’re happy or not!

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Seriously, theories are fine, but we thought we should look at what the research shows is driving this happiness.

Professor Kaare Christensen at the University of Southern Denmark found that Danes have low expectations. Because of this culture of expecting less, the people are happy when good things happen.

This made us think of something Tony Robbins said – if you’re not happy, you have a choice. You can either change your conditions or your expectations. But what if you don’t want to change your expectations?

Tal Ben-Shahar, who teaches the most popular class at Harvard University, found that the single most significant predictor of happiness is close relationships with friends and family. We found it interesting that 92 percent of Danes belong to some sort of social club.

Maybe that’s why social media has become so bigg! What do you think?

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Sources

University of Leicester Produces the first ever World Map of Happiness

Why Danes are smug: comparative study of life satisfaction in the European Union

Denmark: The Happiest Place on Earth

Denmark ‘happiest place on earth’

The REAL Happiest Place on Earth

And The Happiest Place On Earth Is…

(Image by nookiez)

How to Form Better Opinions and Make Better Decisions

On the show, George recalled a college class where one of his professors debated, all by himself, if CEOs were overpaid for an hour-and-twenty minutes. George said, at the end of class, he had no idea where his professor stood on the issue, but he understood executive compensation better than he ever imagined.

There’s a relatively new concept called “integrative thinking”.   It was developed by Roger Martin, Dean of the Rotman School of Management at the University of Toronto and author of the book The Opposable Mind: How Successful Leaders Win Through Integrative Thinking.

A lot of people form an opinion and then look for evidence that they’re right. Scientists do the opposite – they go into an experiment with a hypothesis and try to prove it wrong.

You know you fully understand the subject at hand when you can argue all sides of the issue equally well, like George’s professor did. You could be on the debate team and win the contest no matter which side you argued.

3 possible outcomes

#1 – You may stick with what you originally thought.
Only now it’s not an uninformed, or slightly formed, or narrowly formed, opinion. You can have full confidence in it.

#2 – You may decide that you had it wrong.

Upon investigation, you discover the best alternative is the other side. You’re truly a scientist at decision-making – you disproved your original hypothesis!

#3 – A third alternative
The most likely outcome is some combination of the other two. That’s the point of integrative thinking – finding the best option by building upon two diametrically opposed positions.

A simple example

Picture yourself out to dinner with a friend. Everything has been spectacular. Your server brings over the dessert tray. That internal debate begins – should you have dessert? The debate might go something like this:

Ooh, that looks delicious …. I want it.
Oh, I can’t have dessert tonight.

I really do have a sweet tooth tonight.
Man, that’s going right to my hips.

I haven’t treated myself for a long time.
It’s so bad for me.

I’ve been dieting & exercising, so it’s okay.
I’ll have to work out twice as hard tomorrow if I eat that.

I’m still a little hungry.
I don’t need to spend the money.

Hey, I wonder if my friend would like to split a dessert with me!

There it is … the third alternative! You started out on one side or another – you should have dessert … or … you should skip dessert. By fully thinking through the issue in this admittedly simple example, you arrived at an option that wasn’t considered when you started.

Usually the best decision is one we haven’t previously thought of because it builds upon our prior thoughts. And the result isn’t a compromise, it’s an improvement.

Our bigg quote today comes from Joseph Joubert:

“It is better to debate a question without settling
it than to settle a question without debating it.”

Debate it now so you won’t question your decision later.

Next time, we’ll discuss why anything we can do, you can do better! Until then, here’s to your bigg success!

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