There are many ways to segment people. One approach to segmentation I’ve been thinking about of late is around reality and the perception of it.
There are two kinds of people in this regard. The first kind are those who care deeply about understanding reality and regard perception to be a second order priority. The second kind are those who care a lot more about perception than about the reality underpinning it.
As is the case with many of these things, the right path tends to lie in the middle. Reality matters. But, perception matters too.
However, when it comes to most marginal decisions, we tend to make calls based on our preference. So, if you are kind who indexes high on reality over perception, I’ve found that it helps to have folks who are different from you on your team so you can understand the other perspective.
That said, I think there is reason to worry if the folks who are making big decisions are more worried about perception over reality.
If reality sucks, perception can only tell a different story for a finite period of time.
In 2005, after his second season with the Cleveland Cavaliers, LeBron James gifted Nike co-founder Phil Knight a Rolex watch. The engraving said – “With thanks for taking a chance on me.” Knight reflected on that moment in his book and said – “It wasn’t much of a chance. He was pretty close to a sure thing.”
That is a powerful example of the nature of risk.
In the popular imagination, risk is this mystical quality that daredevils have. They gamble all of their life’s savings in a bet that would make no sense to others. That is far from the truth.
When you become really good at something, things that seem risky to other people aren’t as risky to you. An expert soccer player wouldn’t describe a complicated trick in a massive game as a big risk. He has probably practiced it a million times. Similarly, Adele may have created music that was very different from the norm at the time. But, when you’ve become as competent as Adele, you know you’ve probably got something that is close to a sure thing.
That, then, brings us to three things we can learn about risk.
First, risk and reward go together. Learning to take risks well can be very rewarding.
Second, our perception of risk changes with expertise. To an expert talent scout like Phil Knight, LeBron was an obvious pick. Similarly, the Pixar founding team would have told you that computer graphics were obviously the future of animated movies. Obvious in retrospect to the rest of us.
Finally, Phil Knight’s wording is important. he said “he was pretty close to a sure thing.” Notice that he doesn’t say “he was a sure thing.” That’s important because there isn’t such an interesting endeavor without risk. Your expertise may minimize the risk in your eyes, but it doesn’t eliminates it.