WHICH STRESS, UNCERTAINTY & RISK SHOULD WE ACCEPT?

Last time, I argued that we should welcome uncertainty, risk, and even stress as essential for any worthwhile world or life. Without stress, uncertainty, and risk our lives would be boring and our character would remain unformed and untested.

Yet as with everything in life, the 80/20 principle tells us to be extremely selective. It is only a small proportion of stress, uncertainty and risk which are good for us. If we can define what is good and what is bad, we can live an eventful but happy life.

There is only a limited amount of uncertainty, stress and risk that we can abide, while also being happy. It varies a lot from person to person, and less so but still notably, at different times in our lives. A few people can cope well with plenty of these characteristics - but most of us can't, especially in relation to stress. Anything which makes us unhappy is guaranteed to make several other people unhappy through our influence on their lives (happiness works the opposite way), and unhappiness rarely makes us more productive or useful either. Outstanding achievement flows, overwhelmingly, from happy and fulfilled people.

From this we can derive two guidelines:

  • Guideline #1 is that we should limit stress, uncertainty and risk (SUR) to what we can cope with and still be happy.
  • Guideline #2 is that we should accept and even seek out SUR if it does not make us unhappy, and if it is the kind of SUR which will have the most beneficial results. The great majority of SUR will not pass these tests, but some will.
  • With these guidelines, let's identify the small fraction of SUR - separately for each - which is ideal.

    Stress

    There are three kinds of stress - internal, imported, and exported.

    Internally generated stress is imposed by us on ourselves in pursuit of a highly desirable and attainable outcome.

    Imported stress is when someone else or some institution or force - usually an organization - imposes the stress and we have little or no choice but to import or absorb the stress. This is always bad stress because it is not in a cause we ourselves have chosen, and the stress really should lie with the people who do stand to gain a great deal from it. If nobody does, then the stress is palpably absurd and should be rejected anyway.

    Exported stress is when we impose stress on other people. This is unfair and we should never do this, unless the stressed people share our goals and stand to gain from them as much as we do - in which case, the stress is really in the first category - internally-generated. Exported stress unglues personal relationships fast and it is extremely virulent.

    So we should only accept internally-generated stress. But this covers a wide territory. What is the best sort of internal stress?

    80/20 tells us that we should look for the rare stress which can have marvellous results from modest effort. This is the stress from trying to achieve goals which are so desirable that they will transform our lives and make us very happy, fulfilled, and productive. It is a fantastic result from relatively little stress, and indeed stress that is not so stressful because we know we are the authors of the stress and can remove it if we must. To find the kind of stress that fulfils these conditions takes ultra-careful thought, and so it may take a few years to know what it is.

    Or we can take inspiration by looking back at the times in our lives which were stressful but had terrific results for us. For me there were two such occasions. One was going hitchhiking around Europe alone when I was seventeen - stressful because I was often lonely and never sure whether I would make it to a youth hostel before the end of the day. Terrific because of the people I met and the confidence I gained. The other was starting a business with two colleagues. Stressful because we could easily have gone bust and lost our savings. Terrific because it worked, we became different people, and we helped to develop many bright young people who subsequently became friends or business partners. And because we gained financial independence.

    In both cases, I felt the stress, but I knew that it was good stress which would repay me hundreds of time.

    Uncertainty

    With uncertainty, the trick is not necessarily to keep it low - that is impossible - but rather to change our attitude to it. With an adventurous mindset, and a bit of creativity, surprise developments can be turned to our advantage. How often have you had the experience of thinking a turn of events is bad, but then come to terms with it, or even benefitted from it? The difference between winners and losers is often their reaction to bad surprises.

    Most uncertainty doesn't matter very much, but some matters enormously. So concentrate on eliminating uncertainty when it can make your life - or kill you. Make a list of these "killer" (up or down) uncertainties and do your best to find out the truth. For example:

    • Are there hidden threats to my health?

  • Can I trust my best friends?
  • Is Mr or Ms Thingummy-Jones a suitable life partner?
  • Which people or causes am I willing to make a total commitment to?
  • What is the best subject or field for me to master?
  • Risk

    There is a false market in risk. Most people avoid too many risks, with the result that the general level of reward for taking risks is too high. Taking risks is good value.

    So, take more risks. Get used to taking them when they are sensible - when they don't threaten your health, wealth, or peace of mind.

    But be selective. The best risks are those with low downside yet high upside. Not many risks are like this, but there are certain risks which surprisingly often fall into this category. For instance:

    • Joining a small, fast-growing company

  • Starting your own business
  • Moving to a center for the activity you want to pursue (e.g. Milan for fashion, Silicon Valley for tech)
  • Moving to a richer or more civilized country
  • Taking a year out of your life to find out who you are and what your goals should be
  • Having adventures of any kind
  • Thinking for yourself
  • Investing in a star business (see The Star Principle) or a small business which has just started to simplify a large market (see Simplify).
  • Some people are happier taking more risks than the average person. Think if you are or could become like that. If you aren't, identify someone who is, and tie your fortunes to theirs.

    Action Implications

    1. Accept stress if and only if:
    • • It is internally generated

  • • It is necessary to attain something really valuable to you
  • • The stress is small relative to the result it should generate
  • • The stress is not making you unhappy.
  • Turn bad surprises into good ones.
  • Take more risks, but only those that have a low downside and high upside.
  • If you can't become a proficient risk-taker, hitch your star to someone who is.