The Counterintuitive Nature of Risks and Rewards
Risk takers are open to new things and willing to endure missteps and failures in order to achieve success. People who take risks step out of their comfort zone and are willing to operate in the world of the unknown and uncertainty. We are invariably charting new waters and battling uncertainty when assuming risk. Conversely, there is safety and assurance with familiarity as well as comfort and control. If we know what the risk exposures are from experience, we can better battle the vicissitudes.
In a real sense when we take a risk, we forego short term loss of control for the promise of future security and bounty. This underscores the correlation with risk and reward which is axiomatic. The greater the reward, the more the risk. Even something as simple as casting for a fish requires someone to venture the bait, with no guarantee of a catch once the rod is in flight. On the other hand, without the venture of bait, it would be impossible to win the catch.
The Hanseatic League, one of the most powerful trading confederation of Northern European city states in the Middle Ages and Early Modern period, was founded in 1356 and prospered through 1862. Their motto in Latin, “Navigare necesse est, vivere non necesse,” in English reads, “To sail is indispensable, to live not.” This line of thought has a long history, and according to Plutarch (46-119) the Roman historian and diplomat from Greece, the expression originates with the Roman General and Consul Gnaeus Pompey (106-48 BC) who purportedly gave this counsel to his sailors setting sail from Rome in perilous weather. The Latin motto of Paris, “Fluctuat nec mergitur,” which means in English “Tossed by the waves but unsinkable,” is a Hanseatic clarion call capturing this same indomitable spirt, coined by Baron Haussmann (1809-1891), prefect of the Seine in 1853, and inspired by the Barque of Saint Peter, apostle and first pope.
Risk is defined as “a situation involving exposure to danger.” The English word risk derives from French “risqué” from the 16th century or from Italian “risco” meaning “run into danger.” The word was used in a commercial context by 1719, meaning “hazard of the loss of a ship, goods, or other properties.” What is interesting is that the meaning of risk has taken nuanced and specific modern meanings when paired with other words such as “risk taker” as of 1892, “risk factor” as of 1906, and “risk aversion” as of 1942. This expansion and delineation of neologisms explaining risk in the last 100 years or so speaks to the importance and relevance of the topic.
Most of us who have achieved both success and failure have one thing in common, the assumption of risk. It is hard to climb up to any mountaintop in life or business without the concomitant risk of falling down. Avoiding risk invites a host of other problems and maladies in business and life. United States Four-Star General George S. Patton (1885-1945) poignantly observed: “I don’t measure a man’s success by how high he climbs but by how high he bounces when he hits rock bottom.”
This concept plays out in life and business and is illustrated in many cultures with many thinkers. In the Hindu texts “Katha Upanishad,” the idea is expressed, “The sharp edge of a razor is difficult to pass over; thus the wise say the path to Salvation is hard.” The Chinese word for “crisis” has two characters and means both “danger” and “opportunity” or “crucial point.” On his retreat in 1812 from the defeat by the Russians at Moscow, Napoleon Bonaparte (1769-1821) observed, “From the sublime to the ridiculous is only one step.”
In sports we see this same paradox in play between risk taking and exceptional success connected with notable defeat. In baseball, the home run hitters are usually the strikeout kings. Reggie Jackson holds a Major League Baseball record with 2,597 strikes outs while hitting 563 home runs which ranked 4th at the time of his retirement. In basketball, the top scorers often also often miss the most shots. Kobe Bryant (1978-2020) missed a National Basketball Association record 14,481 shots, taking 26,200 shots and making 11,719 shots for 33,643 career points which ranks 4th in league history. In football, the quarterback and many elite running backs have the most fumbles. Brett Favre as quarterback holds a National Football League (NFL) record 166 fumbles, however he retired as the career passing leader with 71,838 yards and most touchdown passes at 508. Walter Payton (1953-1999) as a running back retired from the NFL with the 3rd most fumbles at 86 and set records for leading rushing yards at 16,726 and most combined yards (rushing and receiving) at 21,803.
Ward ``Piggy” Lambert (1888-1958), who coached John Wooden (1910-2010) when he was playing at Purdue University, had a controversial philosophy consistent with these circumstances: “The team with the most mistakes will probably win.” Most coaches believe by eliminating mistakes and errors, the team will win, but the innovator Coach Lambert felt the team with the most mistakes usually would take the most risks and thus be prone to victory in the long run.
Hernan Cortes (1485-1547), a Spanish conquistador, explorer, and adventurer conquered what is today known as Mexico and formerly the Aztec Empire. Cortes landed in the Yucatan Peninsula in 1519 with 11 ships and approximately 500 men, 16 horses, mastiff war dogs, mobile cannons, crossbows, and muskets. Being far from the Spanish headquarters, approximately 5,000 miles, and distant from their imperial outpost in Cuba, approximately 1,000 miles, Cortes risked disaffection, insubordination and mutiny from his men who were operating in difficult and unfamiliar territory and vastly outnumbered. Upon reaching landfall, Cortes executed a brilliant stroke of leadership and scuttled or beached each and every ship under his dominion. By literally disabling and figuratively “burning his ships,” Cortes and his men could not make an easy return with a halfhearted effort. Instead, both captain and army were sealed in their fate to survive by conquest. Cortes eliminated the easy options for retreat or escape for everyone and solidified his leadership role by casting his lot with his crew.
The idea of burning one’s ships has precedent in history. Agothocles of Syracuse (317-289 BC), a tyrant of the Greek island of Sicily in the 3rd century BC, broke a Carthaginian blockade sealing his island’s harbor at Syracuse and took the battle to enemy‘s home territory utilizing the element of surprise. Upon landing at Latomiae (modern Cape Bon) in North Africa, Agothocles put his 60 ships to the torch and had them burned, thus committing his approximately 13,000 troops to victory without the possibility of retreat. Consequently, in the Battle of White Tunis (310 BC), the Greeks finding their far larger Carthaginian adversaries unprepared, triumphed.
Yet another case history of a commander burning his ships is apocryphal but closer to home perhaps for Cortes. This is the story of the Berber Muslim commander Tariq ibn Ziyad (670-720 AD) who led his army in the early 8th century on the Muslim conquest of Visigoth Hispania at the Battle of Guadalente (711 AD). When Tariq crossed the strait separating Africa from Hispania and landed at a rocky promontory, it became named “Jabal Tariq” or “Mountain of Tariq,” today known by its anglicized name “Gibraltar.” According to legend, Tariq burned his ships upon landing and allegedly exhorted his soldiers,” “Behind you is the sea, before you, the enemy,” thus eliminating the possibility of retreat. This inspired his troops to overcome great odds with approximately 12,000 warriors and vanquish the Visigoth King Roderic (688-711 AD) and his approximately 100,000 men, leading to a 700 year Muslim occupation of Iberia.
In order to move forward and embrace change, which are at times difficult, it is important to cut ties with the past and the easy and comfortable path in life and business. Sometimes we must metaphorically “burn our ships” to conquer new territories and risk uncertainties to find new opportunities in business and life.