Embracing Reliability and Asymmetric Bets
In our journey to "Raise the Floor," we’ve been exploring the frameworks and mindsets that enable sustainable growth in our businesses and lives. Building on the discussion of clarity and currencies, Now we focus on two powerful concepts: reliability and asymmetric bets. Together, these form the foundation of what we call the Barbell Strategy a tool for navigating uncertainty while maximizing potential.
The Reliability Anchor
W. Edwards Deming famously said, “Every system is perfectly designed to get the outcome it is currently getting.” This quote challenges us to evaluate the systems we rely on. Are they consistently delivering the outcomes we desire, or are they prone to volatility?
Reliability doesn’t mean passivity. We use "reliable" rather than "passive" to emphasize stability and predictability. Think of it as the strong anchor of your barbell, providing a solid foundation for growth. Recurring income streams like rents, fees, or service agreements serve as this anchor, funding your solvable problem, and the specific measurable goals you are working toward.
Real-life example: Consider a real estate investor with a portfolio of rental properties. While flipping houses might provide higher one-time returns, the consistent cash flow from rentals ensures a baseline of financial stability. This reliability allows the investor to confidently pursue more dynamic opportunities.
Reflect on your business: What revenue streams can you count on with high certainty? Are these sufficient to fund your core goals? If not, it’s time to reinforce this side of the barbell.
Asymmetric Bets: Low Risk, High Reward
Once you’ve established reliability, you can shift focus to the other side of the barbell: asymmetric bets. These are opportunities where the potential upside far outweighs the downside. Nassim Nicholas Taleb describes this as "domesticating risk.” By limiting your exposure to catastrophic failure, you open yourself to transformative opportunities.
Examples of asymmetric bets include:
- Opportunistic investments like carefully chosen real estate projects.
- Innovative business ventures with minimal capital but high growth potential.
- Networking and relationships that might unlock unexpected opportunities.
These bets should never risk the reliability of your system. Instead, they’re a way to collapse time, accelerating progress toward your solvable problem without risking everything.
Real-life example: A small business owner might invest a modest amount in a promising new technology or marketing strategy. If it succeeds, the rewards could be substantial. If it fails, the impact on their overall operations is negligible because the reliable side of their barbell remains intact.
Avoiding the Middle Ground
The middle of the barbell is where risk and reward are poorly aligned. This is the realm of wasted effort and unnecessary stress. It’s like working out just enough to exhaust yourself but not enough to achieve meaningful fitness gains. The solution? Focus on clarity and deliberate action.
Tools to Align Your Barbell
To evaluate and align your barbell strategy, revisit these tools and questions:
- ATIMER Framework: Where are you spending your currencies (Attention, Time, Impact, Money, Energy, and Relationships)? Are they aligned with your goals?
- Barbell Mapping: Sketch out your barbell. What activities are on the reliable side? Which are your asymmetric bets? What’s stuck in the middle, draining your resources?
So let's ask these questions:
- What does the reliable side of your barbell look like today?
- Identify one asymmetric bet you could take to collapse time toward your goals.
- Where are you still stuck in the middle? How can you move these elements to either side of the barbell?
The process of "Raising the Floor" is about creating clarity and certainty, one step at a time. By anchoring yourself in reliability and taking calculated asymmetric bets, you can build a system that not only withstands uncertainty but thrives in it.
A key takeaway: The process is the shortcut. Trust it.
Are you balancing reliability with transformative opportunities, or are you stuck in the middle? Together, we’ll continue to raise the floor and chart a path to sustainable success
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