So, what’s the deal with sea anemones anyways?
You may be wondering what entrepreneurs can learn from sea anemones. Let’s dive right in:
Many years ago I read an interesting story about sea anemones on coral reefs. The sea anemones on the outside of the reef are far more colorful, vibrant, and strong than those on the inside.
This occurs because the sea anemones on the outside of the reef are exposed to more harsh conditions, to which they must constantly adapt. They face the great pull of the ocean currents, greater variations in temperature, and predators. In turn, this is what leads them to become brilliant and strong.
By contrast, the sea anemones on the inside of the reef are protected and go almost entirely unchallenged. Due to this lack of challenge, they do not grow to the same brilliance or strength as those on the outside of the reef.
What entrepreneurs can learn from sea anemones.
What is it entrepreneurs can learn from sea anemones, then?
In a sense, your average entrepreneur is much like a sea anemone surviving on the outer edge of a coral reef. They are exposed to the elements, the “currents” of fluctuating market conditions, predators, and a wide variety of uncertainties. They must act quickly under pressure and without having all the information they may desire.
This certainly puts the average entrepreneur at risk, too. But much like a sea anemone, it gives them a challenge that forces them to grow and become the strongest, best, and brightest version of themselves.
Moreover, even though most entrepreneurs will encounter their share of failures (small and large), maintaining the commitment to live “on the outside edge” of the coral reef for an extended period of time can actually mitigate risk.
This is something Daniel Kahneman describes in his best-selling book, Thinking Fast & Slow, which is a fascinating read – and one I always recommend to anyone in the business world. A nobel-prize winner in economics, professor Kahneman has done much more than revolutionize economics. His research has also made waves in the fields of psychology, statistics, and business, and his work in prospect theory laid much of the foundation for modern behavioral economics.
In the book, he encourages decision-makers of all shapes and sizes to reconsider probability theory in terms of weighted long-run effects. This has immediate implications for any given decision, namely that it may increase your risk tolerance in the short term.
Living on the “outer edge” of the coral reef.
In case this sounds abstract, let me provide you with an example from Kahneman’s book.
Say you have a large organization with a number of VPs that report to a CEO. Any given VP may shy away from risky business initiatives for fear of losing their job if things don’t work out – and given the risk, well… it’s easy to understand their CYA thinking on this.
Left to their own devices, then, the entire group of VPs may individually decide against so-called risky business initiatives. But in many cases, the long-run expected value of such decisions is actually cash-positive. This means it’s in the best interest of the company to take those risks presuming the calculation supports it, because with enough iterations of risk, better outcomes can ultimately be achieved.
The challenge, then, is to merge the interests of the business as a whole with those of the individual VPs. The VPs are understandably scared to take a large, singular risk that could cost them their job. But with the encouragement of an intelligent CEO – one who understands the cash-positive expected value in the long run – the entire group of VPs can be moved into action, moved to the “outer edge” of the coral reef.
As a result, the VPs themselves will be exposed to challenges that cause them to grow and develop out of their comfort zone, and most importantly – the company’s long-term objectives can be achieved due to the large number of iterations of risk that lead the business towards its long-run expected value of those decisions.
The CEO does need to clearly explain these types of decisions, however, and provide individual assurances to VPs that their heads will not role if any individual project fails. The CEO must know and accept in advance that certain projects will fail, and view such failures as a mere cost of doing business (to achieve the greater long-run goal) rather than assign blame to the VPs in charge. They must take a team “we” approach instead of an individual “pass/fail” approach.
Of course, there are situations where individuals can and should be reprimanded for poor planning, execution, and management of business projects. But once again, the CEO has to be careful to facilitate an environment of trust and safety, or else it is unlikely that he/she will obtain the buy-in required to move forward with these types of initiatives. Not to mention certain VPs may leave if they feel pressured to take on projects that are too risky without the proper assurances.
It’s basically the same for entrepreneurs.
Not every entrepreneur will reach the point of managing large teams, such as with the example provided above. But even for the solopreneur or entrepreneur working with a small team, the same logic applies.
There are often risks that can and should be taken by an entrepreneur, because in the long run a commitment to those risks will yield better outcomes.
Certainly each decision needs to be weighed individually, and each group of decisions must be evaluated for its long-run expected value (without making any assumptions). But the point is that it’s smart to lean into risk sometimes, even if it feels scary on any individual dice roll.
This may feel unnatural or counter-intuitive, but with appropriate calculation and understanding of expected value, you may do quite a bit better. And what’s more important, feeling safe and protected on the inside of the reef? Or getting out there to the outer edge where you can truly grow, advance, and succeed?
Entrepreneurs can learn a few things from the natural selection processes that occur out in the ocean. Sea anemones living on the outer edge do sometimes succumb to predators or harsh conditions, but they are also the ones most likely to become the best versions of themselves. They are the most likely to be strong, vibrant, and robust. They are the most likely to succeed.
Putting yourself on the outer edge, outside of your comfort zone, is never an easy thing – even for people with a naturally high risk tolerance. Nobody wants to fail and be seen as stupid or less able. But if you hide on the inside of the reef for too long, you are guaranteed to grow pale, weak, and less capable.
Let us all take the directive from Daniel Kahneman, then, to think twice before taking the so-called “safe” road. What may seem more safe today, in one isolated instance, may in fact be nothing more than a path to long-term stagnancy.
Bottom line: be smart and do the math, but lean into risk where appropriate – and especially where the sum of many such decisions yields a more favorable long-run outcome.