My father-in-law Don McFadden told me a story about a big mistake he once made. He bought an apartment building in his city and borrowed most of the money to do it. After he took ownership, he learned that many of the tenants were moving out and there was no way to stop them, because they had never signed leases. He was facing an emptying apartment building and a large monthly mortgage payment – a bad combination. Worse, he got surprised: he hadn’t done the research to know that it was coming.

So, how did it turn out? It turned out just fine. It turned out better, in fact, than if he had never done the deal in the first place. He and my mother-in-law re-negotiated their loan with the bank. They took the opportunity to clean and paint the vacant apartments, and were able to fill them with tenants of their choice, for higher rents. And one-year leases. My in-laws owned that building for 30 years.

In a similar vein, James McCann, the founder of 1-800 Flowers, related this story about the early days of his company:

In 1986 I bought the assets of a failed floral company in Texas called 800-Flowers and took that name. I thought I was smarter than everyone else and neglected to hire lawyers and bankers to do due diligence. I unknowingly signed for all liabilities, which I later learned was a debt of $7 million. People advised me to file for bankruptcy. Then my grandmother took me aside and said: “This bankruptcy thing? We don’t do that. Find another way.”

And he did. The Texas company’s sterling assets were its name and its 1-800 number. McCann built his company around technology – first phone ordering, then the internet – to upend the floral-delivery business and create a market leader with over $600 million in annual revenues.

We often confront situations where we have to make a decision without all the information we’d like to have. Do we jump? Or wait and see?

Many of us err on the side of “wait and see,” using due diligence as a way to put off risk, or to avoid it completely. Yet, the above stories tell us that even big mistakes can turn out successfully. It all depends on your mindset:

1. Don’t just focus on the downside; understand the opportunity.

Keep in mind that it’s not easy to look at both sides of a situation. In fact, as discovered by pioneering behavioral economists Amos Tversky and Daniel Kahneman, we are wired to value losses higher than equivalent gains. The classic, two-column “Pros and Cons” list can be helpful here. Bad things will be easier to think of than good ones – try to come up with an equal number of items in each column. How do they stack up?

2. Understand that you will shape the outcome.

When you make a decision, you don’t just sit back and see how things unfold; you will actively engage to help ensure success. Ironically, when you start off the wrong way, as Don McFadden and Jim McCann did, you become even more committed to turning it around – your reputation and pride are on the line.

3. Know who you can rely on.

In Don McFadden’s case, he found he had several partners in his predicament. His wife Sheila became a crucial sounding board and source of creative solutions. The bank that had lent him the money had a stake in his success as well. By working with him to revise the terms of his loan, the bank was a crucial enabler that led to the long-term success of the apartment building. With regards to your decision, who is on your team? Who will help you if things go wrong? Your family, close friends, business partners are all candidates.

4. Stick with it.

In her outstanding book Mindset, psychology researcher Carol Dweck discusses the trait that both McCann and McFadden had in spades, and that you will need to make your decision into a long-term success, no matter what happens:

Exceptional people seem to have a special talent for converting life’s setbacks into future successes. Creativity researchers concur. In a poll of 143 creativity researchers, there was wide agreement about the number one ingredient in creative achievement… perseverance and resilience.

Most of our decisions have limited risks and rewards. Nevertheless, if we know that with hard work, perseverance, and resourcefulness we can make even a bad situation into a success, we can approach any decision we face with that confidence. As my father-in-law said about his experience buying that apartment building: “Failure is an opportunity.”

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How Do You Do It?

What’s your approach to taking big risks?