Mindset Monday - Loss Aversion

This is episode 220 of the Empowered Team podcast. Happy, happy New year. Welcome to 2023. And we know you are people who take a lot of action. We do too. We're achievers, we're leaders. We love to serve other people. However, sometimes the actions that we're taking are not quite getting us where we want to go. They're really just keeping us busy. So join us for our Empowered Action Challenge. This is a free seven day challenge. Join us so that we can support you in taking the actions that are really going to make a difference in your life. And maybe they are inactions, maybe they are things you don't want to do and you need a little bit of accountability. Well, this challenge, Empowered Action Challenge, is accountability for leaders. So join us. It's free, it's seven days. It's going to be a whole lot of fun. We'll keep you accountable and get you really into that momentum so that you can stick with the actions that you really want, the ones that really matter. Join us. Welcome to the Empowered Team podcast where we explore how to optimize your performance in career, sport and life. And now your host, executive coach and life strategist, Kari Schneider. Welcome to Mindset Monday. We have another episode, so thank you for tuning in. We're so happy to have you here. This is a labor of love and we are aiming at really making a difference for you. So today we're talking about loss aversion. Loss aversion. In this episode, I find this to be a real important one because sometimes we don't even realize that this is what we're doing. And what it is, it's that we don't want to lose something more than we want to gain something. So it's almost like, you know, playing not to lose versus playing to win. I like to think of this as a weigh scale. So I have this fantastic scale at home on my kitchen counter and it's this Turkish scale and we, we got it in Turkey and it's, it's metal and it's heavy and it's red and it's just this classic Turkish scale that would be used at the markets all the time. And you put the little, the little weights on one side and find out how many grams of whatever spice or whatever you're getting. And it provides me such a beautiful visual for this exact topic, loss aversion. And it comes down to, am I which is more important? Which one has more weight on the scale? Losing the thing that either you've attained or whatever it is for you or going for the next level, the next win, the next, whatever it is. So this can come up in all sorts of places in our lives, in our personal lives, in our business lives, in our physical health, you name it. And I always like to start with the physical health because it's the low hanging fruit. It's the easiest thing for me to get a message across with. So, for instance, I can think of a national level women's hockey player, and this female player is very small. And the challenge was that in being so small, it was really important for the team to have a lot of physicality on the ice. And so she was looking to gain a lot of muscle mass. And in doing so, that would likely secure her position on the team, also get her more playing time. However, in gaining this muscle mass, she was losing some of her mobility. She wasn't moving the same way she would always move on the ice. So there was a cost there. And the challenge for her was, do I stay the same and risk not being on the team, or do I gain this muscle mass and hold my position on the team and potentially lose where I am right now, how I move right now, what I feel like right now. So that was her challenge. This loss, aversion of this thing, this fear of losing what she currently had, versus the gain of potentially being on the team and playing for the team. And when there's a big. When there's a big fear of that loss, then likely what we typically do, what I typically see, and just as humans, what our tendency is, is to stay right where we are. Because going for the new thing or the next level is typically so scary that we don't want to do it. So another example of this is in my, my older daughter's, in her soccer, competitive soccer team in her league, they were a team that were definitely the underdogs. They worked their butts off to try and get to the best tier. They made it there, they won. They were then the underdogs in their most competitive tier for her sport in the region. And the coach had developed a system and worked with them so long that this one particular play or one system that they had, they would run was. It was named after a city, let's call the city Seattle. And so when he shouted out to the team, seattle, Seattle. Run Seattle. The team knew exactly what to do. And what it was, was they would just protect the ball and keep possession of the ball because all they were trying to do in that play was run down the clock. Because if they had a lead they didn't want to lose that lead. So all they were doing in that play, Seattle, was, was keeping possession of the ball, taking their time with it, and making sure that the other team didn't get the ball in order to hold their win and run the clock out. Now, that would be a perfect example of not going for the next level, and it is loss aversion. However, this is where we want to make the distinction. Are you actually causing yourself a risk or causing yourself a cost by not going for the win, or is there more of a risk or more of a cost by going for the win? It's only really a loss aversion when you've analyzed and looked at the risk that you don't want to take. So it's only loss aversion when you don't want to lose something more than you want to gain something. Because what happens in the example of Seattle, that play is that they already had what they want, wanted. They didn't want more than that at this point. They already got what they wanted, they got the goal, they got the lead in the game, and they already have it. So what they were doing wasn't loss aversion necessarily. It was protecting the win. Whereas a different way of looking at it would be to not go for the big goal that you have in your business because you're afraid it's going to affect something about your business right now. Or not go for the change in body for the hockey player because they're afraid they're going to lose what they have right now. But the reality is, is that they're going to lose so much more by protecting what they currently have. So that's why I wanted to introduce you to the scale in the very beginning is really understanding that the risk of losing what you have is actually less than the risk of losing what you could have had if you'd gone for the thing. So the risk of not going for it, the risk of the life or the situation or the result or the outcome from not going for it, is actually greater than the risk of losing what you currently have. And we do this all of the time. We stay in sucky situations because at least we have this sucky situation. Because what happens if I go for something different? Then I don't have my sucky situation simply because we're afraid of change. So I invite you, on this particular episode, this loss aversion, is to take a look at what you have in front of you, whether it's a business decision, whether it's something that you want in a relationship, whether it is a personal physical goal or personal relationship goal. And look at it from the scale where you are right now losing what you have right now. Is that so bad when what you likely have to gain can be so much greater? Don't hang on to a sucky situation just because shifting or trying something new might be scary. And the worst that can happen if you try the new thing and go for the next level is that you still have your sucky situation, but you would have learned so much just from trying to the skills, the new experiences. There's so many things that will bring more just from trying to go from the for the next level. So that is what we wanted to take a look at. With loss aversion. We don't want just to hold our holding or hold our situation. Stay in a holding pattern to avoid something else. Sometimes we get into these ruts simply because this is how it's been for so long and it doesn't have to be that way. So today, take a look at your life. Look at three areas right now that are in a holding pattern just because they've been that way and you don't want to lose what you currently have. Take a look at what you have to gain. Take a look at how much more that can bring your mindset, your life, your business, your relationships, or your interactions just by trying something that's different than what you're currently doing. Loss aversion doesn't have to hold you stuck. You can move forward and see that there's not going to be any loss by making a change. There's only going to be a gain. Even if it doesn't work the way you want it to, there's going to be something that you've learned along the way. So on this Monday, go for it. Whatever that thing is, it's going to tip the scale for you. Get out there, live big and if this has served you, please share this so other people can have a little extra Mindset Monday for themselves. Have a beautiful rest of your day and have a powerful week. 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