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The Value of Productive Paranoia in Leadership and Entrepreneurship

We often think about fear as weakness, as something that needs to be overcome.  Entrepreneurs think of fear as a state of mind, that needs to be eliminated, and even the word fear should be removed from our vocabulary. May be we should just learn to take fear as something different and look at it from another angle. When it comes to fear in entrepreneurship, there is one specific approach, very popular among successful entrepreneurs, called productive paranoia.

What is productive paranoia and why practicing it actually works? In his book, Great by Choice: Uncertainty, Chaos, and Luck – Why Some Thrive Despite Them All , Jim Collins and co-author Morten T. Hansen, concentrate on the term productive paranoia as one of the most important traits of great leaders. Entrepreneurs who practice productive paranoia are always planning ahead of time getting prepared for the bad moments. They always prepare for the worst and know how they will react when it happens. Exactly:  “When” it happens, not “if” it happens. Because successful entrepreneurs know that not everything will go smooth in their venture and they prefer to be ready when the path gets rocky.

Productive paranoia is interesting approach that makes us to look at optimism and pessimism in business in a different way. It seems that planning for the worst case scenario really works for entrepreneurs who know that they will eventually fail at some point of their journey, but prefer to feel prepared for it. May be, besides dismissing our fears, we should study them and try to understand them better.

Planning for the worst case scenario seems very negative, but actually it is as close to being realistic as if we plan for the best case scenario, right? This method works perfectly for entrepreneurs because it helps them determine the worst outcomes from specific decisions and allows them to calculate better if their business will be able to handle such a loss. Being careful when you take risks is not a bad idea, especially when the bar is set so high. Your business can’t be strong only in the good times, it must be strong in the bad times in order to survive and maintain growth.

Productive paranoia is very unusual approach that still keeps the charm of the challenges of entrepreneurship alive – the risk taking, the uncertainty, and even the failures. Practicing productive paranoia doesn’t mean that you are playing it safe. You can still make bold decisions and challenge yourself by leading your business to growth, but at least you know what will be the worst that can happen and still be willing to take action.

So, basically, aren’t all entrepreneurs practicing productive paranoia from the first day of their startup venture, without even knowing it? Most entrepreneurs know that they will fail and are accepting the fact. So, by embracing the worst case scenario, are we eliminating all fears and turning them into creative ideas and productive action plans? There is something to think about.

─ February 6, 2015