I was guilty of at least one fundamental sin that affected my own risk tolerance from the start. I was committed to my own “official future.” In scenario planning, the official future is the outcome that people find most desirable or believe to be most likely, or both. In business, an official future frequently includes some assumptions that haven’t been fully considered (businesspeople often conduct scenario planning exercises just to unearth the risks hidden in those assumptions, and to see opportunities not previously considered).
My own official future for this trip was “Panama in three weeks, with 10 days to spare.” And then an easy week or so to Miami, our intended destination. I thought we should have little problem averaging seven knots a day, but my distance-speed-time calculation was influenced by the need to convince others (and myself) that we would be there on schedule. Pete and Diane had to get back to work on December 1; my wife, left alone to tend our two small children, was impatient for my return. So I had assumed an average boat speed that, in reality, would be difficult to sustain over 3,200 miles.
A business analogy is found in the sales pitch of investment advisors or the expectations of investors themselves. If you must earn a certain return over a given time period, then you are tempted to assume either that your investment strategy will work or that the market’s direction will favor your outcome, or both. This might be called “hope as a strategy”; it is quite popular among some top executives. And yet, as any skipper who makes a living by delivering other people’s boats will testify, having too great a sense of urgency about your timetable can put you in harm’s way. (As one old adage puts it, “The sea lies in wait for the unwary, but she stalks the reckless.”)
We thus left San Francisco committed to a goal that we didn’t fully realize would require some luck to achieve. On a boat or in business, that’s the kind of pressure that shows how much risk tolerance really exists within a team. And though I didn’t know it yet, it would be largely up to me to either build up our risk tolerance so we could meet our goal — or decide, in the end, that we shouldn’t make an all-out try.
Intermittent Storm Warnings
We sailed southwest for more than a week to find only mild wind offshore. Falling further behind schedule day by day, we sailed back closer to land in hopes of better breeze, then encountered an extreme squall off San Clemente, in which gale-force winds hit 45 knots (51.75 mph). Pete and I could both steer under such conditions, but although the boat performed beautifully, six hours of steering downwind in seas reaching 12 to 14 feet in height seemed to take Pete to the limit of his nerve. I knew this from the way we both kept adjusting our wind indicator. I kept setting the device to “true,” to get an accurate reading of the winds that the boat was being asked to handle. But when Pete took the wheel, he switched the indicator to “apparent,” a lower number when you sail downwind, because it subtracts boat speed from wind speed. (At 45 knots, with the boat hitting 13+ knots, the “apparent” wind is 32.) “I don’t want to know how hard it’s blowing,” Pete said, with a look that was half grin and half grimace. Weeks later, I would find out that he’d never sailed in seas that big before our trip, and he said he didn’t want to repeat the experience anytime soon.