Matt Higgins believes in taking big swings.
After dropping out of high school to help provide for his mother, Higgins got his GED, enrolled in college at age 16 and went to law school. He’s since held a host of notable positions including co-founder of RSE Ventures, an investment firm that has backed restaurant industry stalwarts like Magnolia Bakery and Momofuku.
He also spent eight years as executive vice president of the New York Jets and made multiple guest appearances on ABC’s “Shark Tank.”
In his new book published Tuesday, “Burn the Boats: Toss Plan B Overboard to Unleash Your Full Potential,” Higgins outlines the winning philosophy that’s carried him along his professional path thus far.
Its core thesis: Get rid of your backup plan.
In a 2016 Wharton and University of Wisconsin-Madison study, two groups of research participants were given the same assignment and the same plan for completing it. One group had a backup plan. That group performed worse, and lost motivation to see their initial goal through.
To Higgins, that’s supportive evidence for his “burn the boats” philosophy: Anytime you even consider a Plan B, you lose energy that could otherwise go toward Plan A.
“Extraordinary things require extraordinary effort,” Higgins tells CNBC Make It.
Simply throwing caution to the wind is a bad idea, though: Eliminating your backup takes some careful planning. Here’s what Higgins suggests.
Consider every possibility
Make a list of everything you’d have to give up to pursue a particular goal, Higgins says.
Say you’ve always wanted to quit your corporate job to start your own business. In the short term, that means giving up more than just a paycheck. You’d also lose your job title, and the identity and self-worth it might provide you.
Ask yourself how much that matters and how you’ll react to that loss, Higgins suggests. Then, do the same for everything else you’d stand to lose: Are you going backwards in compensation? Will you be living off your savings? You need a plan in place for each possibility, he adds.
Do the same for potential upsides: When would your business hopefully pay off? If it doesn’t by then, what’s your game plan from there?
Once you identify your best and worst potential outcomes, and determine their respective likelihoods, your task becomes simple: Weigh whether the possibility of the best outcome is worth the probability of the worst outcome.
If the answer is “worth it,” take the plunge and don’t look back, Higgins says.
Analyze your risk aversion
Higgins isn’t the only successful person who makes decisions this way. Billionaire investor and Microsoft co-founder Bill Gates takes a similar approach when evaluating big risks, for example.
“Whether we invest $100,000 or $100 million, the decision is always calculated,” Gates wrote in a 2019 blog post, adding that he spends “a lot of time thinking, analyzing data and talking to experts” before making a new investment.
Of course, you can only plan so much because there’s a limit to what you can control. Keep your eye on your Plan A goal without getting too stressed about the uncertainties you’ll encounter on the way there, Higgins says.
That might sound impossible for naturally cautious people, but Higgins says the philosophy is actually well-tailored to that demographic. When you feel worried or anxious, your brain prepares for worst-case scenarios — making your pros and cons list more realistic.
If you can acknowledge those cons and still feel comfortable moving forward, you’re probably well-prepared to handle the risk, Higgins says.
“The idea of ‘burning the boats’ accommodates — in fact, requires — a degree of risk aversion,” he adds.
There’s another upside to this kind of thinking: People who can strike that balance between focusing on the present and planning for the future can often manage daily stress without getting agitated, a 2020 study from North Carolina State University found.
“You’ve already processed all of those [worst-case] eventualities, and you don’t need to give it another thought,” Higgins says.
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”
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