Behavioral economist and Professor of Marketing Baba Shiv works with entrepreneurs on how to build a risk-tolerant mindset. A mindset, Shiv believes, that is crucial in times of crisis.

While we take a break and prepare for season two of If/Then, we're sharing an episode of Grit & Growth, a podcast from our partners at Stanford Seed. Here, Baba explains two types of mindsets: a fear of failure or a risk-averse mindset (type one) and a fear of missing out on opportunities mindset (type two).

“What the rational brain is good at is simply being rational ... it lists what the emotional brain has already decided to do. If you’re stuck in a risk-averse mindset, the rational brain will come in and say, 'These are the reasons why you should not innovate’ Whereas if you’re in a type two mindset, the rational brain will come in and say, 'Here are the reasons why you should take some chances.'”

And Shiv believes that taking chances, especially when your competitors are being more timid, is how leaders and companies can succeed. Shiv has seen firsthand that entrepreneurs from emerging economies are particularly innovative: “They’re facing constraints all the time and as a result are more resourceful, not in spite of their situations, but because of them.”

Shiv is the Sanwa Bank, Limited, Professor of Marketing at Stanford Graduate School of Business

Top Takeaways

1. Sleep. Without it, you’re more likely to wake up feeling risk-averse ... the antithesis to innovation.
2. Calm your mind and the rest will follow — develop a meditation, yoga, or tai chi practice to make your breath and brain more resilient to stress.
3. Pay attention to your heart—actually your heart rate variability — so you know if it’s a good time to make an important decision.
4. Innovation = creativity, multiplied by execution, divided by constraints. Don’t forget to think about your constraints in the design process.
5. Focus on building your collaborative advantage (not just competitive advantage) by developing meaningful connections with suppliers, customers, partners, even competitors. You’ll make more progress with relationships based on trust than just transactions.
6. Instill an innovative mindset throughout your company — survival is going to come from teamwork.

• On Grit & Growth, meet intrepid entrepreneurs from Africa and South Asia, hear their stories of trial and triumph, and gain insights and guidance from Stanford University faculty and global business experts on how to transform today’s challenges into tomorrow’s opportunities.
• Baba Shiv on If/Then Season One, "More Than a Feeling: The Keys to Making the Right Choice"

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It can be tempting to think one thing causes another because they happen in succession, but there’s a lot to unwrap in the idea of causality. This week, If/Then is featuring an episode from the podcast All Else Equal: Making Better Decisions. Listen as hosts and finance professors Jonathan Berk and Jules van Binsbergen explain the difference between correlation and causality, and examine cases where it is tempting to assume one thing caused another. Their guest for this episode, Guido Imbens, is a professor of Economics at Stanford Graduate School of Business, and was awarded the Nobel Prize in 2021.

All Else Equal: Making Better Decisions Podcast is a production of Stanford GSB and is produced by University FM. It is hosted by Jonathan Berk, The A.P. Giannini Professor of Finance at Stanford GSB, and Jules van Binsbergen, The Nippon Life Professor in Finance, Professor of Finance, at The Wharton School. Each episode provides insight into how to make better decisions.

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To wrap up the first season of If/Then: Business, Leadership, Society, we invited Senior Associate Dean Jesper B. Sørensen into the studio to talk about the importance of research at Stanford Graduate School of Business. He shares insights on what motivates faculty to study what they do and how it impacts practitioners across industries.

“One of the challenges of being a great researcher is that you need to move away again from this kind of day-to-day reality.… I think a gift that a lot of our faculty have is to be able to both live in that very abstract kind of world and then make it relatable to somebody who’s not living in that world,” Sørensen says.

“Sometimes putting fundamental insights into practice is really hard. One of the hallmarks of research is trying to isolate particular mechanisms through various kinds of control. Scientists live in the world where it’s a vacuum, and so we just watch the leaf fall and we can then time it and then tell you what the answer is,” Sørensen says. “And managers live in a world where the wind is blowing and there’s all these kinds of forces getting in the way.”

In his conversation with podcast host Kevin Cool, Sørensen also shares his thoughts on three episodes from If/Then’s first season.

If/Then is a podcast from Stanford Graduate School of Business that examines research findings that can help us navigate the complex issues we face in business, leadership, and society. Each episode features an interview with a Stanford GSB faculty member.

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