risk9

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.” – Mark Twain

Most of you have probably been in meetings when people had a disagreement on what to do, which alternative to choose, what path to follow. The conversation can get heated, people can take sides, and numerous cogent arguments can be set forward as critical determinants of what is the best way to proceed.

Even though the whole discussion is about rational decision making, and there may be reams of data supporting one position or another, the situation frequently is not about the content per se at all. Rather it is about a more fundamental but less mentioned and explored reaction – how do we responded to risk?

Let me give you an example of how we all differ in our ability to accept risk.

Let’s say a person will give you a choice of picking any one pill from a vial containing 10 identical white pills, one of which, however, is a deadly poison. If you take the choice of selecting a pill, your reward will be one million dollars (even if you are unfortunate enough to select the deadly poison the reward will go to your beneficiaries), or not select a pill and get nothing. Would you choose to take a pill? (If you do, by the way, you are among the approximately 5-10% of students in my classes who have said yes to selecting a pill.)

If you refuse to select a pill under these conditions, let’s change the scenario slightly. Suppose the reward for selecting a pill (one of which of the 10 would be deadly poison) was not one million but rather one BILLION dollars (tax free of course). Would that change your mind? A few (perhaps 5%- those who are bad at math) change their minds, and say they would accept the choice.

One more scenario. We’ll go back to the million dollars, but this time, instead of having to select one pill from among 10, you can select one pill from among 100 (with only 1 pill being poisoned). Would you take this choice? Again, only about 5% of people asked would accept this choice scenario.

As someone who would be there with both hands out in the first scenario, to grab a pill and the million dollars, I find it hard to understand those who would not accept the choice under any conditions. But what I have found is that you can’t talk people out of what they feel. That last thing you want to tell them is, “Don’t worry. Things will work out fine.” But you see, they do worry, and that worry will keep them opposed to your ideas unless you spend sufficient time discussing risk reduction.

And here is one reason why so many businesses make bad decisions. The President (Founder, CEO, leader of the team), comes up with a proposal for a new venture. That’s what leaders do – they lead the way in thinking things that no one else is smart or brave enough to think of doing.

And then what happens? The risk adverse team members begin to provide all sorts of reasons why this plan will not work (or what is even worse, say nothing until after the meeting, then complain to everyone else about the plan deficits and obstacles). If your plan does not also include risk identification and reduction strategies, then you may find yourself leading a team of foot draggers, reluctant participants, and people who are more interested in saving their own butts than they are in creating a new and better future. So the plan fails, not because it wasn’t a good plan that perhaps needed some refinements and tweaks, but because not everyone was committed to its success. And why were they not committed? Because the fear of risk and failure were stronger than the expectation of success.

And if you are a low risk taker? Let me leave you with some observations from people who took different kinds of risks – which is why we remember them today.

“You cannot swim for new horizons until you have courage to lose sight of the shore.”

William Faulkner

“People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”

Peter F. Drucker

“Yes, risk-taking is inherently failure-prone. Otherwise, it would be called sure-thing-taking”.

Jim McMahon

“A man would do nothing if he waited until he could do it so well that no one would find fault with what he has done.”

Cardinal Newman

‘How does one become a butterfly?’ she asked pensively. “You must want to fly so much that you are willing to give up being a caterpillar”

Trina Paulus

“Every society honors its live conformists and its dead troublemakers.”

Mignon McLaughlin

[sign off]