I have long been interested in the upside and downside of risk and reward. This is nothing more than a long winded way of saying that you win some you lose some. Managing the chance of either of these outcomes is what being in business is all about. But we can often get carried away by only seeing the negative aspects of risk.
But risk can have upsides and worrying constantly about the downside means we lose sight of opportunities.
One of may favorite signs of an over zealous approach to managing risk – well making sure you can’t be sued and that is not the same thing as managing risk – can be found in the bathrooms in New York – ‘Warning – This Door May Open.’
When I first saw the notice I couldn’t help but smile, its a notice that states the obvious. It is after all a door and it is therefore likely that it might open at some point in time. In fact as I was standing in the bathroom hoping to get back to work I was relying on the door to open. The word ‘May’ was a bit of a challenge implying as it did that the Door ‘May Not’ open and of course I had no way of knowing what would persuade it to open. However taking courage from having been present for many door openings and remembering that it never seemed that difficult I reached out, grabbed the handle and pulled. Door open, I walked through and the rest as they say, is history.
After a bit of reflection I realized that this warning in some ways reflected the best and worst of how we think about risk today. By its very nature there is a chance that the risk may happen (or in this case the door may or may not open). Risk is all around so reminding ourselves that risks do actually occur should help us think about how we assess , understand, and consider risk. The fact that a risk can occur and that this can turn into a loss of some kind should be a sobering reminder that we have our own responsibilities to understand and assess what we do on a day to day basis. It should also prompt us all to think about the positive aspects of risk – the door may in fact open.
But the fact that a risk may occur should not in any way stop us from going about our business. So as a reminder that risks can actually turn into something bad and that we have some element of control over how we treat these risks the warning on the door is a good thing.
The downside of a warning like that is when it is used as a way of apportioning blame when something happens. “I told you the door might open”.
If businesses continually feel that the role of government or society in general is to tell them off for something they did then we continue to encourage a risk adverse attitude. And a risk adverse attitude eventually leads us to take as little risk as possible. Business comes to a halt and a slow (and sometimes rapid) decline sets in.
And for a society all of a sudden we reach a conclusion, collectively, that taking a risk might be a bad thing.
But risk is what we do. If we don’t take risk we cannot find any positive potential nor, and this is the most important point, can we learn from mistakes. Learning from what went wrong as well as what went well is what underpins a great business.
So the door may open and that might be a good thing.
Do you ever think about taking a risk?
The Burble 