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MindPrep Blog

Adaptive Strategies, Inc. is an education and consulting organization focused on helping managers make a difference. With the use of assessment instruments, tailored workshops, and personal projects, we give managers the tools to think and behave differently; that is, aligned with the emerging needs of the organization. 

Who owns the risk? You? Someone you know? Someone you don’t know?

Kristen Scott

Risk involves threats to outcomes that we value. Sometimes we share the risk, like when we buy insurance. And sometimes we get an opportunity to reap the benefits of the upside of our decisions while someone else suffers the downside. And that’s when we get careless.

What’s the issue?

Humans – the vast majority of humans – get careless with decisions that have no downside for them. Sometimes it’s a case of simple carelessness but sometimes it’s a case of being calculatingly callous.  If you don’t own the risk, your tendency will be to see the upside for you and to ignore the downside for others. There are some truly altruistic people; but the majority of us have a selfish streak that we hide from ourselves.

Give me an example.

The ownership of risk was at the heart of the 2008 financial crisis that engulfed the nations of the world. Without going into the esoteric points behind newer financial instruments like collateralized debt obligations, swaps and “tranches,” let me simply say that the financial industry players each figured out a way to shift risk away from them and to someone else for many years. Unfortunately, the entire industry didn’t realize the systemic risk they all collectively faced.

Risk was treated like a classic shell game and organizations around the world became more and more fragile. However, everything was OK as long as the price of houses kept rising. OOPS!

So what’s the proverbial bottom line to this shell game? It’s simple – as long as someone else has to bear the risk we can be as reckless with our decisions as we want to be. It’s a game of “I win and I don’t really care if you lose” and participants played it well.

What should I do?

We have to consider the ownership of the risk along with the ownership of the decision.  Empathy is truly needed when someone else owns the risk associated with our decisions.

The glib answer is to put some of your own “skin in the game” for decisions that will impact others. But that may not always be practical. Another answer is to get to know the people who will be affected well enough so that you can truly develop empathy for their situation. Putting a face on the people you may hurt brings the downside of your decision a bit closer.

If you are in a leadership role you can make the downside real to the deciding parties by putting their bonus or advancement in jeopardy.

 

What are the tough questions that have to be answered, but no one wants to ask?

Kristen Scott

For all of our talk about being tough decision makers, too many businesses avoid tough questions. We may know that the product has become obsolete, but we can’t get ourselves to “waste” the R&D money we’ve budgeted for upgrades and we never address the question of “should we kill this product?”

What’s the issue?

This is an issue as old as the “emperor’s new clothes” fable. When caught in a culture that adheres to hierarchy and reputation we are loath to upset others by asking questions that may prove tough for the founders and leaders to contemplate. But that’s exactly what they should do!

Give me an example.

The glory days of many of our past technology leaders come to mind. Motorola was the leader in analog handsets and they took way too long to face up to the reality of digital technology. Kodak was the leader of photography (film) and they didn’t question a world without film. GM was the undisputed automotive leader who lost the lead to companies with better quality.

Or make it personal and look for your own tough questions that your family and friends avoid asking. Who’s willing to ask an aging parent if they should stop driving? Or if they’d be better off moving into an assisted living facility.

What should I do?

Learn various techniques for asking the tough question.

Sometimes you have to come right out and ask what has to be asked. (Think of an emergency room doc faced with a person who “fell down the stairs.” Was it an accident or abuse?) Sometimes you have to become a story teller and hide the real question long enough for the listener to become emotionally involved. Sometimes to you need to find an ally with enough “gravitas” to ask the question you suspect is being ignored.

Or sometimes you have to come at the question from another angle. Build a set of scenarios, including a “nightmare” scenario. Then ask “What would have to be true for this scenario to actually happen?” and let the team discover the question for themselves.

Just remember that questions never asked are often never answered – until it’s too late.