Rees Morrison has an interesting post this morning bridling at a vendor comment reported in KM World that “We trust our legal department to be risk-averse and process-oriented….”
He takes on the process-oriented trope; I’m more interested in the “risk-averse” side of the equation.
As Inigo Montoya says in The Princess Bride when his boss keeps mischaracterizing their situation, “You keep using that word. I do not think it means what you think it means.”
I hear people using “risk-averse” to characterize a law department that says “no” to almost all business-side initiatives. After all, doing X entails some legal risk. “Customers might sue us if it doesn’t work. Competitors might sue us if it does. We could infringe a patent, muck up a trademark.”
However, there’s often more risk in sitting still, in failing to keep up with — let alone outpace — competitors.
What if Microsoft had decided that a graphical user interface was still too risky — especially with the possibility that Apple or Xerox might sue — and eschewed Windows in favor of MS-DOS 7.0, 8.0, etc.? (There would never have been a 10.0; they’d have been out of the operating-system business.) Indeed, Windows 1.0 was not a useful product, and even 2.0 was little more than a container for Excel and PageMaker that you ran on top of DOS anyway. They could have stopped, or they could have bet it all on the OS/2 IBM partnership. That would have been “safe.”
What if Boeing had not risked everything on the untried concept of a jumbo jet that became the 747? McDonnell Douglas and even Lockheed might still be around, and Airbus would be dominant. Boeing might have been bought out, or might be just another Embraer or Bombardier. Taking the plunge on the 747 was a monstrous risk.
What if Ford had decided that no one would want to buy the Edsel and so they never produced it? The auto world would have lost its best metaphor for failure, to say the least. (Okay, so not all business risks pan out.)
Project managers know that you must evaluate risk in context. Good project managers know that you must also include opportunity cost — the cost of not doing something — in valuing risk.
Risk aversion has its place. I sure hope that the planes on which I ride were built by risk-averse engineers and are flown by risk-averse pilots.1 But risk aversion’s place isn’t every place. Risk aversion paradoxically is fraught with danger in the marketplace, where avoiding risk entails its own risk.
The law department that’s permanently risk averse may not be doing the business any favors. Some businesses are perforce more legally risk averse than others — pharma, say, compared with consumer software.
The project manager who’s permanently risk averse may not be doing the business or her project any favors, either. You often have to risk failure in order to succeed. Risk must be managed, not simply avoided.
Doing nothing is itself a risk in the project world.
1Two sayings come to mind here. One is the old saw: “There are old pilots. There are bold pilots. But there are no old, bold pilots.” The other is something a pilot said on the intercom a few years ago while we were waiting for the mechanic to address a problem: “It’s better to be down here wishing you were up there than up there wishing you were down here.” I thought of both last week when my flight to New York was two hours late leaving because of computer and air-conditioning issues and then the flight back — already three hours delayed — sat on the runway another 90 minutes waiting for fierce winds to die down.