Archive for the ‘Risk’ Category

Rewarding failure to spur innovation … say, what?

October 14, 2011

TakeAway: Companies are looking for a new way to be innovative by rewarding individuals on their failures.

The rewards for failures vary by company from statues to monetary awards with the hope of generating innovation.

Excerpted from WSJ: “Better Ideas Through Failure

Amid worries that we are becoming less innovative, some companies are rewarding employees for their mistakes or questionable risks.

The tactic is rooted in research showing that innovations are often accompanied by a high rate of failure.

“Failure, and how companies deal with failure, is a very big part of innovation,” …. Failures caused by sloppiness or laziness are bad. But “if employees try something that was worth trying and fail, and if they are open about it, and if they learn from that failure, that is a good thing.”

A unit of WPP’s Grey Group started handing out the “Heroic Failure” award because he was worried that fast growth at the agency was making employees “a little more conservative, maybe a little slower,”

Extracting lessons from foul-ups is the focal point of Michael Alter’s “Best New Mistake” awards at SurePayroll.

Only people who are trying to do a good job, make a mistake and learn from it are eligible for the $400 annual cash award.

Edited by ARK

Ken’s Take: I always scratch my head when I hear people say that companies punish risk takers.

If  GE and Black & Decker had given trophies for ‘nice tries’ that didn’t pan out, I’d need another wing on the house to hold them. 

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Five forms of risk breed our insecurity …

March 10, 2010

Minds are insecure for many reasons. One reason is perceived risk in doing something as basic as making a purchase.

Behavioral scientists say that there are five forms of perceived risk:

  1. Monetary risk. There’s a chance that I could lose money on this.
  2. Functional risk. Maybe it won’t work, or maybe it won’t do what it’s supposed to do.
  3. Physical risk. It looks a little dangerous. I could get hurt.
  4. Social risk. I wonder what my friends will think if I buy this.
  5. Psychological risk. I might feel guilty or irresponsible if I buy this.

Source:  Repositioning: Marketing in an Era of Competition, Change, and Crisis by Jack Trout with Steve Rivkin, 2010

If Sports Ruled the World …

September 25, 2009

Ken’s Take: Nuts.  Being a sports freak, I wish I had conjured this analogy.

In posts, I’ve mused that the willy-nilly changes in laws — and their contextual application — are injecting “political risk” into business — corporate and personal. 

Bankruptcy laws are ignored (e.g. the UAW cutting the line in front of secured creditors), contracts are ignored (e.g. exec comp pacts), tax laws are changed retroactively, closed legal cases are re-opened when political winds shift.

The question my biz friends are asking: “how can my company commit major investments — human and financial capital — if we’re not sure what the rules will be.”

That’s one of the reasons that the economic recovery will be jobless.  Adding payroll just isn’t worth the risk of game-changing shifts in the rules and their interpretation. 

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Excerpted from WSJ, If Sports Ruled the World, Sept 17, 2009

in the primal world of sports we are all strict constructionists, even as we agree that a discreet judge would have given Serena’s foot fault a pass.

While we all know what the rules are in sports, no one knows anymore what the rules are in real life.

The Austrian novelist Peter Handke reduced the fine line separating freedom from foul to a novel’s title: “The Goalie’s Anxiety at the Penalty Kick.”

This is why we watch sports. Not just to see the thrill of victory and the agony of defeat, but because it is the one world left with clear rules abided by all.

(Some esthetes would chime in that this is why they listen to classical music where structure rules.)

Compared to sports (and classical music), real life has become constant chaos.

While we all know what the rules are in the sports, no one knows anymore what the rules are in real life.

Not in politics, law, the bureaucracies, commerce, finance or Federal Reserve policy.

Boston lawyer Harvey Silverglate argues in a forthcoming book, “Three Felonies a Day,” that federal law has become such a morass that people in business routinely violate statutes without a clue. Modern law lacks what sports provides lucidity.

The utopia most people want: a rules-based life, with wiggle room.

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Full article:
http://online.wsj.com/article/SB10001424052970204518504574416774102132370.html?mod=djemEditorialPage

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