Showing posts with label risk tolerance. Show all posts
Showing posts with label risk tolerance. Show all posts

December 8, 2012

Go Safe or Go For It?


In_it_to_win_it
I came away with some thoughts on risk taking watching this scene from the movie "Lies and Alibis."

The girl says: "Simple is boring."
The guy answers: "Boring is safe."
The girl responds: "Safe is for old people."

(Note: nothing personal here to the elderly. Also, hope I didn't get the who said which thing wrong, but the point is the same.)

Take-a-way: Very often in life we aren't sure whether to take a risk or not. Is it worth it or is it reckless? And we have to weigh the pros and cons, carefully!

- We have to ask ourselves, where's the risk and where's the reward?

We have to decide whether we want to try something new and accept the potential risk or stay stable and go safe with the status quo that we already know.

At times, staying with a bad status quo can be the more risky proposition and change the safer option--so it all depends on the situation. 

- We also have to look at our capabilities to take chances: 

For example, in terms of age appropriateness--it can be argued that younger people can take more risk, because they have more time to recover in life, should the situation go bad. 

At the same time, older people may have more of a foundation (financial savings, built-up experience and education, and a life-long reputation) to take more chances--they have a cushion to fall back on, if necessary. 

- In the end, we have to know our own level of risk tolerance and have a sense of clarity as to what we are looking for and the value of it, as well as the odds for success and failure.

It's a very personal calculation and the rewards or losses are yours for the taking. Make sure you are ready to accept them!

Finally--always, always, always have a plan B. ;-)

(Source Photo: Andy Blumenthal)

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April 29, 2008

Organizational Culture and Enterprise Architecture

Enterprise architecture is about managing change and complexity in the organization. EA establishes the roadmap to evolve, transform and remain competitive in an ever changing world. Part of change involves continually going out there and simply trying—trying to climb the next rung on the ladder; trying to innovate and do something that hasn’t been done before; and generally speaking, trying to do things better, faster, cheaper.

As children, we all learned the old saying, “if at first you don’t succeed, try, try, try again.” This lesson can apply to both individuals and organizations.

In EA, we set targets that are ambitious. If the targets are too easy to achieve, then they are not challenging us to be our best. So we set the bar high—not too high, so that we fall on our face and break our nose—but high enough, so that we don’t necessarily achieve the target the first time around. We set stretch targets, so that we really are transforming the organization.

How do we keep the organizations focused on the goals and continuously trying to achieve the next big thing?

Well, people like organizations, need to sincerely believe that they indeed can succeed, and they must be dedicated and determined to succeed and achieve their goals.

The Wall Street Journal, 29 April 2008 reports that “‘self-efficacy’ [is] the unshakable belief that some people have that they have what it takes to succeed.”

This is the differentiator between “what makes some people [and organizations] rebound from defeats and go on to greatness while others throw in the towel.”

Is self-efficacy the same as self-esteem?

No. Self-efficacy is “a judgment of specific capabilities, rather than a general feeling of self-worth…there are people with high self-efficacy who ‘drive themselves hard but have low self-esteem because their performance always falls short of their high standards. Still such people succeed because they believe that persistent effort will let them beat the odds.”

“Where does such determination come from?”

Well, there is both nature and nurture involved. “In some cases it’s inborn optimism—akin to the kind of resilience that enables some children to emerge unscathed from extreme poverty, tragedy, or abuse. Self-efficacy can also be built by mastering a task; by modeling the behavior of others who have succeeded; and from…getting effective encouragement, distinct from empty praise.”

Organizations are like people. In fact, organizations are made up of people focused on and working towards a common cause in a structured environment.

Like people, organizations need to believe in their goals and be determined to achieve them. The whole organization needs to come together and rally around the goals and be of one mind, convinced that they can and will achieve success.

Of course, neither people nor organizations succeed the first time around every time. We can’t get discouraged or be afraid to make mistakes. Our organizations need to encourage and promote self-efficacy among their employees so that they will engage in reasonable risk taking in order to innovate and transform.

“It took Thomas Edison 1,000 tries before he invented the light bulb. (‘I didn’t fall 1,000 times, he told a reporter. ‘The light bulb was an invention with 1,000 steps’).”


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October 3, 2007

Driving Innovation and Enterprise Architecture

The Wall Street Journal, 24 September 2007 reports that “managing innovation is one of the biggest challenges that companies face.” Why? “They not only need to come up with new ideas, but also need to foster a culture that encourages and rewards innovation.”

Douglas Solomon, the Chief Technology Officer of IDEO (an innovation and design consulting firm) provides some insights on how to make a culture more innovative:

In general, “corporations inherently have antibodies that come out and try and kill any innovation.” Small companies don’t have sufficient resources and big companies “don’t always have the thought processes and the skills to really think outside their current business, nor the permission to really do it.”

Here are four things organizations need to be innovative:

  1. Degree of discomfort—“there are still people who say, ‘if it ain’t broke, don’t fix it. And I don’t think these companies are in a really good position to change…you have to have a certain degree of discomfort in your business to be willing to make the changes that are necessary
  2. Design thinking—rather than analytical thinking extrapolating from the past to the future, innovative thinking requires ‘design thinking’, which is rooted in creativity, optimism and is goal-driven, trying to create new possibilities for a new future.
  3. Time to innovate—“you have to actually build processes, you have to support people, you have to give them time…to think on their own…you have to provide a reward system for encouraging innovation.”
  4. Risk tolerance—“you have to tolerate risk, if you’re going to try to be innovative.” Doug Merrill the VP of engineering and CIO of Google adds that “Every company in the world says ‘don’t ask permission, ask forgiveness.’ Every company in the world says ‘It’s OK to fail.” And for 99% of them, it’s probably not true.”

In User-centric EA, developing a target state and transition plan for an organization requires innovation. If there is no innovation in your target architecture and plans, then you’re just regurgitating the same old stuff to the enterprise and it’s probably of very limited, if any, value. EA must step outside its traditional box and come to the table with innovative ideas and new approaches to the business; that is it’s real value add.

As we see above, being innovative is hard: It requires sometimes going against the grain, standing out amidst nay-sayers and the ‘old guard,’ looking outside the enterprise for best practices and marketplace trends, and being optimistic and open-minded to future possibilities that are not eclipsed by ingrained thinking and turf battles. Finally architecting the future state must be grounded in present realities (including constraints such as resources, politics, and other priorities and requirements), but innovate we must if we are to make a better state tomorrow than the one we have today!


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