Tuesday, May 19, 2009

Risk vs. Ambiguity

Interesting article in Inc. magazine, I read while in the doctor's office the other day.

It's a "Q&A" with Jim Collins, author of 'Good to Great' and 'Built to Last'. His insights are quite interesting. 'Good to Great' is quite an interesting book. I encourage you to read it if you haven't.

Collins sees the economic period we're in as ripe for entrepreneurship, comparing it to the beginning of the 20th century, when what we now know as big and successful corporations:

"Around the turn of the last century, for example, we began to see the business corporation emerge as a building block of modern society, but if you'd made that observation to people in 1900, they wouldn't have known what you were talking about. Then, in the period of the 1920s to '40s, we saw the emergence of management as a fundamental function and discipline in society. It was Peter Drucker who best articulated that idea. He saw that we were becoming a society in which management would be one of the central, important professions -- like medicine or law. Then came the third big development, which really flourished after the Second World War: the idea that work can be systematically broken down into pieces and reassembled in ways that dramatically increase both performance and humanity."

I love his quote of Steven Jobs, when describing tech industry, "He said, "We aren't creating computers. We are creating bicycles for the mind." That was his phrase. He said the most efficient locomotive vehicle is a bicycle, and you could create a bicycle for the mind. It just happened to be a personal computer. Now, that way of looking at a business is very different from thinking, We're creating a company so everybody can get rich and retire. If that's how Jobs had seen it, he would have quit a long time ago. Same with Yvon Chouinard at Patagonia. He wanted to make incredible products, but those products would be part of something bigger -- creating a role model for people who wanted to build a sustainable organization. It was a noble vision of entrepreneurship, and a lot of these entrepreneurs shared it."

But my favorite revelation of his in the interview dealt with his concept of risk. Collins described entrepreneurship as a life concept. The difference between a 'paint by numbers' approach to life and a blank canvas approach. Then, when asked by the reporter whether or not that had something to do with risk tolerance Collins said something that was remarkable -

"Not risk. Ambiguity. People confuse the two. My students used to come to me at Stanford and say, "I'd really like to do something on my own, but I'm just not ready to take that much risk. So I took the job with IBM." And I would say, "You're not ready for risk? What's the first thing you learn about investing? Never put all your eggs in one basket. You've just put all your eggs in one basket that is held by somebody else." As an entrepreneur, you know what the risks are. You see them. You understand them. You manage them. If you join someone else's company, you may not know those risks, and not because they don't exist. You just can't see them, and so you can't manage them. That's a much more exposed position than the entrepreneur faces. But there's lower ambiguity on the paint-by-numbers path: very clear but more risky. The entrepreneurial path: very ambiguous but less risk. Of course, the truth is that it's all ambiguous, anyway. If you think you can predict the future, you're crazy."

It reminds me of something I read in a book called 'How to Think Like Leonardo da Vinci", which posited seven characteristics of da Vinci that made him a genius, one of which is 'sfumato', meaning 'turned to mist', or 'smoked'. It is a high tolerance for ambiguity, change, paradox and irony. We joke at Central Dallas Ministries, that you won't last long without a high tolerance for change!

Some people need to 'paint by the numbers. They will be awfully disappointed in the days and years to come. The economic model upon which we came to depend. A model that enriched so many and relegated so many to the margins, was broken by materialism and greed.
But in breaking it, the door was opened to new possibilities. Realizing those possibilities will take time, it will take courage, patience, and will be neither cheap or easy. And the lack of certainty may actually be the consequence of painting a future more exciting than we can imagine with all the ambiguity and irony of entrepreneurial genius!

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