Friday, April 25, 2008


“Dude, have you read the book called The No A$#h%le Rule?” The loud question came quite abruptly from this very well-suited Swiss ‘gentleman’ standing by my side at the roulette table in Luzern’s top casino, who had noticed that I was just about to place all my remaining money on a sure-shot winning bet! Well, you could put your money forecasting that the roulette ball would fall either on an even number or on an odd one! In the past five moves, the ball had always fallen on an even number, and this time, I was 100% certain that the ball would surely fall on an odd number, given my extensive knowledge of the law of averages. I was proudly and silently confident of the load that I was about to make... when I heard that question! The man continued, “It’s a 2007 best-seller written by some well known Stanfordian called Robert Sutton, who says that in business, you shouldn’t take high risks like an a$#h%le!” I was irritated at this thoroughly unwanted interjection from this self-titled risk guru, who was openly slandering my seemingly high-risk move; surely out of pure jealousy! Aren’t the world’s most successful companies and entrepreneurs those who take high risks without flinching an eyelid? Would Steve Jobs have been Steve Jobs sans his proven supremely high risk appetite? Isn’t high-risk the only route to high achievement? A reality check...

The famed David McClelland had proven way back in 1961 that high achievement motivation was related not with ‘high-risk’ taking but, surprisingly, with ‘moderate-risk’ taking. But that was 1961. What about now? Professor T. J. Kamalanabhan of Universiti Telekom, Malaysia and Dr. D. L. Sunder (IIT Madras) concluded in their noted 1999 paper, Managerial Risk Taking: An Empirical Study, that “considering managers are aware of their organisations’ resource constraints, moderate risk taking is eminently rational.” But seriously, aren’t entrepreneurs supposed to be living on the edge of top-end risk?

Dr. Stewart (Clemson University) and Professor Carland (Western California University) in their famed paper, Risk Taking...And Entrepreneurship, concluded that the results of past research had failed to prove that entrepreneurs take any higher risks than managers. For that matter, the American Management Association’s five commandments of great leaders includes a pristine second commandment – “Great leaders are informed risk takers... They act decisively, not recklessly, to maximise ‘lucky’ breaks!” The Australian Institute for Commercialisation’s golden rule book of successful entrepreneurs reads: “Successful entrepreneurs are moderate risk takers, not gamblers. They conduct feasibility studies and test-market their ideas...”

And why not, as shown by the pan-global benchmark 2005 global CEO survey of KPMG, Risk Taker, Profit Maker?, which found that the top two factors leading to reduced margins were ‘Poor Forecasting’ and ‘Poor Risk Identification’! The world famous Protiviti 2007 US Risk Barometer’s global Fortune 2000 gave stark findings. The ‘Risk Appetite’ of global firms – which already was moderate – is further falling, and how! In 2007 itself, even compared to one year before, this factor fell from 5.12 to 5.07 (on a scale of 1 to 10; 10 being the highest-risk level). ‘Organisational Risk’ too fell from 5.62 to 5.23; and ‘Industry Sector Risk’ fell from 6.07 to 5.76! This ‘moderate-risk’ orientation has clearly come because of an increased risk management focus. The classic E&Y 2006 survey (Risk! Let’s Talk!) shows how a mammoth 66% of leading global firms plan to increase risk management investments. The fact is, howsoever competent a CEO might be, high-risk cannot be handled. The path breaking Grant Thornton Survey US Business Leaders Survey (11th ed.) shows how at best, only a puny 19% of CEOs were confident of excelling while facing high risk choices...

I snapped back! I was still on the roulette table. All my money was on the ball landing on an odd number. Statistics be damned, I was sure my command over the topic of probability couldn’t be wrong! The ball rolled across the table, slowed down, and finally landed... on zero!!! Goddammit!!! They said it’s the rarest of rare instances when this happens! Goddamn them too!!!! And where the hell was that suited guy?!? God be with him too... That I left with my clothes on after losing everything on that table was a miracle. Anyway, like I mentioned, the book is called, “The No A$#h%le Rule”. It’s available in all leading book stores. Fortune’s latest issue covers it too. I’ve read it page to page... Ah yes, just for information, I don’t visit casinos anymore... or drink the municipality water... or eat my cook’s food... or argue with my wife on any topic...!


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