by Ben Perreira
“Many of the things you can count, don’t count. Many of the things you can’t count really count.” – Albert Einstein
In business and life, many of our pursuits are directed at the elimination of “maybe.” Making money means the possibility of “maybe” being evicted is stemmed. The unlikeliness of a line of business involving Mars tourism means that “maybe” is off the table. Waking up early means we are going to be at work early, no longer “maybe” getting fired for being late.
Maybe means risk, and risk is seen as bad.
However, eliminating risk also eliminates possibilities. Change is created in the gray areas, not in the well-defined zones of present enterprise. Financial managers get this to some extent because they pay interest on their debt. Interest primarily accounts for default risk except in very few instances. The problem is that financial managers also try to control risk by quantifying risk factors whose parameters are not so easily mapped (see: market research).
Next time you look at financial projections (US national debt or corporate income, for example), remember that anything beyond what is in the past is simply an opinion. Once a formula is created in Excel it is easy to copy it to subsequent years or quarters. Projections create the illusion of a lack of risk that something will “maybe” change in the coming years. It’s right there on paper!
I love risk because it means there is an upside. There is a chance to create something great. If we knew what was going to happen the game wouldn’t be much fun anyway.