The Cult of Mediocrity

  • Duncan P (6/19/2012)


    Taking a risk for a big payoff is one thing, but many people (without any other kind of safety net - e.g. a wealthy family) will not want to experience the flip side of risk i.e. failure, given that it could entail losing their job or livelihood. Keeping what you have, which is tangible, is worth more than some intangible reward that may or may not come your way.

    I'm all for taking a risk, providing I don't have to suffer too much if it all goes wrong!

    That's risk mitigation, an integral part of any risk analysis. Minimizing your losses in the event of failure is extremely important.

  • The bottom line is that if a company does not take sufficient risk to maintain or increase their market share then ultimately they will spiral down into oblivion and be forced to put up the "Going out of business" sign. Therefore, to avoid insolvency, companies must ask their employees to identify strategies, that involve risk, to improve or maintain the bottom line.

    Lehman Brothers is a great example of companies that "gambled" rather than take calculated risks. What they did was criminally irresponsible and, quite frankly, stupid. Their methodology was comparable to any pyramid scheme: the "value" of the mortgage backed securities could only be sustained if the properties that backed them "never" depreciated. That expectation was patently ridiculous over time but it sure looked good in the short term.

  • TravisDBA (6/19/2012)


    Often the difference between a successful person and a failure is not that one has better abilities or ideas over the other, but the courage that one has to bet on one's ideas, to take a calculated risk and to act. Taking a risk is a gamble. Always has been. 😀

    Agreed. No one makes movies about the ancient Roman middle managers who lived a safe, comfortable life filing documents. The people who are remembered are the ones who do great things. It's rare to find people who accidentally stumble into greatness without taking risks.

  • j_e_o (6/19/2012)


    The bottom line is that if a company does not take sufficient risk to maintain or increase their market share then ultimately they will spiral down into oblivion and be forced to put up the "Going out of business" sign. Therefore, to avoid insolvency, companies must ask their employees to identify strategies, that involve risk, to improve or maintain the bottom line.

    Lehman Brothers is a great example of companies that "gambled" rather than take calculated risks. What they did was criminally irresponsible and, quite frankly, stupid. Their methodology was comparable to any pyramid scheme: the "value" of the mortgage backed securities could only be sustained if the properties that backed them "never" depreciated. That expectation was patently ridiculous over time but it sure looked good in the short term.

    As Forrest Gump used to say, "Stupid is as stupid does". That is very different from calculated risk taking and or taking a calculated gamble. For example, if someone decided to rob a bank, or burglarize someone's house, or pull a Bernie Madoff or Scott Rothstein, well thats' just stupid decison making. Nothing more. 😀

    "Technology is a weird thing. It brings you great gifts with one hand, and it stabs you in the back with the other. ...:-D"

  • That is very different from calculated risk taking and or taking a calculated gamble.

    But if you asked anyone at Lehmann at the time they would have told you that they were doing"calculated risk taking". You can't easily tell the reckless gambling from the supposedly calculated risk taking, except with hindsight. And probably not even then: some reckless gambles do come off, and the people who made them are then treated as sages and gurus, rather than just having been especially lucky.

  • archie flockhart (6/19/2012)


    That is very different from calculated risk taking and or taking a calculated gamble.

    But if you asked anyone at Lehmann at the time they would have told you that they were doing"calculated risk taking". You can't easily tell the reckless gambling from the supposedly calculated risk taking, except with hindsight. And probably not even then: some reckless gambles do come off, and the people who made them are then treated as sages and gurus, rather than just having been especially lucky.

    Agreed, that is probably what those 'bozos' at Lehmann would have said. Never underestimate the power of stupid people in large groups. Bank robbers say that kind of stuff too. but again as I said before, stupid behavior is stupid behavior, and there is a difference. 😀

    "Technology is a weird thing. It brings you great gifts with one hand, and it stabs you in the back with the other. ...:-D"

  • mtucker-732014 (6/19/2012)


    If your company is not flexible enough to offer rewards to encourage high pay off risk taking then there is no upside for an individual employee - if company gets the benefit and the employee gets at best a pat on the back why would any rational person stick their neck out?

    I would think that "If your company is not flexible enough to offer rewards to encourage high pay off risk taking..." then you should either go to a company that does or form your own company. That is what risk is about, throwing off the limitations of those who would keep you in a mold and doing something new and/or different.

    Risk and creativity cannot live long in the narrow path of "we do not do it that way here." Strive for it. If you get half way there and fail, stand back up and go again. Failure is not falling down it is the act of staying down and not getting back up to go again. The phoenix had it right!

    Not all gray hairs are Dinosaurs!

  • julian.fletcher (6/19/2012)


    "Or defeated the Nazis."

    Wow - that's some achievement! Did you need any help doing that?

    Who's "you" in this question?

    Everyone who fought the Nazis, including internal rebels within Germany, took risks. The article doesn't say "Americans beat the Nazis", it says people who took risks did that. And I don't think it's talking about the table-top wargame. (http://en.wikipedia.org/wiki/Risk_(game))

    So please valet park the high horse and engage in the conversation.

    - Gus "GSquared", RSVP, OODA, MAP, NMVP, FAQ, SAT, SQL, DNA, RNA, UOI, IOU, AM, PM, AD, BC, BCE, USA, UN, CF, ROFL, LOL, ETC
    Property of The Thread

    "Nobody knows the age of the human race, but everyone agrees it's old enough to know better." - Anon

  • Duncan P (6/19/2012)


    Taking a risk for a big payoff is one thing, but many people (without any other kind of safety net - e.g. a wealthy family) will not want to experience the flip side of risk i.e. failure, given that it could entail losing their job or livelihood. Keeping what you have, which is tangible, is worth more than some intangible reward that may or may not come your way.

    I'm all for taking a risk, providing I don't have to suffer too much if it all goes wrong!

    Just keep in mind that you can lose everything even if you spend a tremendous effort on avoiding risks.

    This universe is rigged towards your death. There are other ways of saying that a bit less bluntly: Murphy's Law, for example, is a very sugar-coated version of it. But human life and happiness and success are very dependent on taking charge of your environment, not letting it control you. That means taking risks, and periodically failing, or even engendering catastrophes. But being risk averse doesn't negate the chance of that, it just means that, when it happens, your corpse will be able to be smug about it not being "your fault". Or something silly like that.

    Eat healthy. Exercise regularly. Do what your doctor tells you. Die anyway.

    I'd rather actually LIVE, than cower in fear of risks. I've climbed mountains, scaled sheer cliffs, gone scuba diving, driven my car as fast as it can go, gone hang-gliding, changed careers, introduced myself to people who looked scary, rescued someone from rape, taken responsibility for my mistakes. All of these things are risks. They're also LIVING, instead of merely existing as an oxygen sponge.

    Contentment with "what you have" is nice. For a while. But anything that doesn't improve will decay and stagnate. Don't let anyone convince you otherwise. If they do, they're just trying to prove that the Laws of Thermodynamics can be set aside by "being happy with the way it is". I'm pretty sure physics doesn't care what your mood is.

    - Gus "GSquared", RSVP, OODA, MAP, NMVP, FAQ, SAT, SQL, DNA, RNA, UOI, IOU, AM, PM, AD, BC, BCE, USA, UN, CF, ROFL, LOL, ETC
    Property of The Thread

    "Nobody knows the age of the human race, but everyone agrees it's old enough to know better." - Anon

  • george sibbald (6/19/2012)


    Its interesting this editorial was first written in 2007, pre the credit crunch.

    I wonder if the promotion of risk would be so enthusiastic now we know just how much risk banks were taking.

    People have confused risk taking with gambling in recent years.

    You have a point.

    The whole purpose of puting money in a bank is to reduce the risks to it as much as possible. Whether hedging one's bets by keeping some in the bank and some in more risk/reward venues, or simply being risk-averse, the whole point of lending it to a bank (which is what a bank account is) is that it's supposed to minimize risks.

    - Gus "GSquared", RSVP, OODA, MAP, NMVP, FAQ, SAT, SQL, DNA, RNA, UOI, IOU, AM, PM, AD, BC, BCE, USA, UN, CF, ROFL, LOL, ETC
    Property of The Thread

    "Nobody knows the age of the human race, but everyone agrees it's old enough to know better." - Anon

  • Everyone who fought the Nazis, including internal rebels within Germany, took risks. The article doesn't say "Americans beat the Nazis", it says people who took risks did that. And I don't think it's talking about the table-top wargame. (http://en.wikipedia.org/wiki/Risk_(game))

    You're right: it doesn't say that Americans beat the Nazis. But nor does it say that people who took risks defeated them - and that's where you are wrong. It says "Or defeated the Nazis" as a sentence on its own (and it's not strictly a sentence, it's a phrase - at least in British English). The underlying meaning of the phrase must be derived from its context.

    It's probably unintentional, but Duncan and I, and others, I would expect, contracted the statement to: "In America, without risk, we would never have defeated the Nazis."

    If the answer to your question can be found with a brief Google search, please perform the search yourself, rather than expecting one of the SSC members to do it for you.
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  • Phil Parkin (6/19/2012)


    Everyone who fought the Nazis, including internal rebels within Germany, took risks. The article doesn't say "Americans beat the Nazis", it says people who took risks did that. And I don't think it's talking about the table-top wargame. (http://en.wikipedia.org/wiki/Risk_(game))

    You're right: it doesn't say that Americans beat the Nazis. But nor does it say that people who took risks defeated them - and that's where you are wrong. It says "Or defeated the Nazis" as a sentence on its own (and it's not strictly a sentence, it's a phrase - at least in British English). The underlying meaning of the phrase must be derived from its context.

    It's probably unintentional, but Duncan and I, and others, I would expect, contracted the statement to: "In America, without risk, we would never have defeated the Nazis."

    It can certainly be read that way. The paragraph does start out with the assumption that Americans like risks, and lists at least one accomplishment that is uniquely American (moon trip) so far as I know. So, fair call either way.

    But I didn't take it as nationalistic jingoism. I don't think it's intended that way.

    I'm not sure, however, that this makes me "wrong". Just difference of opinion on how we read it.

    Even if the statement is intended to be read the way you read it, it's not a false statement. If certain people of the United States (to be even more specific, and make clear I don't mean "people who live in North, South, or Central America or surrouding islands and related bodies"), hadn't taken risks, the Nazis probably would not have been defeated. On the other hand, if certain companies and people in the US hadn't been selling them weapons, technology, factories, raw materials, et al, they might not have needed to be defeated, since they might never have gotten off the ground in the first place, as it were. Same for the USSR/CCCP/whatever. If Americans like the Rockefellers hadn't financed them in the early 1900s, they might never have created a risk that needed taking in the mid/late 1900s.

    It's a complex picture. But I think all that goes beyond the scope of the article, which is simply trying to to illustrate that risk aversion is, itself, inherently risky, when viewed as opportunity-loss.

    - Gus "GSquared", RSVP, OODA, MAP, NMVP, FAQ, SAT, SQL, DNA, RNA, UOI, IOU, AM, PM, AD, BC, BCE, USA, UN, CF, ROFL, LOL, ETC
    Property of The Thread

    "Nobody knows the age of the human race, but everyone agrees it's old enough to know better." - Anon

  • Archie,

    Speaking of robbery before, here is a real good example of the difference between taking a calculated risk or gamble in life and then just being plain stupid. Read on. 😀

    http://www.sun-sentinel.com/news/broward/fl-cellphone-robber-folo-20120619,0,654321.story

    "Technology is a weird thing. It brings you great gifts with one hand, and it stabs you in the back with the other. ...:-D"

  • TravisDBA (6/19/2012)


    Here is a real good example of the difference between taking a calculated risk in life and just being plain stupid. 😀

    http://www.sun-sentinel.com/news/broward/fl-cellphone-robber-folo-20120619,0,654321.story%5B/quote%5D

    If you used the url /url ifcode short cuts, people could just click on the link instead of having to cut and paste it.

    http://www.sun-sentinel.com/news/broward/fl-cellphone-robber-folo-20120619,0,654321.story

  • Thanks.:-D

    "Technology is a weird thing. It brings you great gifts with one hand, and it stabs you in the back with the other. ...:-D"

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