Tuesday, August 28, 2007

Risks and management

Recently i read John Scarpinos column How poor management skills jeopardize software quality dealing with willingness to take risks, fear and lack of communication within IT and a fascinating article in Evolutionary Psychology titled Towards the development of an evolutionarily valid domain-specific risk-taking scale by Daniel J. Kreuger et al.

In business today taking risk seems very attractive to management. Taking a certain amount and type of risk can bring a competitive edge to the manager. The manager willing to take the risk can, if he succeeds make a better result than his colleagues, giving a better opportunity to become a more prominent manager in the future. Somehow it seems like business today is not too different from what evolution has wired into us over time when humans were hunters and gatherers. Fear is in a sense a very normal feeling, i suppose our ancestors were both afraid of the animal they were hunting and of starvation at the same time. Only thing is that today we today seems afraid of managers and failure to get a good result.

I'm sure that at least in some domains there is value to a very rigid Quality Assurance process where by risk is minimized, but i don't subscribe to the idea that QA should be allowed to interfere with business risk taking or innovation. What i more consider problematic is first of all the trend by managers today not to be present taking responsibility for the risks taken when things go bad or not sharing the benefits from the risks taken. Evolution should however have given us the ability to deal with cheaters since this is neither any new kind of behavior... Second problem as i see is that managers don't know or either want to know what kind of risk they are taking. This can be related to a basic lack of communication or lack of presence of the manager. An other way of viewing the problem is that employees out of fear or whatever hide unpleasant issues from their managers.

Managers ruling by fear and authority do however have one significant disadvantage, since they are not likely to get anywhere near a full set of information to base their risk taking on. I would even go further to say that strict formal process oriented approaches will always come second to managers participating in a dialog as equals, being present and acknowledgeable and fair in their actions. Knowingly taking small affordable risks can give great rewards, and if things go bad, just use plan B.

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