There is a spectrum of emotion that is said to rule the stock market that runs from fear to greed. With the recent events in the financial markets making headlines, I have been thinking about the factors of fear and greed and how they affect our individual or organizational risk tolerance. If you have assets and resources adequate but not extraneous, the fear of loss may keep you in conservative investments. If you have an excess of resources or are investing with money you are prepared to lose, you can be driven by greed.
In other contexts, I prefer to draw the risk tolerance curve below.
When you are contemplating a decision, do you have more to lose or more to gain? This, more than any other thing, will determine your boldness, your willingness to accept risk, and the lengths to which you will go to preserve the status quo.
I used to work in an intrapreneurial group at a huge, multinational corporation. Although by the corporate standards it was a "start-up," I recognized immediately the difference between this group and the actual start-ups I had worked with. This was no scrappy start-up. As a case in point, we had a full-time attorney, PR professional and agency, and trained marketers making sure we used the brand appropriately. The company knew that at even the most aggressive projections, the revenue and margin that would be brought by this new business was less than the value of its brand in the marketplace. Thus, there was more to lose than gain. Which is one of the reasons why, in my opinion, these initiatives were not successful under that corporate umbrella? Start-ups work when there is more to gain than lose.
I see this curve playing out in the discussions about the use of "social media" in corporate contexts. Some companies large and small are jumping in and now have Facebook fan pages, Twitter accounts, and active outreach by more than one "department" of the company. Other consumer brands are reluctant to jump in and lose control over the message, the brand, or the customer experience (all things that might be a false sense of control anyway).
Tara Hunt's new book
The Whuffie Factor outlines this well. When I met her last week at
WebVisions, she said several times that her next book will be about the cultural change that is required to "do" social media and create social capital in the marketplace. I think she'll find that companies must create environments where they have more to gain than lose by their efforts to see the change take hold.
In fact, this even applies to personal motivation factors and change management. In Alan Webber's
Rules of Thumb book, he says that there is a formula for predicting change: "Change happens when the cost of the status quo is greater than the risk of change." Said another way, change can happen when the risk of gain is more than the risk of loss.
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