The True Cost of No Risk

Around 4 years ago, I was in a meeting with a large online coupon provider I supported. Around that time, I stumbled on a chrome plugin named Honey. Had a great experience with the extension and brought in up in the meeting.

"We tried an extension a while ago and it didn't work out."
"Is there an opportunity to perhaps explore it again?" I asked inquisitively.
"No, too risky."

With their acquisition of Honey, PayPal valued the cost of not taking that risk at $4 Billion.

Many companies have innovation as a core value, including the one above. Innovation as a company value is difficult to define, and worse not measurable. Frankly, if you aren't innovating then your business has the shelf life of a ripe banana.

But risk is different. Risk can be forecasted, calculated, and risk is at the center of innovation. Asymmetric risk should be a core component of your company values or at least your approach to planning.

Put simply if the upside potential is greater than the downside loss it is asymmetric risk. The best businesses know how to maximize their asymmetric risk by identifying opportunities where the risk is known and capped while the upside is attainable and limitless.


Thanks to Loic Leray for sharing their work on Unsplash

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