Cars are Safer and Traffic Deaths are Up!

accident-v2Risk Homeostasis is back in the news.

We have previously written about how we accept a certain level of risk then use risk protection measures not to be safer, but to increase our risk taking so our net level of acceptable risk stays the same. That is risk homeostasis.

It has been broadly reported recently that there has been a huge increase in traffic fatalities in the United States in the first half of 2016 compared to the same period in 2015: 10.4%.  Understandably, many are gravely concerned.

How does this relate to risk homeostasis? By any estimation, vehicles and highways have become safer.  Significant effort and resources have gone into design improvements that have increased safety.  Cars have airbags, ABS breaking systems, crumple zones and even some now have automatic emergency driving features to help avoid accidents.  Highways have many more barriers that give way on impact to reduce the chances of injuries or fatalities.  Yet traffic deaths are up dramatically.

This is risk homeostasis. The safer things become, the more we take risks.  Knowing that we are less likely to die while driving a safer modern vehicle, we take more risks such as texting while driving.  Sad but true.

The administrator of the National Highway Traffic Safety Administration recently announced a goal of eliminating traffic fatalities in the U.S. – all of them – within 30 years. A laudable goal but exceedingly unlikely.  All the safety features in the world will not change human nature.

Lessons from an Innovation Superstar

Under Armour 2 - croppedUnder Armour founder and CEO Kevin Plank is nothing if not an entrepreneur. He started the company in 1995 in his grandmother’s basement.  His inspiration was to find an alternative to the cotton shirts he wore under his pads when he played football at the University of Maryland.  Those shirts got soaking wet, heavy and slowed down the players.

Under Armour logo - cropped

His creation now has nearly $4 billion in annual sales, 13,500 employees and is an innovation superstar. Not satisfied, Plank is setting out to create an entirely new component at Under Armour.  He is leading a charge into fitness technology.  Along the way, he has invested nearly $1 billion buying three activity-tracking and diet-tracking mobile app companies.  He sees this effort aligning well with the Under Armour’s mantra to “make all athletes better.”

Whether he will succeed in this effort is unknown. What is fascinating is the culture he has created in the last twenty years that so thoroughly embraces innovation to the point that it created an entirely new market segment – high performance athletic wear.

Not surprisingly, Plank is into continually sending the message that innovation is prized and desired. (As obvious as this seems, my experience with client organizations shows that this is astonishingly rare.)  One of the ways he continually sends the message is by having admonitions prominently displayed around the Under Armour headquarters in Baltimore.  They include:

Perfection is the enemy of innovation. 

Respect everyone. Fear no one.

And my favorite:

Think like an entrepreneur. Create like an innovator.  Perform like a teammate.

A simple but powerful concept he promotes at Under Armour is called “guardrails.” He promotes the idea of providing his people with figurative guardrails that establish the boundaries within which they operate.  Presumably some guardrails apply to all and some are specific to individuals.  Regardless, it is a brilliant concept.  Guardrails allow creative and motivated team members the latitude to do exciting things with boundary clarity.  Brilliant.  The results of the organization speak for themselves.

Risk Homeostasis – the impact on organizations

Leap-Cropped-SmallerIn the previous post, we talked about people risking more if they have an increased sense of protection from the possible negative outcomes of their actions.

The significance of this in organizations is obvious and powerful. If the leaders in an organization genuinely support their people when risks do not yield the desired results, they will get more initiative and innovation.

In this setting, the “safety devices” are not automobile airbags or seat belts, but a culture and leadership team that values initiative even when the results may not be as intended. The important qualifier is that poor outcomes cannot be due to flawed execution. Clearly, that is not acceptable. But if the execution was sound yet the results were not as intended, it is vital that the person or team that took the initiative be praised and rewarded. Not doing so will send the clear message that only successful risks are acceptable and since risk-taking is inherently an uncertain process, initiative and innovation will be stifled.

So, provide your people with “initiative & innovation airbags” and they will be much more inclined to drive assertively towards your organizations goals.

Risk Homeostasis – the more things change the more they stay the same

bubble wrapped car, croppedLet’s talk for a few minutes about risk homeostasis – a fascinating concept put forth by Gerald J. S. Wilde. The premise is that every person has a certain level of risk with which they are comfortable then use risk protection measures not to be safer, but to increase their risk taking so their level of acceptable risk stays the same.

An example would be driving a car with lots of safety features such as seat belts, front and side airbags, ABS brakes and sideview (blind spot) assist that lets you know a vehicle is next to you but hard to see with your peripheral vision or mirrors.

Now compare driving this car with driving a car from the late 1950s or early 1960s with none of these safety features. Risk homeostasis tells us that the same person would drive the car loaded with safety features in a riskier manner. The idea is that all the protection provided by the safety features allows for more risks to be taken yet the original level of risk tolerance is still maintained.

If risk homeostasis is valid, the same person would drive the older car without the safety features more cautiously and as a result achieve the same level of risk as driving the safety feature loaded car in a riskier manner.

The same idea would suggest that a motorcyclist wearing a helmet and protective leathers with carbon fiber armor plates would drive in a riskier manner than if the same person was on the same motorcycle in shorts, a T-shirt and no helmet.

I leave it to you to decide whether you think risk homeostasis is valid. Some researchers think it is not.

Here is one last data point as you consider the validity of risk homeostasis:

When drivers see bicyclists wearing helmets, research shows that they take slightly less care with passing them than bicyclists without helmets. The results of a study published in Accident Analysis & Prevention in March 2007 tells us that drivers give a bicyclist not wearing a helmet on average 3.35 inches more room when passing them than if the bicyclist is wearing a helmet. Consider that this all happens spontaneously as the driver passes the bike without much time for the driver to contemplate their behavior in advance. They likely do it all rather intuitively.

So, do you think risk homeostasis is valid?

 

Offer the Carrot – Bury the Stick

Risk taker v3, cropped

Earlier in this blog, I wrote a little in a post called Subjectivity in Risk Assessment about research showing that we accept greater risks from voluntary hazards than from involuntary hazards. I would like to expand on that topic because I think it is important in understanding how members of an organization respond to efforts to innovate.

Consider the following list of voluntary and involuntary hazards:

Voluntary Hazards

• driving or riding in a car
• recreational risks – such as cycling, motorcycle riding, white water rafting, rock climbing. SCUBA diving
• entertainment risks – amusement park rides, bungee jumping
• alcohol consumption
• smoking
• sun exposure
• flying in a plane

Involuntary Hazards

• air pollution
• hurricanes, tornados and earthquakes
• hydraulic fracturing (fracking)
• communicable diseases
• second-hand tobacco smoke

If you are like most people, you consider many of the involuntary hazards to be a more significant that the voluntary ones. A great deal has been written about the statistically verifiable impact of all the hazards listed. For this discussion, it is not necessary to discuss at lengthy the relative impact of each hazard. The point is that hazards that are imposed on us are commonly perceived as more significant or threatening than those we take by choice.

One example it sun exposure. Many people actively seek to enjoy the warming rays of the sun. Yet it can be readily proven that doing so brings with it significant negative consequences.

How does this apply to encouraging innovation in organizations? The clear message is that you will be more successful if you create incentives as opposed to requirements. It is as simple as seeking action with a figurative “carrot” versus “a stick.” Whether it is change, uncertainty, temporary discomfort or hazards, people do not like them to be imposed upon them.

Risk Protection = More Caution. Really?

snowboarder on the steep v2, cropped v2There is an interesting study published in the journal Injury Prevention on behavior change among skiers and snowboarders when they wear a helmet.

What would you guess?

> Option A:  Would you think that a person who wears a helmet would think they are better protected from injury and be more risk inclined?

> Option B:  Or would you think their decision to wear a helmet suggests they are more safety conscious and less risk inclined?

If you guessed Option B, you are correct.  The study tells us that helmeted skiers and snowboarders appear to ski or snowboard more safely.snowboard helmets

So, what does this tell us about human nature and intelligent risk-taking in an organizational setting?  The logical conclusion is that the better you prepare for the risk or initiative you are pursuing, the more comfortable you will be going forward.

The lesson:  prepare well before getting started.  One thing you can do is utilize the six steps of intelligent risk-taking presented in my books The Power of Risk (Maxwell Press), Business Lessons from the Edge (McGraw-Hill) and The First-Time Manager (AMACOM).

The second lesson:  Preparing well and proceeding intelligently is not likely to make you more risk-inclined and more prone to lapse into poor decisions.

Both good outcomes.

===

The study was conducted by researchers at San Diego State University.  The full paper on the study is available on the National Center for Biotechnology Information (NCBI) website at:  http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2598370/pdf/173.pdf.  (The NCBI is part of the U.S. National Institutes of Health.)

Risk Well “and Stuff”

Chevy Truck, cropped

Right after the last out of the 2014 World Series, Chevy gave a pickup to the most valuable player.  The poor guy tasked to present the keys looked like he was about to have a stroke.  He struggled to get words out, sweated profusely and started to stutter.  When he got to the part where he was supposed to tell all the world about the truck’s impressive features, he blurted out that it had “technology and stuff” then thrust the keys in the MVP’s hand – all on live national TV.

Disaster or opportunity?

Here is some of the back story.  Dan Ammann has been thand shakehe president of General Motors for about a year.  Part of his strategy is to “put the right people in place and let them make decisions.”  Oh, the risk!

Within hours a member of the empowered Chevy team was being bold.  Instead of tryi
ng run from the flub, the Chevy manager monitoring social media was tweeting with the hashtag, #TechnologyAndStuff.  This was 1:29 a.m. and Jamie Barbour was on it!

Before dawn, the U.S. marketing chief for Chevy was firing off emails to his social media, digital marketing and advertising teams so they could start to exploit the “technology and stuff” line.

By 7:30 a.m. a new voiceover was being recorded for an ad that would run that evening on an NBA game so it added “and stuff” to the script.  The team quickly bought ad time on the late night comedy shows that would air that evening anticipating that the comics would likely fry them for the flub.  They were determined to have the upper hand.GM_logo

Before they were done exploiting what could have been a disaster, they had the Chevy pickups like the one the MVP received emblazoned with #TechnologyAndStuff as they took the drivers at a NASCAR event in Texas around the track before the race.

A flub turned into a coup:  Advertising Age magazine estimates that Chevy got $5 million in free media exposure for their effort.  Risky.  Yes.  Successful.  Heck yes.

This is risking done well.  Kudos to Dan Ammann and the innovative and resourceful Chevy team.

***

This is where you can find a video of the now infamous World Series presentation:

https://www.youtube.com/watch?v=fMsqSVyXnO8

***

An Innovative Environment Helps Attract the Best People

millennial-generationWe all hear about the importance of organizations being innovative. Seems reasonable. An innovative organization should be able to find ways to do things better, develop more new products and services and be generally more effective. These outcomes can all bolster an organization’s competitive advantage.

BMillenials v2ut research shows that an innovative environment contributes to an organization’s competitive advantage in a way that may not have occurred to you. It makes the organization a more desirable place to work and helps it attract talented contributors.

Deloitte has been conducting an annual survey of the millennial generation now for a few years. (Millennials are considered to currently be in their early 30s and younger.) When queried on the importance of working in an innovative environment, they have some noteworthy responses.

A huge portion, nearly eight in ten, say that they are influenced by how innovative an organization is when deciding where they want to work. Half tell us that working for an innovative company is “essential” or “very important” to their overall job satisfaction. And just shy of one quarter say they are willing to earn 15% less in return for having a job at an innovative organization.

This is huge. We all know that attracting the best people makes a critical contribution to your competitive advantage. We now know that part of attracting them is creating the innovative environment that yields dividends in many forms.

Encourage Disobedience

Download-Button v2Here are the first two sentences in a recent article that got my attention:

“Want to be more competitive? Then empower your most technologically disobedient employees.”

The core message is that employees want to do their job and they will seek the tools to do so.  If the corporate Information Technology (IT) department does not provide them with what they need, the will find the applications they need on their own even if it means paying for them.  The proof?  According to research conducted by Frost & Sullivan referenced in the article “80% of people working for organizations with more than 1,000 employees go around the IT department and use (or even buy) software.”  The practice is referred to as “Shadow IT.”

The idea is similar to my admonition to achieve innovation by accepting failures, because you won’t get one without some of the other.  Are there risks?  Of course.  But as the article concludes, “firms concerned about the security issues of shadow IT are missing the point; the bigger risk is not embracing it in the first place.”

The article is titled “Let Staff Go Rogue on Tech.”  It was written by Christopher Mims and is available on the website of the Wall Street Journal.

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The Risk Overhang – Which Can Lead to the Risk Hangover

balanced-rocksCorporate, organizational and personal risk profiles are dynamic and situational.  Dynamic in that they change often.  By the nature of organizations having a more gradual decision-making process than individuals, their risk profile changes more gradually.  Individuals, on the other hand, may change their risk-profile much more often based on successes, set-backs, access to capital, financial security – or lack of it – and countless other variables.

Organizations are often overly risk-seeking in an upswing and overly risk-averse in a downswing.  Call it the risk overhang, which can lead to the risk hangover.  It is a function of excess – a risk posture that is no longer in alignment with the business and economic environment.  It overhangs the change in conditions.

It is all a matter of balance – or lack of it.  A successful risk posture always is.

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