Risk and the financial meltdown

I’ve been developing new products with financial services organisations – banks, building societies, insurance companies, credit card operators etc – for several decades. Nearly all the majors, both in Britain and internationally.

In my early days (by which I mean the 1970s), there seemed to be a rather strict regime, where risk assessment and legal issues would be dominant in our thinking.

But some time along the way (in the mid-eighties, I think), the gung-ho marketing folk seemed to get the upper hand, and the risk and legal people were pushed back, discounted, assuming a much less intrusive presence.

I wonder if others share this perception? How widespread did it become in the industry? Was this shift a factor in the recent financial meltdown?

And what is the situation now? Have the risk managers reasserted themselves?

Giving it a Go

I’d been living and working in Sydney for a few months when a young journalist from the Financial Times in London showed up. She was to write a feature article on my experience there, particularly comparing British and Australian management styles.

“Well,” I began, “in England we’ll discuss some new project for eighteen months or so, and there will be a really good reason when we decide not to go ahead with it. Now in Australia we’ll discuss it for about twenty minutes and decide to ‘give it a go’.”

I got into trouble with my boss in London over the article when it ran. “Unpatriotic,” he called it. It was certainly somewhat overstated, but the impulse behind it was, and remains, fundamentally true. “Give it a go” is an essential Australian expression, without an exact equivalent in English English.

The upside to a lengthy gestation period can be to reduce risk, aiming to get towards perfection. But the downside is that there’s often no chance in the meantime to see what will happen in real life – then to learn and adapt.

The advantage of the Aussie version is that things are tried out in practice with customers. And the problem can be that risks are not managed adequately.

Where am I on all this? In innovation, as in so many things, the perfect is the enemy of the good – and is often unachievable. So my advice is usually to give it a go.

Which culture do you live and work in?