But calculated risks are an illusion. The meaning of the word “calculated” is “done with full awareness of the likely consequences.”
Raise your hand if you think it’s possible to have “full awareness of the likely consequences of where your business is going right now? (and if you think it is possible, then what is the risk?)
No, instead of chasing the mirage that is “calculated risk”, we should aim to take “calibrated risk”.
The meaning of the word “calibrated” is “carefully assessed, set, or adjusted.”
Now that sounds a much more relevant approach to taking risk, to constantly and carefully assess, set and adjust your actions towards the perceived risks out there.
I learned about “calibrated risk” from Nils Kjetil Vestmoen Nilsen, Digital Innovation Manager at Schlumberger, an energy company. They work with technologies to support exploration, drilling, and production of oil and gas, as well as with renewable energy.
Nils job is about helping to digitalise the oil and gas industry. While the industry was very early in using big data and AI there is always new frontiers to aim for. Right now a moonshot project they are working on is “the self drilling oil rig” as well as projects to return CO2 back to the ground. At the same time they are introducing smaller changes to their clients.
Talking to me about “calibrated risk” Nils told me: “Calibrated risk is about balancing the different kinds of risk you are taking. Some big, hairy goals and some moonshot ideas, but also some low hanging fruits and low risk projects.”
Taking calibrated risk is not about going “all in” on one “big idea”. Instead, it’s about going “all kinds of in” on a mix ideas with different levels of risk.
Nils told me: “(When you drill for oil) you are always in uncharted territory. No-one has been where you are going, so there is no way of having full awareness of all the likely consequences. Instead, we have to constantly adjust. That means we also have to have an arsenal of innovation projects with different levels of risk, as well as different potential reward.”
Take no risk and you play it safe but you might be over run by the competitors.
Take too much risk and you might hit the jackpot, but you might also totally miss the mark.
So take calibrated risk where you create a platter of innovation initiatives of various risk, some low risk, some high risk – and always calibrate them by assessing and adjusting them to what’s happening.
