“After an amazing Super Bowl, Pete Carroll is looking like a lot of CEOs these days,” writes Rob Pait in his insightful article titled Requiem For a Gambler: Why Pete Carroll Wasn’t Wrong.
“Why? He made the wrong call. Or did he?
“As most of America knows, Pete Carroll is the coach of the Seattle Seahawks. In Sunday’s Super Bowl game against the New England Patriots, his team had a golden opportunity to win the game in the last minute. Near the goal line, he called a passing play for his team when ‘accepted wisdom’ was to run the ball using their superstar back Marshawn ‘Beast Mode’ Lynch. The Patriots intercepted the pass, ran out the clock, and won the game and the title.
“The play was a gamble. Carroll admitted as much after the game. He thought the Patriots would be ready for a running play, and took a chance on a passing play. He took full accountability. Naturally, Pete’s being roasted on the Internet by Seahawks fans, who are using ‘idiot,’ ‘brainless,’ and ‘he should walk up to a cliff and keep walking’ in their post-game commentary.
“Here’s the thing. Like most of us in our business pursuits, he didn’t make the wrong call.
“In order to get into the Super Bowl, Pete’s team needed to execute on one risky play after another to come from behind and beat the Green Bay Packers. He was hailed as a motivational genius. At the end of the first half of Sunday’s game, he took a risk by passing for a touchdown instead of settling for a sure-thing field goal. Chat boards were praising Pete as a master tactician.
“Pete did what Pete does. He took calculated risks, and most of the time those risks work. A highly-visible risk didn’t, and now he’s an idiot.”
I appreciate the sentiments in this article and I can’t argue with calculated risk taking. Risk aversion has stifled too many companies and paralyzed otherwise brilliant business leaders across multiple industries.
Yet, risk management requires leaders and managers to understand the impact of risk calculated against the opportunity at hand. So important questions to ask are: Was Coach Carroll managing a risk or was he assessing an opportunity? Was he looking at the options from a gain perspective or from a loss perspective? And how did his assumptions lead to the ill-fated option?
I believe he focused on the risk of running because everyone believed that’s what would happen versus the opportunity to pass which no one believed would happen. The corollaries in business are the SWOT (strengths, weaknesses, opportunities and threats) analysis, risk impact matrix, competitive intelligence analysis, stakeholder analyses and dozens of other tools for understanding options and setting direction.
In business, leaders and managers must assess both risk and opportunities. They’re usually better versed at the former than the latter and therefore are predisposed to believe more readily in their assumptions. When considering any opportunity, leaders and managers should apply the same diligence to assessing success (the opportunity) as they do in assessing failure (the risk) by using the specific tools and disciplines mentioned earlier.
Not all gambles pay off and not all risks are worth the potential for gain. But I do believe managers and leaders should become better at assessing both risk and opportunities. They should also understand their own personal risk tolerance, and ensure they have an organizational doctrine—the playbook if you will—for handling risks and opportunities.
No risk or opportunity is really valid until the underlying assumptions of each are challenged and the tolerance for failure is wholly understood and supported across the organization. Decisions regarding the future of an organization are best rendered after a thoughtful strategy is developed, resources and infrastructure are allocated, and when policies, plans, and procedures are aligned to best support the risk/opportunity being considered. Certainly, in business we have a bit more than a 30-second time-out to figure all of it out, but perhaps not much more, metaphorically speaking.
The key is this: Don’t wait until you have to make a “risky” decision before you assess your strategies and abilities for doing so.
A proper level of risk might be necessary to advance your business but it need not be mysterious. We can help.