Thanks to some fantastic contributions on risk-taking and failure on The Guild (on which, see below!), I was reminded of the idea of "opportunity cost" and the pre-mortem method of analysis, which can be quite useful in helping us to better understand risk and failure, before embarking on a project.
I recently came across opportunity cost, or the value that we risk losing by not pursuing a particular option that's popular in the business world. Imagine we had the option to buy Apple stock in 1997 but elected not to do so. How much money did we leave behind by not jumping on the purchase? That's the opportunity cost in a simple example. Given the other ways we can measure "value" of any given decision, though, we can measure opportunity cost in a number of different ways that are far more complex (e.g., financial value, social value/social capital, time, etc.).
In discussing risk and fear of failure beside innovation, considering opportunity cost can be helpful in measuring risk, perhaps even helping us to see the risks in different terms. Before making an important decision to tackle a particular innovation, for example, we can try to measure the opportunity cost of not saying yes (what happens if we don't do it?), while ideally measuring our assumptions in the process. How does the opportunity cost of a decision reveal our assumptions about it? In my experience, we don't ask these questions enough, which help to grow our fear of failure.
In the same way, Daniel Kahneman, in his exceptional book Thinking, Fast and Slow, discusses the similar idea of the "pre-mortem" (cf. a guide to the pre-mortem and a summary of the idea) The gist is to consider all the things that can go wrong or pretend the idea failed and discuss why, before beginning a project. What's the worst thing that can happen? By thinking about this question before we make a decision, rather than looking back on it with 20-20 hindsight, we can hopefully gain more objectivity about our expectations for the project, improving it in the process (and again measuring our assumptions more accurately).
Opportunity cost and the pre-mortem could both make great conversation and collaboration points within a team, and as such, they could go a long way toward developing culture, helping us to embrace risk. I'm interested in thinking through them in greater detail over the coming weeks.