Something that I’ve been spending a lot of time thinking about these days (and weeks and months), is how to handle taking smarter risks, and make sure that we are (and I am) always moving forward aggressively, but intelligently.

This isn’t PERFECT methodology, but I find myself running through these four steps whenever deciding whether or not to move forward on something that could be risky.

1. Evaluate and analyze as best you can, but not to death. Go with a reasonable combination of gut and analysis. In the past, we’ve sometimes spent way too long (days, weeks, months) going over every possible scenario that could ever be, twisting ourselves in circles and agonizing over combinations of events that had little or no chance of ever actually materializing. Too often, we had analysis paralysis, and the result was a lot of inaction, frustration, and wasted time. We missed out on lots of opportunity, simply because we were being unreasonably cautious.
2. What analysis you do though, should include what I have been calling the doomsday scenario. Think about the expected outcome of the risk (particularly any reasonably expected downside), and then assume that EVERYTHING goes 100% wrong. How or where would that leave us? Set low expectations, or at least be mentally prepared for the worst, and be comfortable with the possibility of that doomsday scenario potentially coming true.
3. Have key metrics in mind for measuring and evaluating the results quickly. Nothing is worse than getting everyone on board to take a smart risk, running the test, and then getting blank stares and shoulder shrugs when you ask if it worked. Find a number, a behavior, some metric that you can watch and use as a determination of success. It’s even better if you can zero in on one single bellwether stat or metric that can give you quick and accurate feedback.
4. Make sure that you can quickly and easily undo your decision of it is a failure. I don’t think that it’s pessimistic to make doomsday assumptions, and as such, be ready to react if those scenarios materialize. If everything falls apart, can we revert our changes quickly and get back to where we were pre-risk?

Fred Wilson has a great post a while back about being “action-oriented”, and one piece in particular stood out to me.

“Dick Costolo, co-founder of FeedBurner, describes a startup as the process of going down lots of dark alleys only to find that they are dead ends. Dick describes the art of a successful deal as figuring out they are dead ends quickly and trying another and another until you find the one paved with gold.”

Full post is here

By now, everyone has heard about Van Halen’s famous concert rider that demanded the candy bowl be free of the brown M&M’s. The story has been repeated over and over as a great example of rock stardom gone to absurd heights, and that is all I ever really thought it to be. But in this month’s Fast Company, I learned that this crazy clause existed for an entirely different reason. A pretty unexpectedly brilliant one.

Van Halen buried a special clause in the middle of the contract. It was called Article 126. It read, “There will be no brown M&Ms in the backstage area, upon pain of forfeiture of the show, with full compensation.” So when Roth would arrive at a new venue, he’d walk backstage and glance at the M&M bowl. If he saw a brown M&M, he’d demand a line check of the entire production. “Guaranteed you’re going to arrive at a technical error,” he wrote. “They didn’t read the contract…. Sometimes it would threaten to just destroy the whole show.”

In other words, Roth was no diva. He was an operations expert. He couldn’t spend hours every night checking the amperage of each socket. He needed a way to assess quickly whether the stagehands at each venue were paying attention — whether they had read every word of the contract and taken it seriously. In Roth’s world, a brown M&M was the canary in the coal mine.

Who’d have thought? David Lee Roth, operational expert.