Monday, April 12, 2010

Risk and Reward

Managers and engineers tend to take different view of risks.  I work in a pretty risk-averse field, highly regulated, where if we shipped something that turned out to be defective, we have to make public recalls.  

So I'm facing a decision that involves some risk.  We are doing a "next version" of a product I'm developing and the chance to make things better shows up.  If it works, we'll save a few dollars on every unit we ship.  If it doesn't work, the effort to change the product is probably thrown out.  Or we'll be late on shipments.  Either way it costs real money.  

If it works:  I save the factory - and all of us - a few bucks per box.  Maybe $5.  Pure profit.  Hey - would you turn down $5 if someone offered it to you with no strings?  

If it fails:  it costs tens of thousands of dollars and they leave my severed head on the flagpole outside as a warning to others not to take risks like that.
Hmmmm.   $5 vs certain death.   That's a tough one.  
Like Scott Adams says on risk vs reward:  
For a manager:  Success: you get tons of money.  Fail: someone under you gets laid off.  
For an engineer:  Success:  you get a handsome certificate, suitable for framing.  Fail: think  Space Shuttle Challenger, Columbia, Hyatt Regency walkway.  Money lost, possibly large numbers of people die.    
Tends to give you a different view of the whole risk/reward continuum.  

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