The Mis-Perception of Risk
The Theory Of Risk
“When you are eager for a project to work, you are more inclined to be overconfident…” (Plous 1933)
Risk is thought of as the possibility of something going wrong and the cost if it does. If you put it into an equation, the equation would look like this:
RISK = PROBABILITY OF OUTCOME x COST
You like to think that things will go well and we will meet the best-case scenario and reap maximum benefit, you like to think that the probability of something going wrong is less than .01, so you put a low likelihood on that event.
So you get: Bad Outcome = .01 (1%) / Good Outcome = .99 (99%)
This is what ‘you like to think’ in an ideal world. But the world is less than ideal.
- It’s that Simple – or is it?
“Society exists only as a mental concept; in the real world there are only individuals.” – Oscar Wilde
As we emerge from the industrial age, we are amazed by what we see as the information age. Immediate access to information has become paramount to the knowledge worker and consumer alike. The impact which the Internet/Intranet and all its social manifestations and affectations are having on the working environment cannot be overstated. read more…
Fat Pig goes to market...
Unfortunately for current western society, present consumption and expansion is an impossible dream. There has to be an adjustment. So far, by manipulation of many factors, the power possessing individuals have been able to keep most plates spinning, albeit irregularly. It is, as you realise, an attempt to provide an acceptable panacea. Yet, as with all plasters applied before washing out the wound, the wound itself only festers. read more…
There was a time when a game was simply a game. Something you played, like ‘block’ or skipping – and in computer games, you could have an electronic opponent if you could not find one locally, as you did with computer tennis.
Then they became more sophisticated and you had levels as with PacMan. From that, other games developed where you immersed a character into a world and played with and against the pixelated creations of the machine. read more…
I never thought I would write about Second Life and romance… but here goes.
This post was prompted by an approach from a new user in the orientation area. He was around 6 minutes old and a brand new user . Let us call him Mike. read more…
Second Life Failure for Council Use
It comes as no surprise to see yet another real world organisation leave Second Life in failure. The latest being Tameside Council. Too often they have gone into virtual worlds with high hopes and unrealistic aspirations.
They believe that just ‘being there’ is enough. It isn’t!
Virtual Worlds and Transparency
Who are you? Are you your self, sitting at the keyboard, or are ‘you’ a pixelated character running inside a computer architecture?
How on earth did we arrive at this question – it is preposterous. To suggest that a person can become a bunch of pixels, independent of the person at the keyboard is a non-statement. You ‘are’ that person behind the keyboard. Whatever identity you have split off from your real life and thrown into a pixelated character is more in need of therapy than any other part of your psyche.
Virtual worlds are fantasy worlds, or if recreation of reality, they are a way to explore outside of our physical constraints. This alone is a reason for transparency.
There may be reasons for you to want to hide your identity, some valid, but most not. Anonymity is seen as a way to do bad things without being caught. If it wasn’t, the death penalty in the US would be administered by one person, not an anonymous collection of test tubes.
People need to realise that there is no ‘Second Life’, it is all ‘life’ and the pixelated ‘selves’ will soon be called to account.
This is likely to occur for the most base of reasons, financial accountability. Some companies working in these worlds are registered, private individuals do not have to account for money they acquire through these means and are therefore tax-free income. Governments are usually stimulated into action when fiscal issues raise their heads. This will be the catalyst for verified identity cards on the Internet, prompted by virtual worlds.
Therefore, transparency will be forced upon us, if we do not put our hands up to be identified first. I encourage everyone to play fair and identify who you are, before there is a rush of ‘outing’.
This of course raises issues of security, bit that is a debate about just ‘how much’ information do you make public. Obviously you don’t want to share your daily ablutions.
Social media is a sham. People and organizations use it to sell their products to the public. – You knew that already?
How many new ‘friends’ are simply marketeers and cross-sellers employed to sell into the market-space instead, often selling into the same market-space as each other. Soon we will see the market-space wars, as competitors vie for the same social group and target the same products competitively into that group. We will see new strategies evolving about how you can outsell your competitor in that space by ‘getting closer’ to your target audience and becoming even more devious.
Social Networking is not sacrosanct and some marketers display no integrity at all. People cannot discriminate between genuine social exchange and the opportunists that are selling blithely at them. The corporation and individual, that sells in this manner, will be perceived as being a nuisance. However before it is picked up and identified, its message may have reached many thousands of potential customers.
Forget the social networking courses and presentations that cost thousands of $$$, you have it all here in a list. These are the rules to social engagement for commercial gain.
The rules are:
- Contribute – to the social media discussion. Make sure what you say is relevant, and appropriate.
- Help – discussions along. If you are interested in them or they can be directed towards your organizations’ interests, more comments the better as you are usually allowed to comment freely. People like to get close to others they know more about, so the more you open up, the better people will like it and want to be your own personal ‘friend’.
- Engage – with others. Educate them, engage them in dialogue, or simply flatter them.
- Establish – relationships. Very important to be seen as credible in social media. This way, when you mention your brand, they will believe you.
- Personalities – learn them and use them to your advantage, get closer to influencers by agreeing with their viewpoint. Select groups that you know something about, that your own personality and knowledge will shine through.
- Sensitivity to others. Watch how others post. See what they are looking for from you. Positive feedback, reinforcement, agreement with their viewpoint? Supply it.
- Help – others. When people appear to be at a loss in the discussion or maybe are losing the argument, support them – they will see you as a good guy and want to help you spread your own messages around.
- Interest – show lots of interest in what other people are doing, they will be very flattered and willing to introduce you to other ‘friends’ who they think will like you too.
- Time for action. Once you have softened your target audience and they are trusting, they will be likely to spread your messages broadly. This could be the time to go in for the kill. Use it – hard and fast.
Social Networks are used by people for many things. Enterprises now even have their own social networks, for the sharing and dissemination of information. However one thorn that people seldom speak about is monetisation.
Even though there is a popular use of social networks evolving, few of these are actually making money. Most are free – such as Facebook. When organisations try to invoke a monetisation program – such as Ning – people simply go elsewhere. Where does that leave us?
It leaves us with no social networks! If people are not willing to pay for their social provision, the provision will simply dissappear. Do we pay for phones – yes. Do we pay for other services, yes. SO why is it so contraversial when we are asked to pay for socialising – after all we pay when we go to a club or pub or any other social grouping – so why not online socialisation.
We do not pay because we do not have to, the competition out there is so fierce that we can cherry pick.
What is the solution? A point will come when the self funded networks will die and you will be left with those that carry advertising or are subscription based – remember AOL?
This is the future. Non commercial social Networking – R.I.P. Advertising is the future of the non-fee paying realm, as with other media such as TV and radio advertisements.
Corporate Social Networks however will continue to thrive. As there is a corporate goal and an end game to them, in collective knowledge assimilation, the corporation has a vested interest in making sure the users ‘play’. What we are seeing on Facebook and the likes now, such as ‘incentives’ and ‘points’ for collaboration, we will see repeated inside the corporation.
Social networks will not evolve as a random group of ‘friends’ new and old, connecting and commenting on each others’ activities. Its future will need to be governed and have compliance applied to it. There will be a need to be accountable for all social interaction, as there is in the workplace and high street.
The ‘Wild West’ has nearly gone, being replaced with highways covered in tarmac and grit, with protective kerbs either side of the channel and cameras every few kilometers.
Good advice is to now prepare now for this future, and manage current behaviour with this expectation.
With Innovation and Strategic Planning, Significant ROI Is Possible!
Virtual world are another ‘new’ platform. A toy for programmers to play with and a confusing array of ideas and possibilities that takes up far too much practical time for managers to look at. Virtual Worlds can be a solution looking for a problem.
So Why Do We Even Consider Them?
These platforms may be the frontier to gaining a new strategic advantage. Just as Google and Facebook hit upon the magic formula for social networks in an evolving market (which is still fiercely contested), Virtual Worlds are arrays of possible solutions looking for problems to solve.
Some have tried to find that problem. American Apparel tried to sell virtual versions of their clothes into virtual worlds, Nike introduces a ‘do-it-yourself’ design your own trainers as a prototype to the real world equivalent, Sears and others used virtual worlds as promotional tools – to catch first breath of newsworthiness in the marketing arena. Even the Daily Mail decided to replicate their real world headquarters in Kensington, inside a Virtual World recreation of London. Scenario modelling, crowd control and architectural layouts are also prime examples of the use of Virtual Worlds.
Then ‘Why’ Have These Examples Not Been Sustained Or Copied?
Most Virtual World investigation is in research, data collection and evaluation. This is still the world of the early-adopter. Mainstream business keeps well away of anything that smacks of the uncertain world of R&D, especially for business critical applications.
Risk and reward are so loosely coupled in business that they could even be considered to be inversely proportionate. Personal payoff is typically not worth professional risk in the IT department. The more risky a project it is, the smaller the reward and higher the panic factor. Small risk is usually applauded more than large return. Risk management is more an issue within the IT department than increasing the bottom line. IT staff are characteristically not rewarded for innovative IT strategies.
I Can Find ‘Case Studies’ Yet Few, If Any, ‘Success Stories’?
As IT is traditionally seen as part of business and financial management, rather than development of new business, this is not the area in which there is classically great corporate innovation. Organisations focus on product innovation within their core business, rather than to look at alternative strategies for reducing costs and increasing profits – especially when these look like ‘games’.
Uncertainty plays a part. Risk is a big issue in the form of financial, legal, marketing, production and personal risk (loss of job, demotion upon failure, CV black marks etc.). These all affect both personal and corporate strategy.
Supply and demand information is unknown when making an initial management decision on Virtual World adoption because there is no historical data to draw on.
New technology is typically another source of risk, even to the backbone of adopted platforms and established standards. To back the wrong horse can be very costly. Case Studies are often short-term ‘toe in the water’ trials with no long-term strategy and committed players to ensure there is a return on investment.
Success Stories require long-term commitment, strategy, expected quantifiable return on investment, as well as expectation and risk management. These take time and require considerable initial investment, both in time and money. What we do know is that this is a risky business.
What Technology Do I Buy Into And When?
Traditionally new projects in IT have a high failure rate. No one wants to be associated with failure. The greater the uncertainly, the higher the risk – and the more likely outcome is for project failure, particularly where there is no long term historical data to analyze for likely outcomes and points of conflict.
There is an advantage to being early on the scene. You can break away from the crowd and really make a difference to your advantage over competitors.
This technology should be applied to an existing problem looking for a better solution, not the other way around. A solution looking for a problem is akin to the tail wagging the dog. Use of this technology, as with most technological advancements, should initially be run in parallel with existing processes. That way you can evaluate the benefits and issues by comparing the new with the old.
For example, for a crowd flow scenario, use existing methods, but additionally use a Virtual World platform to perform the same task. Compare the costs, speed and ease of use. If the virtual world comes out faster, cheaper and easier you may have a winner. If not, you have only spent a proportionately small time on the project and have risked very little because the processes were also run using conventional methods.
Benefits can only be appreciated when compared to existing processes.
Selection of Virtual World technology platform should be simply to find the best-fit product for the specific task. Look for repeatability, rigor of execution requirements, accuracy in duplication of existing systems and relevance of platform to the task. Finding the best platform for the job, rather than the shiniest and glossiest package will aid success of the project. Because we are at an early phase in technological evolution, platforms will evolve to the tasks required of them. Finding the one with the best potential fit for your project will assist your success.
Manage Your Organisations’ Expectations?
High expectations can mean that even the most successful project can be thought of as a failure. Expectation management, going beneath the glossy package and the eye-candy, to demonstrate real benefit, keeps everyone happy.
As with most projects, this means drawing up schedules, spreadsheets and other paraphernalia. Having a realistic set of outcomes with achievable timelines and returns will require planning and will depend on information and timelines for other projects on similar tasks, but using traditional methods.
Risk is chancy, managing risk is essential for gaining value from new technologies. Developing projects using Virtual Worlds needs regular management if it is to be adopted into normal business practice.
Even the inspirational Google manage risk on innovative projects – here typically 4 days a week an employee works on their given project. Then one day a week on their pet project. There is no expectation that the pet project will produce anything and because of the satisfaction the employees have, most people put so much effort in the 4 days that it is worth the companies’ effort to provide the fifth day for personal projects that just ‘could’ leap Google yet another bound further ahead in the race. Safe projects known to yield benefit are securely bound. The risk is kept in another box we might call ‘Friday’, perhaps we should rename this ‘riskday’.
Conclusion
Virtual Worlds can have great value for the organisation. However traditional strategies and structures should be implemented. Ensure that you have a problem that needs a solution, not the other way around. There are unlikely to be any previous models to copy at present, so information has to be gleaned from existing models of tackling the process being replaced. Risk and expectation management are essential inclusions in an adoption strategy. Most successes are kept quiet until a strategic advantage has been achieved. Unreasonable short term expectations raised from media hype should be countered by a long term strategy that is sustainable and beneficial to the organisation.
The aim of adopting a Virtual World solution should be to reduce costs and to make the existing process faster and easier.
