Risk, Reward, Innovation and Hubris, 2040’s Ideas and Innovations Newsletter, Issue 115
Issue 115, June 29, 2023
Every day we assess the potential rewards along with the real and perceived risks of the situations, desires, tasks, and ideas we confront. We may not be consciously aware of these assessments, but they are happening all the time.
Our ever-expanding technical prowess has resulted in new tools, more efficient production, opportunities to transform ideas into reality, and new platforms to engage and connect. We also have access to expanding our knowledge and deferring to AI to do the meaningless work for us.
Risk vs Reward
Tech-based rewards allow us to be more connected, efficient, and informed … but as with most rewards, there comes risk. Our risk assessment in most situations is based on our inherent need to maintain our security and comfort. We may not take on new responsibility, pursue a new project or even immerse in new technology if we are held back by perceived risks. Most of us are strongly influenced daily by our conscious and subconscious assessment of risk measured against potential rewards. As we wrote last week, social proof gets us up and over our perceived risks if we see what others have already done without experiencing any consequences.
Some of us seem to easily dismiss risk by explaining it away as the rewards seem so tangible, worthy, and achievable. Many innovators follow this behavior pattern motivated by moving society forward. Let’s face it, without them we could be holding society back out of risk aversion. Why rock the boat when all seems well and fine? However, there are real consequences that come when risk is dismissed, when a blind eye is turned, and short-term or misunderstood rewards take center stage.
Risk Assessment
We experienced an example of rewards overtaking risk this past week as we were all transfixed by the Titan submersible, all of us hoping that the five individuals would survive. Each passenger assessed the risk of diving in an uncertified vehicle against the reward of experiencing exclusive, intimate views of the Titanic. Even though the passengers signed extreme waivers, Stockton Rush, owner of OcanGate, could easily be accused of hubris in allowing the titan to operate. Rush, as described by many who interacted with him over the years listened to the criticism, advice, and expertise of others. But ultimately, hubris became a blind spot that led to significant consequences.
We learn from situations when failure occurs (and most often when it comes with the loss of life) They are wake-up calls that force us to take a pause and recognize that we need to collaboratively develop regulations, policies, certifications, and processes to ensure appropriate and comprehensive testing. We need to deeply assess risk and reward to remove or limit fatal and other consequential risks.
Institutionalized Risk
On a broader scale, although our immersion in all things tech has resulted in great rewards across society, there are emerging risks that are real and have ramifications. Although most technologies we leverage today do not result in the loss of life, there are nonetheless risks, often ignored by the hubris of innovators.
The tide has turned on our infatuation with the tech geniuses who have fundamentally changed our lives. We may have bought into Facebook and Amazon when they launched as social and commerce platforms that connected us and gave us access to shiny new toys seamlessly. But more recently, our love affair with tech has turned the corner to the dark side as we wake up to the potentially disastrous possibilities of AI in manipulating and deceiving us. Sound dramatic? Not really. We’re not alarmists, but we do believe that practicing rigorous critical thinking is essential to recognizing the hidden dangers of some tech innovations. We’re all in for digital transformation. What we are not fans of is when leaders get a little too over-confident in believing their solutions transcend ethical behavior when serving their customers. By another name, that’s hubris.
Consider these recent developments:
Meta was fined $1.3 billion for violating E.U. data privacy rules and ordered to stop transferring data collected from Facebook users in Europe to the United States, in a major ruling against the social media company for violating European Union data protection rules. (Axios)
The F.T.C. accused Amazon in a lawsuitof illegally inducing consumers to sign up for its Prime service and then hindering them from canceling the subscription. The agency said that Amazon “duped millions of consumers” into enrolling in Prime by using “manipulative, coercive or deceptive” design tactics on its website. Amazon denied the allegations. (NY Times)
Multnomah County, Oregon filed a lawsuit last week against more than a dozen fossil fuel companies alleging $50 million in damages from the June 2021 heat wave that blanketed the Pacific Northwest, sending temperatures up to 116° in the county. The suit also seeks $1.5 billion in future damages and $50 billion to “weatherproof” the county against extreme heat. (Axios)
The antitrust battleground for Big Tech is expanding beyond the US and Europe. The Indian Competition Commission ruled that Alphabet abused its dominant position in the smartphone software market with its Android operating system. It fined the company 13.4 billion rupees ($162 million) and demanded Alphabet abandon its strategy of pre-installing popular Google apps like YouTube and Google Maps. (NY Times)
Hubris
What’s hubris? It can happen after a person or organization experiences a period of extreme success. Hubris is excessive confidence, arrogance, and unrestrained pride. Executives overcome by hubris may become a liability for their firms when they make business decisions without fully thinking through the consequences. Investopedia dives deeper… Continue on to the full article>
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