Risk-averse behavior creates self-defeating pattern
By Peter J. McDonnell, MD
This is a true story. I left the office a little early today in order to get my hair cut. I plopped down in the chair, facing the television showing the Winter X Games on ESPN. The young lady asked if I had anything special in mind this time.
“Just make me look intelligent to men and irresistible to women,” I said.
“Easy,” she replied, and began snipping away.
“What do you do?” she inquired.
“I'm a professional snowboarder,” was my answer. I waited for the laughter that did not come.
“Cool,” she replied, “but isn't that dangerous?”
“Not the way I do it,” was my rejoinder. “Besides, my middle name is Risk.”
“Cool,” she replied. “But don't you have to pay a lot for medical insurance?”
It turns out that the issue of risk had been in the back of my mind. Normally, we Americans are noted for being entrepreneurial risk-takers. But, according to Ron Ashkenas of the Haas School of Business at the University of California, Berkeley, when the economy gets bad and unemployment rises, people start playing it safe.
According to Ashkenas, laboratory mice can be conditioned to exhibit “good” behaviors by giving them sugar pellets when they do what the scientist wants and shocks when they do the opposite. But, if the consequences are random (i.e., the same behavior is sometimes rewarded and sometimes punished), the mice become highly stressed and confused and start taking no actions at all: “They stop taking risks, which is the safest possible behavior.”
In a company faced with tough times, argues Ashkenas, the same phenomenon takes place (but with people and not mice). “I discovered that while executives genuinely wanted innovation, they simultaneously wanted to control costs and report consistent earnings. So while a few people had been recognized and rewarded for innovation, many others had been laid off. As a result, the strongest and most consistent message . . . was that people in the company, at all levels, were risk-averse. Like the mice in the lab experiment, managers and employees were anxious about the consequences of failure and felt it more prudent to continue doing what they had always done. Such behavior inevitably creates a self-defeating pattern. If the firm does not create an environment where people can take risks and occasionally fail, then innovation will be stifled.”
In today’s slow-growth economy, combined with cuts in physician reimbursement and research grants, the word “company” in the paragraph above might be replaced with the word “medical practice” or “academic clinical department.” It would be a shame if ophthalmology in our country, long known for its ability to develop and rapidly adopt new technology to serve its patients better, began to play it safe.
Back during the Clinton years when the U.S. economy was charging along, ophthalmic practices had the confidence and cash to acquire excimer lasers remarkably rapidly. RK changed overnight from a fairly common procedure to a historic curiosity, replaced with PRK and LASIK. A large experience and literature with the excimer rapidly developed.
Admittedly, not all new medical innovations are fantastic. But I wonder if as many of my fellow ophthalmologists today feel they can take the risk of investing major dollars into femtosecond laser technology for cataract surgery (by way of disclosure, I have no financial relationships with companies that build these devices).
What if they are prevented from charging adequate fees to cover the added costs associated with purchasing and using the laser? What if there is not a substantial increase in patients coming to the practice in response to marketing the presence of this new toy? Will a junior ophthalmologist in a group practice refrain from arguing for the investment because he/she fears the wrath of senior partners if the hoped-for-benefits fail to accrue?
This evening I found myself pondering this issue of risk-taking behavior in today’s medical practice environment while sipping a cocktail. Lost in thought, I suddenly became aware of a young lady looking at me, when I heard her say, “Nice haircut!”
After a quick glance in the mirror, I wondered, “Hmm, I wonder if I also look intelligent to men?”
Ashkenas R. Taking risks in tough times. Harvard Business Review Blog Network. Blogs.hbr.org/ashkenas/2011/01/taking-risks-in-tough-times.html