Fence Sitter
By A. R. Samson
By this time, the planning sessions of companies are done. Risks and opportunities have been assessed. And appropriate responses arising from assorted threats like a new competitor in the horizon, the disruption (a favorite word this year) from technology and the rise of a young market have been laid out.
There are consultancies involved in risk management and contingency planning. They aim to anticipate different scenarios, from best case up to the worst case (the end of the world). This process is called “future-proofing,” insinuating that the future and all its unpleasant surprises can somehow be adequately planned and prepared for. Often, the price tags of these various options are estimates that can swing wildly.
Can over-preparedness be too costly?
Insurance companies, HMOs, and sellers of fire extinguishers promote the notion that one can’t be too over-prepared. Their “what-if” scenarios are powerful marketing tools to sell products or services to address even the most unlikely events taking place. What if the CEO gets hit by a red truck? (He won’t, he walks too slowly.) Who takes over the business? Short answer: the ones already running it now.
A “just-in-case” mentality can easily become a costly strategy if intended to overcome any foreseeable contingency. Sometimes, all the swans you will encounter next year are white. Maybe you won’t even see any swans at all, unless you travel.
When moving into a new home or condo unit, this just-in-case approach rears its head. While staunchly proclaiming her skepticism about feng shui, the housewife still scrupulously follows all the prescribed layouts, purchasing aquariums to counter the good chi flowing out, or is it to prevent the bad chi coming in? She quickly demurs when criticized for the costs she is racking up — there’s no harm in following these beliefs to the letter. I just want to avoid bad luck… just in case.
The making-sure attitude seeps through corporate thinking as well. Layers of control are ordered just in case people do not behave as they are supposed to. Because of this suspiciousness, Filipino corporations may have the biggest internal audit and security departments in the world. The recent introduction of corporate governance rules has allowed other countries to narrow the gap. People whose only job is to watch other people to ensure they are doing their jobs are considered necessary… just in case there are loafers out to cheat the company.
Even family corporations though can exhibit a failure of trust — what, you sold the stocks I thought I still had?
A photographer with a digital camera allows him to preview the shot just taken. But, he will still routinely take a second shot in case the first one is accidentally deleted. Preparing for a party, a hostess adds an extra table or two in case bodyguards show up with their boss or invitees bring along nieces visiting from Toronto. This over-allocation already presumes a hundred percent attendance from those who confirmed in the RSVP. This batch is likely to reflect an additional delinquency rate of 20% (I was really all dressed up to go when my daughter who is supposed to drive me over came home late from a children’s party.) Is it any wonder that on a per-capita basis, our country has the highest incidence of doggie-bag requests? (I just made that up.)
Just-in-case thinking makes sure nothing goes wrong. A person who exhibits a spirit of over-preparedness is good to have on one’s team. She is the one who will have the can opener everybody else forgot to bring along in the picnic. She also breaks the budget for an event by ordering extension cords, stand-by generators, and a tent in case it rains.
Still, the segurista makes sure she gets her money’s worth. She is a figure of awe in TV commercials, a fussy buyer for which only a superior (and more expensive) product is good enough.
“Just-in-time” dealing with any crisis is a low-cost approach to risk. Being jolted out of one’s comfort zone unprepared allows us to contemplate life’s lessons. It’s not what happens to us, but how we react to it that defines our character, and our solvency.
But of course, there’s no harm in having a hefty cash balance… just in case you need to get over life’s bumps.
A. R. Samson is chair and CEO of Touch DDB.