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Legal Business

Risk Aversion and the Princess Bride

Rees Morrison has an interesting post this morning bridling at a vendor comment reported in KM World that "We trust our legal department to be risk-averse and process-oriented...."

He takes on the process-oriented trope; I'm more interested in the "risk-averse" side of the equation.

As Inigo Montoya says in The Princess Bride when his boss keeps mischaracterizing their situation, "You keep using that word. I do not think it means what you think it means."

I hear people using "risk-averse" to characterize a law department that says "no" to almost all business-side initiatives. After all, doing X entails some legal risk. "Customers might sue us if it doesn't work. Competitors might sue us if it does. We could infringe a patent, muck up a trademark."

However, there's often more risk in sitting still, in failing to keep up with - let alone outpace - competitors.

What if Microsoft had decided that a graphical user interface was still too risky - especially with the possibility that Apple or Xerox might sue - and eschewed Windows in favor of MS-DOS 7.0, 8.0, etc.? (There would never have been a 10.0; they'd have been out of the operating-system business.) Indeed, Windows 1.0 was not a useful product, and even 2.0 was little more than a container for Excel and PageMaker that you ran on top of DOS anyway. They could have stopped, or they could have bet it all on the OS/2 IBM partnership. That would have been "safe."

What if Boeing had not risked everything on the untried concept of a jumbo jet that became the 747? McDonnell Douglas and even Lockheed might still be around, and Airbus would be dominant. Boeing might have been bought out, or might be just another Embraer or Bombardier. Taking the plunge on the 747 was a monstrous risk.

What if Ford had decided that no one would want to buy the Edsel and so they never produced it? The auto world would have lost its best metaphor for failure, to say the least. (Okay, so not all business risks pan out.)

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