Despite evidence to the contrary, at times it feels we are living in a very, very mad world.
Between fears over global climate change, Ebola, poorly coiffed North Korean dictators, and the Islamic State’s 24-hour terror TV – it’s easy to feel overwhelmed and frankly, frightened.
And yet all around the world businesses are springing up in the places we, in the West, have termed ‘fragile and conflict states’. Cocktail bars in Yangon (no Buddha adverts, please), passport photo shops in Kandahar (thanks again for the red eye, lads), a French bakery in Bujumbura (best croissants that side of the equator). Why is it, then, that the idea of opening an office in Myanmar, Afghanistan, or Burundi sends cold shivers down the spines of most CEOs?
Simply put, we are scaredy-cats. But don’t worry, it’s only cultural.
Anthropologists have argued (and quite convincingly, I’d contend) that risk is a ‘cultural construct’ – the things we find threatening may not be all that empirically dangerous, but we are socially conditioned to find them terrifying. Most of us don’t hesitate to get into steel cage propelled at 80 km by a series of controlled explosions, but require sedatives to fly from London to New York City – a mode of transportation which is about 100 times safer. It’s not that people are ignorant of these statistics, or even just that humans are notoriously poor at evaluating risk statistics. It is that a large part of what we find threatening, is what we have been raised to find threatening. As Mary Douglas puts it:
The different social principles that guide behavior affect the judgment of what dangers should be most feared, what risks are worth taking, and who should be allowed to take them. In Zaire the Lele people suffered all the usual devastating tropical ills – fever, gastroenteritis, tuberculosis, leprosy, ulcers, barrenness, and pneumonia. In this world of disease, they focused mainly on being struck by lighting,” (Douglas 1982:7).
We are not any more or less rational than the Lele when it comes to risk. And this is important to remember because increasingly, the most exciting markets are those that feel a little risky, a little dangerous. Those places that we once called ‘emerging markets’ are perhaps better sorted into two categories: stable and unstable. And let’s be clear – the space between the two is a matter of opinion, experience, and one contested election.
We have grown accustomed to evaluating business risk in a very particular way, but we have to understand that for all of the formulas, consultants, and systems we’ve developed – ultimately, risk, and risk tolerance, are culturally relative.
And this should matter to you and to your business because it means that these exciting, but slightly scary markets, will be dominated by those companies with cultures that are willing to take the risk for the potential reward.
So what’s a CEO to do? For a start, look to humanitarians for advice. As Medicins Sans Frontieres have long argued “risk mitigation is not synonymous with risk avoidance”. If you want to play in the next generation of growth markets, you must learn to evaluate risk from a different paradigm.
The world isn’t getting more dangerous, but it is getting more competitive. And your competitors aren’t those you meet on the golf green but those who have grown up in and around the risks that give you heart palpitations. How are you going to keep up?
Melyn McKay is a partner with advisory firm, Monticello LLP, and a socio-cultural anthropologist.