Magazine article Management Today

The Shit Happens Principle

Magazine article Management Today

The Shit Happens Principle

Article excerpt

Pick a card, any card...

Bet pounds 1 on red or black and I'll pay you pounds 5 if you're correct. I tell you I've taken six of the black cards out of the deck, so naturally you bet on red. Too bad: you drew a black card. Did you make a bad decision? Of course not. You made the best one you could have in the situation.

Social scientists who study risk perception describe this principle as 'If you did the right thing then, you have done the right thing now.' Or, more colloquially, as the 'shit happens principle'. It's obvious in simple examples, but in more complex business situations, it's easy to lose sight of. Even if the odds are very much in our favour, we can still lose. How many times have you heard someone say at a post-project review: 'It looked like a good bet. It still looks like a good bet, but luck was against us.' If you are a cold-blooded venture capitalist or private equity investor or trader you get this, but most of the rest of us don't. It would be really good if we could.

Consider HP's recent purchase of Autonomy - a pounds 7.1bn investment followed promptly by a pounds 5.4bn writeoff. Sounds like a lousy deal, but was it? …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.