9
Risk

… Shackleton was (paradoxically enough) an exceedingly cautious man. It may sound fantastic to call an Antarctic explorer of his caliber cautious, but I claim that it was true of him. He was brave, the bravest man I have seen, but he was never foolhardy. When necessary he would undertake the most dangerous things, and do so fearlessly; but always he would approach them in a thoughtful manner and perform them in the safest way. He was proud of his reputation for carefulness, and therefore, the nickname that he had won on his first expedition, that of “Cautious Jack,” which tickled him immensely.¹

—Frank A. Worsley

I once presented my perspective on leading at The Edge to a group of senior executives in the insurance industry. These executives, many of whom were actuaries, raised a number of thoughtful questions about this strategy. Their business, one commented, was not one in which taking “the Big Risk” is viewed favorably.

Risk taking for its own sake, however, is not the subject of this chapter. Needless risk taking is a form of bravado that endangers organizational stability, or even lives. Clearly, there are times to stay the course, and there are situations in which risk should be minimized. Unfortunately, there are also times in which taking what appears to be a safe course is actually a dangerous move. This chapter explores both dimensions of risk.

Never Take an Unnecessary Chance

The very nature of Antarctic exploration involves risk. Nevertheless, Shackleton was incredibly disciplined in his ability to avoid taking unnecessary chances, and there are numerous examples of this restraint.

He severely disapproved of any carelessness that might tempt fate. Soon after the loss of Endurance, for example, Macklin and Greenstreet decided to combine seal hunting with a joy ride on a small floe. Poling along merrily, they were as happy as college students punting on the river. Then they sighted the Boss and, like “guilty schoolboys,” promptly ended their excursion. When the two returned to the camp, Shackleton’s “awful look” made it clear that this was their last bit of reckless horseplay.

Shackleton’s caution was tested again and again. By March 9, 1916, the Patience Camp had drifted far enough north that the crew began to feel a slight movement caused by the swells of open water. The motion broke through the apathy that had set in among the crew, who were eager to launch the lifeboats at the earliest opportunity. Two days later, the pack opened up and a large stretch of open water appeared. They prepared to launch the boats, but the Boss hesitated. Something inside him signaled caution, and he gave the order to remain on the floe. He had been wise to trust his intuition, as the ice closed soon after.²

The pressure to launch the boats continued to build. It peaked again on March 23, 1916, when the party sighted land—the northernmost point of Antarctica. The expedition had been drifting for five months of claustrophobic monotony, and the thought that they might escape the floe sent shock waves of excitement through the camp. Here was a chance to make a sledge journey that would put them on dry land.

Shackleton and Worsley climbed to the top of a hummock to assess the situation. They scanned the horizon with binoculars, and Worsley posed the question foremost in everyone’s mind: Would they attempt to make it across the ice? Worsley describes what happened next:

[The Boss] did not reply at once, and I could see by his expression that he disliked having to say the word that would disappoint all of us. At length he said shortly: “No … I can’t risk the danger of crossing ice that will be opening and closing rapidly under the influence of the tides and currents between us and the land. The boats might get crushed. We might get separated. Many things could happen. But if we keep on as we are for another hundred miles or so, we are bound to drift to open water, and then we will make for the nearest whaling station.”³

Shackleton could not foresee the dangers that lay ahead. But he was sure that, having safely brought the expedition 2,000 miles since they were first trapped in the ice, he was not going to make an impetuous move that would risk the expedition.

When a Risk Is Justified, Do Not Hesitate

The landing on Elephant Island had given the crew a brief respite, but it was only a temporary sanctuary. Anyone searching for the crew of the Endurance would expect them to be somewhere in the south of the Weddell Sea, far from the expedition’s current position, so there was effectively no hope of rescue from Elephant Island.

In addition to this grim fact, there was another, more immediate problem nagging at Shackleton: their food supply. Clark had managed to add variety such as limpets to their menu, and Green, the cook, continued to make hot meals, but the hard reality was that the food supply would not last forever. Worsley recalled:

… [T]he day dawned when Shackleton had to face the fact that he would not be able to feed his men through the winter. I remember that day. He asked me to walk with him to our usual lookout promontory, and there he confided to me his ever-growing anxiety. “Skipper,” he said, “we shall have to make that boat journey, however risky it is. I am not going to let the men starve.”⁴

This was not a time for wishful thinking about rescue, or for imagining that the food supply would be sufficient to sustain the men. It was a time for carefully calculating the odds, and for having the courage to do what no one had ever done before: risk the 800-mile sail to South Georgia.

It is hardly possible to exaggerate the dangers involved in the boat journey, but Shackleton’s logic in choosing this course was impeccable. Sailing in subfreezing temperatures across 800 miles of stormy ocean in an open boat was extremely hazardous, but he reasoned that the venture would add nothing to the risks of the men left on the island. First, there would be six fewer mouths to draw on the limited food supply at Elephant Island. Second, Shackleton planned to take only a small amount of rations—one month’s provisions—for the crew of the James Caird. He knew that if they had not made South Georgia in one month, they were not going to make it at all.

The Boss balanced the odds and concluded:

The risk was justified solely by our urgent need of assistance. The ocean south of Cape Horn in the middle of May is known to be the most tempestuous storm-swept area of water in the world. The weather then is unsettled, the skies are dull and over-cast, and the gales are almost unceasing. We had to face these conditions in a small and weather-beaten boat, already strained by the work of the months that had passed.⁵

The lifeboat James Caird, only twenty-two feet, six inches long, was hardly built for such a voyage. The passage was one of extreme danger and hardship, a constant battle against the seas and the gale-force winds. Those men not on watch sought protection from the bitter cold, but there was no respite. Every part of the small vessel was soaked by the relentless waves.

Space was so cramped that Shackleton had to direct the movement of each man during watch changes to avoid collisions and bruises. Boulders that had been taken for ballast had to be moved constantly to trim the boat, a “weary and painful” task. Their clothes and reindeer-skin sleeping bags were always wet and, as the bags disintegrated, the reindeer hair contaminated their drinking water.

The James Caird was often in danger of swamping. The tiny boat took water with each cresting wave, and one man bailed furiously at all times. They were often forced to crawl forward on the decking to chip the ice that was weighting down the boat. Each effort meant a risk of life: If a man had gone over the side, he would have been lost forever.

The ice continued to accumulate and the boat became “more like a log than a boat.” To regain buoyancy, they discarded everything not absolutely essential for survival, including spare oars and two of the wet frozen sleeping bags, each of which weighed some forty pounds.

By the sixth day of the journey, each man suffered from frostbite and showed blisters on his hands. They ate, treated their wounds, and prayed for better weather. Good weather meant more than relief from the cold. To navigate accurately, they needed to see the sun. The sky had been so cloudy that they had no way to fix their location.

On the seventh day, the sun eventually came out, and Worsley—hanging on the mainmast with his sextant—was finally able to get a shot at the sun and determine their position. The news was good: They had covered more than 380 miles and were almost halfway to South Georgia. Still, the emergence of the sun showed clearly how tiny the James Caird was in the vast ocean. Shackleton recalled:

So low in the water were we that each succeeding swell cut off our view of the sky-line. We were a tiny speck in the vast vista of the sea. … For a moment the consciousness of the forces arrayed against us would be almost overwhelming. Then hope and confidence would rise again as our boat rose to a wave and tossed aside the crest in a sparkling shower….⁶

On the tenth night, Worsley was so cramped from his turn at the helm that he could not straighten his body. He had to be dragged below and massaged until he could crawl into his sleeping bag.

The next day, Shackleton was at the tiller when he saw what he thought was a line of clear sky. As he called out the good news to the others, Shackleton realized he had not seen an opening in the sky. What he had seen was the foam on the crest of a wave—a wave larger than any he had seen in his life.

As Shackleton called out, “For God’s sake, hold on!” the wave lifted the boat like a cork. The James Caird, half filled with water from the giant wave, was still afloat, but just barely. Fighting for their lives, the men bailed with anything that they could find. Slowly the boat regained its stability, but the voyage had almost ended in disaster.

If conditions had previously been severe, now they were horrible. The food and cooking stove were soaked, and drinking water was running low and was contaminated by salt. With dry mouths and swollen tongues, they strained for a sight of land. Finally, on May 8—fourteen days after their departure from Elephant Island—they sighted the dark cliffs of South Georgia.

They were desperate to land and find water, but the forbidding coast offered no safe haven. Waves broke over the rocky coast and splashed thirty and forty feet into the air. They had no choice but to stand off and search for a better landing point.

As dawn broke the next day, they found themselves being driven onto the shore, which was a sheer wall of rock. In the treacherous seas and hurricane-force winds, the James Caird was shipping water heavily. It was agonizing to have come this far and face disaster. Then fate turned. The wind shifted and freed them to maneuver. Shackleton recalled:

… [J]ust when things looked their worst, they changed for the best. I have marveled often at the thin line that divides success from failure and the sudden turn that leads from apparently certain disaster to comparative safety.⁷

As the wind stopped, the pin that held the Caird’s mast fell out. If the pin had given way earlier, during the hurricane, the mast would have “snapped like a carrot,” and they would have been driven onto the rocks to a certain death. Once more, they searched for a landing point, tired to the point of apathy and dehydrated to the point of death from thirst. Their last water—strained through gauze to separate the liquid from reindeer hair—had long been used.

Finally, on May 10, they found a gap in the reef. Fighting shifting winds, they tacked again and again to hit the opening and, on their fifth try, navigated the narrow opening to the safety of the cove beyond. Shackleton sprang ashore with a line and held the James Caird against the outgoing waves. After narrowly escaping a twenty-foot fall to the rocks below, the Boss secured the line and the crew came ashore.

As they stood on the beach, they heard a gurgling sound and turned to see a freshwater stream. They fell to their knees and drank the ice-cold water. They had risked the Southern Ocean, and they had triumphed. At last, they were safe.

In retrospect, Shackleton’s decision to leave the ephemeral safety of Elephant Island was the right one. He gambled and he won. But knowing that a risk is called for and actually taking it are two different things. My own experience in Vietnam brought that point home clearly, and one particular day forever shaped my perspective on the issue of risk. Although the events of that day are not happy ones, I will relate them now in the belief that there is significant value to the underlying lesson in the story.

Toward the end of my tour in Vietnam, I was the commanding officer of a Marine rifle company—an infantry unit of about 200 men. My company, India Company, had been given the task of providing security for a convoy of forty vehicles traveling north from the Marine airstrip at Chu Lai to the base at Da Nang.

The distance, about fifty miles, was relatively short, but moving any distance along Route 1 was potentially treacherous. Appropriately named “Rough Riders,” convoys traveling along the elevated road were much like moving ducks in an amusement-park shooting gallery. They followed a fixed, predictable route, and they were exposed and vulnerable to enemy fire at numerous points. In addition, much of the road’s pavement had been destroyed, creating opportunities for the Viet Cong to plant mines and other explosive devices.

The convoy left Chu Lai early in the morning. Each truck was filled with either cargo or Marines from my company. I was in one of the lead trucks, surrounded by my radio operators and a forest of antennas. We sat on layers of sandbags placed as protection against explosions from mines. Their value was more psychological than real.

Included in the convoy were several armored vehicles, including a peculiar Marine contraption called the Ontos. The Ontos, from the Greek word for “thing,” had a great deal of firepower but often broke down. In addition to this problem, the Ontos was armed with six recoilless rifles that, when fired, create a dangerous back-blast from the explosion. Nothing can be behind an Ontos in action.

We were escorted by a helicopter gunship that would provide immediate air cover. We also had the capability to call in “fast movers”—jet aircraft that could deliver additional air support in case of significant trouble. In theory, we had a lot of firepower that could balance the odds in case of an ambush.

As with so many days in Vietnam, things started to go wrong early. I had been given the wrong frequency for the gunship, which circled the convoy repeatedly trying to raise us on the radio. Unless we could communicate, the helicopter could not be used, so I had no choice but to stop the convoy until the problem was fixed.

Finally, the exasperated pilot landed the chopper so we could talk in person and straighten out the problem. The incident would have been just another annoyingly comical moment, but the delay had cost time. Time meant losing daylight, and getting caught out in the open at night meant losing the ability to use aircraft effectively—a situation I did not want to think about.

As the convoy moved north, there was another delay at the small town of Tam Ky. The Viet Cong had planted a large mine set to detonate when a very heavy load—such as a military truck or tank—went over it. An unfortunate Vietnamese farmer, in a small truck filled with heavy bags of rice, had detonated the mine. The farmer had been killed and his truck blocked the road until it could be removed.

Throughout the day there were delays at each point in the road where pavement had been destroyed. Each of these sections had to be swept by a combat engineer team using mine detectors. The team, led by Naval Academy classmate Bill Gleeson, used the most sophisticated detectors available to methodically examine every square inch of dirt for buried explosives. The engineers also went into the water to check for wires and explosives that might be planted in culverts. It was a tedious task, but it could not be rushed.

After several hours on the road, I received a radio message that a battalion of the NorthVietnamese Army (NVA) was operating in the vicinity, so we should be on the alert. Intelligence reports were frequently wrong, but the warning raised my level of vigilance another notch. It meant that an ambush, if it occurred, would be a serious firefight with the NVA, not a limited skirmish with the Viet Cong.

With all these delays, it was getting to be late in the afternoon, and I was becoming more and more concerned about still being on the road when night fell. Still, there was no way of avoiding the time-consuming process of sweeping for mines. At one stretch of road, the driver of a lead truck refused to move forward—even after the road had been swept. Glee-son waved him across from the far side, but the driver pointed at himself and shook his head, “No.” Unconvinced that the road was clear, the driver thought he was being used as a human mine detector. Gleeson walked back to the truck, flashed his signature smile, climbed in beside him, and said, “Let’s go!”

The convoy rolled forward and the lead trucks, including mine, passed safely. But as I looked back, a truck exploded in an inferno that instantly killed the two Marines aboard. A mine, fashioned from several hundred pounds of high explosives, had been buried so deep that it could not be detected. It apparently had been “command detonated” by a nearby enemy soldier who was trying to hit my truck, marked with antennas, but he hesitated and hit a vehicle following behind. The delay cost lives and time. The burning truck had to be pushed off the road, and medevac helicopters brought in to take out the casualties.

We cleared the wreckage and the convoy moved on. As we passed through another small village, we were hit by sniper fire and lost another Marine. Another life, another delay, and it continued to get dark.

We finally began picking up speed and made it to a small village about twenty miles from Da Nang. The village sat at the entrance to a long bridge across one of the many rivers in the area. A large wooden gate at the entrance to the bridge controlled traffic movement.

The lead vehicles with the minesweeping team crossed the bridge, and my truck approached the gate. When we were about twenty-five yards away, the gate slammed shut. The village erupted with a series of explosions that was unlike anything I had ever experienced in Vietnam. Hundreds of tracers streaked across the road like strands of a fiery spiderweb.

As soon as the ambush was triggered, the Ontos ahead of my truck turned to return fire. This meant that the road ahead was now blocked by the back-blast from its six recoilless rifles and by the closed gate. We were now caught in the withering fire of the NVA battalion, armed with mortars, rockets, automatic weapons, recoilless rifles, and other heavy weapons. The closed gate and the back-blast had stopped the convoy; the trucks were fixed targets. Marines piled out of the trucks to take cover and return fire.

The sustained din of explosions and small-arms fire was so great that it was impossible to hear someone shouting only a few feet away. I tried to raise the rear of the column on the radio but could hear nothing but the thumping of the .50-caliber machine gun mounted on my truck. As I crouched by my radioman trying to decide what to do next, I came to the sudden, chilling realization that we were in the killing zone.

Every ambush is carefully designed with an area of entrapment appropriately called the “killing zone”—and we were in it. The NVA had driven the civilians out of their homes, and the entire village was now a free-fire zone designed for death. If we stayed where we were, we would all die.

I should have realized this sooner. The immediate action in an ambush situation is to move forward, no matter what. But the blocking of the road by the closed gate and the back-blast of the Ontos had taken me by surprise. In addition, I am sure there was a part of me that wanted to engage, not run, but this was not a time to fight.

I got the Marines back onto the trucks and we broke through the gate. As we approached the bridge, the NVA troops began firing at my truck with a recoilless rifle. If they had hit my lead vehicle, every other truck would have been stopped on the bridge and the situation would have been hopeless.

Then the firing from the recoilless rifle stopped abruptly. I later learned that Gleeson, whose engineer team had made it safely across the river, had risked his life to come back and silence the weapon with a grenade launcher. We moved onto the bridge and were now fully exposed to enemy fire.

Tracers were everywhere, and it seemed impossible that the convoy could make it across the full length of the bridge. There was no choice, however, but to keep moving. As the lead trucks rolled onto the bridge, the rear of the convoy was heavily engaged. The NVA troops were attacking with fixed bayonets prepared for close combat. The last truck in the convoy was on fire, and its wounded driver was rescued only through the courageous efforts of one of my men. He ran back to the truck, threw the driver over his shoulder, and—firing an M-60 machine gun from his hip—carried the driver to safety.

When the convoy reached the far side of the river, we regrouped. Every vehicle was riddled with bullet holes, and two had been destroyed. As I look back, it still seems unbelievable that the company survived the ambush. We reached Da Nang late that night.

I have since thought a great deal about that day. There was great risk for everyone in driving across the open bridge and being directly exposed to the full force of the ambush. The greater risk, though, was standing in place, taking what cover could be found and eventually—inevitably—running out of ammunition and being overrun. In the killing zone, there is only one course of action: Move, move, move.

Lessons for Leaders

Henry David Thoreau once said, “A man sits as many risks as he runs.” There are times when doing nothing, or making a “safe choice,” actually entails greater risks than a bold gamble. Shackleton could have avoided sailing 800 miles across the Scotia Sea, and it is possible that, by some miracle, the expedition would have been rescued. It is far more likely, however, that they all would have suffered slow starvation on Elephant Island.

The situation Shackleton faced was analogous to being caught in the killing zone of an ambush. In both cases, the crucial leadership decision is whether to stay in a deteriorating situation or risk greater immediate danger to reach a position of ultimate safety. Under these circumstances the decision that appears to be the safe choice is often the one that carries with it the greatest risk.

These life-and-death situations, while extreme, are metaphorically similar to those faced by leaders in a number of adverse business situations. In their book The Profit Zone, for example, Adrian Slywotzky and David Morrison point out that information technology, global competition, and business design have combined with other forces to create changes in the old economic order. As a result of these changes, market share and volume growth no longer guarantee business success. Yet many managers cling to the illusion of the security they provide. In doing so, they stay pinned down in the “no-profit zone”:

No-profit zones are the black holes of the business universe. In a physical black hole, light waves go in, but never come back out. In an economic black hole, investment dollars go in, but the profit dollars never come back out.⁸

A business that stays caught in the no-profit zone will, like a military unit in the killing zone, meet with disaster. Getting out of the zone requires, first, recognizing the danger and, second, taking the risk of doing things differently—of reinventing the business.

There are some situations in which the economic danger is difficult to ignore. Under these conditions—a losing situation with little hope of a turnaround—it makes sense to take major risks because there is little real alternative. In other instances, risk aversion does not result in disaster, but neither does it create change. Risk takers make things happen.

Randy MacDonald, senior vice president of human resources for IBM, has a reputation for taking big risks that make a real difference. In describing MacDonald, Ted Hoff, human resources vice president of global sales and sales incentives, put it this way: “Randy embodies the ability to take calculated risks!”⁹

MacDonald took such a risk in response to CEO Sam Palmisano’s call to make IBM a Globally Integrated Enterprise. The challenge facing Mac-Donald and IBM Human Resources was to develop a system to measure and track the capabilities of each member of its global workforce. Having this information would enable IBM to shift employees to growing markets and be more responsive in deploying talent.¹⁰ To achieve this goal, however, MacDonald would have to fundamentally change the company’s approach to human resources management.

MacDonald and his team devised a pioneering program called the Workplace Management Initiative.¹¹ They created a new HR structure, replacing the old siloed arrangement. Instead of grouping by function—for example, benefits, compensation, or diversity—MacDonald formed cross-functional teams of specialists. Each team was then assigned to a specific business unit where functions worked together to ensure that their efforts were aligned with business unit objectives.¹²

With the new HR structure in place, MacDonald set out on the next challenge: inventorying the skills and experience of IBM’s 330,000 employees.¹³ MacDonald and his team created an assessment taxonomy to catalog expertise and career ambitions.¹⁴ After each employee completed an instrument that encompassed 4,000 skill areas,¹⁵ HR teams reviewed the results of the assessments. With this knowledge, they were able to identify critical skill gaps and ensure that employees’ skills were well matched with their assignments. These actions enabled other HR functions, such as workforce development and recruiting, to be carried out more effectively.¹⁶

Did the Workplace Management Initiative bring Palmisano’s global vision to life? Although there were some setbacks, the overall conclusion was that the transformation helped IBM’s bottom line during difficult economic times. One concrete payoff was optimized labor costs, as IBM was able to redeploy employees to vacant positions requiring a particular skill set. The program also helped IBM recruit the right individuals, an enormous benefit. More difficult to measure, but perhaps most important, the Workplace Management Initiative contributed to improved service for IBM clients. Having the right people at the right place and at the right time can make all the difference.

The concept of the Workforce Management Initiative was powerfully simple, but execution was massively complex. Not only did it require a $100 million investment, but no organization in the world—not even the U.S. military—had ever attempted such an in-depth assessment of capabilities. The program involved an investment in databases and software applications, and it also demanded something even harder. Each IBM business had to change the way it managed a massive and growing global workforce.

Reflecting on the experience, Ted Hoff underscores the importance of MacDonald’s leadership:

There were language issues, workforce laws, cultural issues, and government-mandated practices. We were on the “bleeding edge,” and our success involved teamwork, perseverance, and innovation. We all gave it our best, but the vision and determination all came from Randy.¹⁷

As the IBM story clearly demonstrates, leaders at The Edge need to be comfortable with the discomfort of risk. Unnecessary risks should be avoided, but there are times for bold moves. Understand the risks you face and evaluate them carefully. Then balance risk and return, and have the courage to step up to those calculated risks that are worth taking.

Expedition Log

1. Think about a risk you might take to improve the effectiveness or profitability of your organization. Using the Risk Assessment Matrix (see Figure 9-1), list the best- and worst-case outcomes you anticipate. What does this analysis tell you about whether or not to take the risk?

2. Is your assessment of the risks involved consistent with the views of others on your team?

3. If you are anticipating taking a significant risk, have you developed a plan for communicating this risk to others? Have you made a compelling, logical case that will facilitate understanding and commitment?

4. Is there a risk you might take to improve your own effectiveness as a leader? Use the Risk Assessment Matrix again, writing out the best- and worst-case outcomes, to analyze this opportunity.

Figure 9-1. Risk Assessment Matrix.