One perfectly sound approach is to just be the cheapest. This often entails lower margins, but hopefully higher volumes. However, the problem with this approach is that it can become a race to the bottom. At some point, somebody will find a new corner to cut. As Seth Godin says, "the problem with the race to the bottom is that you might win."

On the other end of the spectrum is this approach:

This is a pamphlet describing full ripeness mangoes from the Miyazaki prefecture in Japan. These are not the cheapest mangoes around. In fact, it's the opposite; they're generally known to be the world's most expensive. But they will almost certainly be the best mangoes that you've ever tasted. And you'll only be able to get them between the months of April and August.

Sometimes it's possible to be both cheaper and better. And that's obviously an ideal position to be in. But in many, or perhaps most cases, you'll need to choose. Cheaper, or that much better.

This is a powerful perspective:

We evolved to be wary of change. Our attention is limited, new things can be a threat and the status quo feels comfortable.

As a result, we spend a lot of time and energy being afraid (and arguing about) the upcoming changes in our lives, but almost no time at all thinking about the things we’re used to.

As an example of this tension, check out this "exit interview" with Toronto's former chief city planner, Gregg Lintern. The underlying theme is change and why it's desperately needed.

But of course, that's not easy.

The interviewer, Victoria Gibson, mentions this survey stat: nearly half (47%) of all Torontonians think the city is building too little housing, and yet only about a quarter (27%) think their area could handle more.

We need this, but not here. Probably because we're used to the way things are.

But if you read the interview, you'll see that the answer, or at least one answer, is to make the conversation personal, and ultimately think critically about, you know, the things we're used to.

Change starts with not giving the benefit of the doubt to the status quo.

Here is an interesting way of looking at risk (via Seth Godin):

If you’re trying to reduce risk, do the hard part first. That way, if it fails, you’ll have minimized your time and effort. On the other hand, if you’re looking for buy-in and commitment so you can get through the hard part, do it last. People are terrible at ignoring sunk costs, and the early wins and identity shifts that come from the easy successes at the beginning will give you momentum as you go.

He's not wrong. We are generally bad at ignoring sunk costs, which is why they have to tell you in business school that you need to ignore sunk costs. It doesn't come naturally.

We are also victims of temporal myopia. Meaning, we tend to emphasize short-term items and discount things that are in the future. So if two things are equally risky, we'll likely perceive the immediate one as more risky than the one that will occur in a few years.

Some things to keep in mind as we go about managing risk.