08: Take risks

In 2005, China’s engineers and scientists completed a new railway. Splicing through mountains five kilometres high and underground rock formations where the temperatures run at -30°C, the new line stretches from Golmud in the province of Qinghai to Lhasa, the capital of Tibet. No fewer than 1,142 km long, it was finished three years ahead of schedule. [1]

The railway is a triumph not just of engineering, but also of conscious risk-taking. Barriers thought very hard to overcome were proved surmountable.

That sequence of events, in which risks are confronted, is a relative rarity these days.

For some years before the credit crunch, organisations made the management of risk into a fearful obsession. [2] Right now, though, however, the consultants Booz, though in favour of innovation, nevertheless want firms to develop a ‘risk appetite’ in the sense of ‘a company-wide statement of the amount of risk that is desirable in day-to-day affairs’. [3] An expert in supply chains says that, given globalisation, just-in-time scheduling, the Internet, the offshoring and outsourcing of labour, the outsourcing of production and manufacturing, and the virtualisation of workplaces or their consolidation it into ‘single points of failure’, then risk consciousness needs to be ‘pervasive’ among all the stakeholders of each organisation’s value chains. [4]

Around innovation, however, there is already far too much risk consciousness. For in innovation, rules and routine often need to be overturned.  Innovation is an inherently risky business. Yet it is at the same time often the best way to deal with risks.

Innovation is risky. Get over it

Nowadays, men and women are supposed everywhere to be ‘at risk’, because everywhere they stand guilty of past misdeeds with nature. In the same way society’s image of the innovator has moved from heroic boffin (Bletchley Park and Alan Turing in the Second World War), through likable eccentric (Emmett ‘Doc’ Brown in Robert Zemeckis’ Back to the Future, 1985), to crazed psycho (Dr Gerard ‘supergun’ Bull, 1928-90, or Dr Craig Venter today).

In 1982, the intrepid Australian physician Barry James Marshall drunk a billion Helicobacter pylori to prove the bacterial origins of ulcers. Along with his colleague J Robin Warren, Marshall won the 2005 Nobel Prize for Physiology or world of Medicine. [5] Yet few outside the medicine celebrate the example Marshall set. [6] Instead, something else has happened.

Elites have come to hold nature as vengeful and in possession of autonomous and highly dangerous risks. Nature is secretly apprehended as thoughtful. By contrast, human beings, and with them innovators, are loudly held to be unthinking, careless, arrogant, power-mad. Yet this turns the world on its head. It presents mankind as in a kind of permanent bipolar disorder – as afflicted by both evil and vulnerability. It reverses the idea of the innovator acting, like Barry Marshall, on the world. Instead, the ‘innovator’ today is now the subject to be acted upon, constrained, placed under legal control.

Talking up the inevitable risks of innovation can only paralyse even the planning of innovation, to say nothing of its execution. Yet innovation has always been risky. Its arc of development cannot be forecast beforehand.

It is time to overturn the Precautionary Principle, upheld at the United Nations Rio Summit of 1992 and adopted by the European Commission in 2000. Defenders of the Principle always present it as something which, when applied, demands action and innovation. But by dramatising ill-defined uncertainties and refusing to make a balanced calibration of risks, the Precautionary Principle renders the very idea of innovation a suspect one. The Principle is about stopping human beings doing anything thought uncertain, not about starting new and risky innovations.

Conscious innovation is the best way to deal with risks

Human consciousness is of use, anyway, not just in the registration of risks, but also, and much more, in the application and extension of accumulated knowledge through experiment. Innovation, though it includes the action of chance, is a thoughtful act based upon wisdom built up over time. At least in principle, therefore, innovation betokens a growing ability to mitigate risks.

In his influential Risk Society (1986), Ulrich Beck, the great magnifier of risk, represented innovation as just the opposite of this.

For Beck innovation is not slowing down, as this Manifesto, says, but exists, rather, in an epoch in which it is ‘set free’. There are ‘waves of large-scale technological innovation with as yet unknown future hazards’. Medical progress is institutionalised without the lay public’s consent, for ‘medicine possesses a free pass for the implementation and testing of its “innovations”’. [7]

Altogether, Beck held innovation as a source of risk, as running amok. More recently, he has discovered that, with climate change, ‘the multibillion-Euro EU budget can give a boost to innovations, from alternative energy sources through to energy-efficient technologies’ – even if, more generally,  ‘innovations are always good for companies, only rarely for human beings’. [8]

In fact, in the wake of Copenhagen, the EU will provide ‘fast-start funding’ around climate change to the tune of just €7.2 billion over the years 2010-12. [9] The US and Australian governments, and the EU, likewise committed a total of just $4 billion to back 13 demonstration projects in Carbon Capture and Storage. [10] There are plans for larger EU-side schemes in renewable energy; but these are plans only. [11]

There is no need to overstate the risk of climate disaster. But it would be hard to enthuse about the West’s commitment to innovation around climate change, the key target of government policy nowadays.

The situation is the opposite of what Beck says. We risk difficulties not because of too much innovation, but because of too little.

Jonathan Watts, ‘The railway across the roof of the world’, The Guardian, 20 December 2005, on http://www.guardian.co.uk/world/2005/sep/20/china.jonathanwatts

To give but one example: when George Bush launched the President’s Management Agenda in 2002, it noted that, according to the General Accounting Office (GAO) ‘high-risk’ list, the number of areas in US federal government most vulnerable to fraud, waste, and abuse had in 10 years risen from eight to 22. See Executive Office Of The President Office Of Management And Budget, The President’s Management Agenda, Fiscal Year 2002, on http://www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf

Alan Gemes and Peter T Golder, ‘What Is Your Risk Appetite?’, strategy+business, 30 November 2009, on http://www.strategy-business.com/article/00010?pg=all.

Gary S Lynch, At Your Own Risk: How the Risk-Conscious Culture Meets the Challenge of Business Change, Wiley 2008, p5 and Chapter 2.

Martin B Van Der Weyden and others, ‘The 2005 Nobel Prize in Physiology or Medicine’, The Medical Journal of Australia, Vol 183 No 11/12, on http://www.mja.com.au/public/issues/183_11_051205/van11000_fm.html#0_i1091639

In fact Marshall stands in a long medical tradition. See Lawrence K Altman, Who Goes First? The Story of Self-Experimentation in Medicine (1986), University of California Press, 1998.

Ulrich Beck, Risk Society: Towards a New Modernity (1986), Sage, 1992, pp11, 185, 206, 207.

Ulrich Beck, World at Risk, Polity, 2009, pp62, 213.

European Council, Conclusions – 10/11 December 2009, EUCO 6/09, 11 December 2009, p13, on http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/111877.pdf

Global CCS Institute, ‘Governments commit USD$4bn to global Carbon Capture and Storage (CCS) projects’, press release, 16 December 2009, on http://www.globalccsinstitute.com/downloads/media-releases/MR_Govts-commit-USD$4bn-to-global-CCS-projects.pdf

Alok Jha, ‘Sun, wind and wave-powered: Europe unites to build renewable energy “supergrid”’, Guardian.co.uk, 3 January 2010, on http://www.guardian.co.uk/environment/2010/jan/03/european-unites-renewable-energy-supergrid

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