is more successful. These companies find that by making small modifications, such as changing the color of a button, adding a single word to a message, or moving images around the page, they can dramatically alter a customer’s response. Some Web-based businesses release dozens of versions of the same product a day, each altering the user experience in some small way so that they can evaluate the response.
A company founded by two former Stanford students, Jeff Seibert and Kimber Lockhart, uses this approach all the time. GetBackboard.com is a Web site for collecting feedback on documents. They continue to experiment with different “calls to action” on their Web site and keep track of which approach works best. When they had a green bubble that said “Get an Account Today,” they had an 8 percent sign-up rate. When the message was changed to “Easy Quick Signup,” the response rate increased to 11 percent. And when the text offered a “Free 30 Day Trial,” the response jumped to 14 percent. This type of experimentation turns failures into successes, and makes successes more successful.
Trying new things requires a willingness to take risks. However, risk taking is not binary. I’d bet that you’re comfortable taking some types of risks and find other types quite uncomfortable. You might not even see the risks that are comfortable for you to take, discounting their riskiness, but are likely to amplify the risk of things that make you more anxious. For example, you might love flying down a ski slope at lightning speed or jumping out of airplanes, and don’t view these activities as risky. If so, you’re blind to the fact that you’re taking on significant physical risk. Others, like me, who are not physical risk takers, would rather sip hot chocolate in the ski lodge or buckle themselves tightly into their airplane seats than strap on a pair of ski boots or a parachute. Alternatively, you might feel perfectly comfortable with social risks, such as giving a speech to a large crowd. This doesn’t seem risky at all to me. But others, who might be perfectly happy jumping out of a plane, would never give a toast at a party.
On reflection, there appear to be five primary types of risks: physical, social, emotional, financial, and intellectual. For example, I know that I’m comfortable taking social risks but not physical risks. In short, I will readily start a conversation with a stranger, but please don’t ask me to bungee jump off a bridge. I will also happily take intellectual risks that stretch my analytical abilities, but I’m not a big financial risk taker. On a trip to Las Vegas I would bring only a small amount of cash, to make sure I didn’t lose too much.
I often ask people to map their own risk profile. With only a little bit of reflection, each person knows which types of risks he or she is willing to take. They realize pretty quickly that risk taking isn’t uniform. It’s interesting to note that most entrepreneurs don’t see themselves as big risk takers. After analyzing the landscape, building a great team, and putting together a detailed plan, they feel as though they have squeezed as much risk out of the venture as they can. In fact, they spend most of their efforts working to reduce the risks for their business.
Elisabeth Pate Cornell, chair of the Department of Management Science and Engineering at Stanford, is an expert in the field of risk management. She explains that when analyzing a risky situation, it’s important to define the possible outcomes and attempt to figure out the chances of each one. Once this is done, one needs to develop a full plan for each eventuality. Elisabeth says it makes sense to take the high risk/high reward path if you’re willing to live with all the potential consequences. You should fully prepare for the downside and have a backup plan in place. I encourage you to read the last few sentences several times. Experts in risk management believe you
A company founded by two former Stanford students, Jeff Seibert and Kimber Lockhart, uses this approach all the time. GetBackboard.com is a Web site for collecting feedback on documents. They continue to experiment with different “calls to action” on their Web site and keep track of which approach works best. When they had a green bubble that said “Get an Account Today,” they had an 8 percent sign-up rate. When the message was changed to “Easy Quick Signup,” the response rate increased to 11 percent. And when the text offered a “Free 30 Day Trial,” the response jumped to 14 percent. This type of experimentation turns failures into successes, and makes successes more successful.
Trying new things requires a willingness to take risks. However, risk taking is not binary. I’d bet that you’re comfortable taking some types of risks and find other types quite uncomfortable. You might not even see the risks that are comfortable for you to take, discounting their riskiness, but are likely to amplify the risk of things that make you more anxious. For example, you might love flying down a ski slope at lightning speed or jumping out of airplanes, and don’t view these activities as risky. If so, you’re blind to the fact that you’re taking on significant physical risk. Others, like me, who are not physical risk takers, would rather sip hot chocolate in the ski lodge or buckle themselves tightly into their airplane seats than strap on a pair of ski boots or a parachute. Alternatively, you might feel perfectly comfortable with social risks, such as giving a speech to a large crowd. This doesn’t seem risky at all to me. But others, who might be perfectly happy jumping out of a plane, would never give a toast at a party.
On reflection, there appear to be five primary types of risks: physical, social, emotional, financial, and intellectual. For example, I know that I’m comfortable taking social risks but not physical risks. In short, I will readily start a conversation with a stranger, but please don’t ask me to bungee jump off a bridge. I will also happily take intellectual risks that stretch my analytical abilities, but I’m not a big financial risk taker. On a trip to Las Vegas I would bring only a small amount of cash, to make sure I didn’t lose too much.
I often ask people to map their own risk profile. With only a little bit of reflection, each person knows which types of risks he or she is willing to take. They realize pretty quickly that risk taking isn’t uniform. It’s interesting to note that most entrepreneurs don’t see themselves as big risk takers. After analyzing the landscape, building a great team, and putting together a detailed plan, they feel as though they have squeezed as much risk out of the venture as they can. In fact, they spend most of their efforts working to reduce the risks for their business.
Elisabeth Pate Cornell, chair of the Department of Management Science and Engineering at Stanford, is an expert in the field of risk management. She explains that when analyzing a risky situation, it’s important to define the possible outcomes and attempt to figure out the chances of each one. Once this is done, one needs to develop a full plan for each eventuality. Elisabeth says it makes sense to take the high risk/high reward path if you’re willing to live with all the potential consequences. You should fully prepare for the downside and have a backup plan in place. I encourage you to read the last few sentences several times. Experts in risk management believe you
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