Saturday, April 2, 2011

Incentives and Risk Management

A training partner and I are trying to get more training time in and promised each other we would put the extra time in together. Problem with deals like these are, they always fall apart. So I decided to add an incentive, which is, the person who bails or flakes without a day's warning owes the other person money. So there is incentive to show up every time. What is the ultimate reward? Getting better faster.

Incentives can be used also to make people less risk adverse. I remember a story about Royler Gracie. He stated whenever he won a tournament, his father gave him 5 dollars. Whenever he lost a tournament, he got 10 dollars. This didn't make Royler go out and lose every tournament, it just made him less adverse to the risk of losing, and each time went out there looking to finish. What ended up happening? Royler became a legend.

I don't like leaving things up to chance, I like plans, and I like putting in incentives to make sure the plans work. Don't avoid risk, calculate the risk into your plan.

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