Colin Powell has some definite views on risk. This passage arrived in my inbox as part of an email chain I received recently.“Once the information is in the 40 to 70 range, go with your gut.” Powell’s advice is don’t take action if you have only enough information to give you less than a 40 percent chance of being right, but don’t wait until you have enough facts to be 100 percent sure, because by then it is almost always too late. His instinct is right: “Today, excessive delays in the name of information-gathering breeds “analysis paralysis”. Procrastination in the name of reducing risk actually increases risk.
When I first read this, it was the 40% that caught my eye. What makes it interesting is that it implies that you can take a risk when the odds could be against you, but also have the goal of making a majority of your decisions have favorable odds. It also advises you not to waste effort over analyzing to get 100% certainty.
The 40% approach would probably be most applicable in long term strategies where a lack of clairvoyance reduces expectations of success. In these cases the key would be to make many small bets, and concentrate resources on those bets that turn the corner as the future becomes clearer.
He’s describing a tactic applicable with many life experiences be they business, military or personal.
