In industry, the risk of being late is perceived to be greater than the risk of being wrong. In academia, the risk of being wrong is perceived to be greater than the risk of being late.
Let’s consider an example from academia first. If a researcher publishes something that is later determined to be misrepresented, incorrect, or otherwise in error, they may be required to publish a retraction, which will have their name on it for all to see. This personal accountability causes most academic research groups to be extra careful about getting things right. Couple that accountability with the availability of low-cost student and postdoc labor, and academics become less constrained by schedules and budgets than their industry counterparts. Time is cheaper in academia than it is in industry.
One of the major functions of the American Corporation is to limit the personal liabilities of its shareholders. This allows corporate leaders to take risks that they might not otherwise take because investors in failed corporations may lose what they’ve invested, but their personal assets will be protected, excluding cases of gross negligence or unlawful behavior. Risk tolerance often trickles down to middle management as well since a pattern of risky decisions that turn out wrong might get you fired, but many employers will not disclose to others the behind your termination for fear of attracting a defamation lawsuit. Contrast this with the practice of publishing retractions in academic journals and you can see why those in industry will become more free-wheeling.
There’s good reason that the expansion of the American corporate model was followed by the expansion of three-letter government regulatory agencies such as the FDA, DOT, and EPA. Having a competitor get to market before you can be crippling in industry, and the drive to “get there first” can create risks to public health and safety if left unchecked.
What does this mean to academics transitioning into industry? Scientists and engineers should not give up the principles they’ve learned in academia, but they do need to understand and appreciate the factors that promote risk taking among business leaders. Their job is to:
1. Make business leaders aware of risks before they make decisions
2. Once a risky decision is made, use their technical knowledge to lessen the risk as much as possible
3. If risk becomes reality, refrain from saying “I told you so”. Rather, they should work to make sure similar outcomes are avoided in the future.
Finally, should you make your way into a business leadership role, realize that you too will become progressively more risk tolerant and the key to your success will be surrounding yourself with a technical team that excels in the 3 behaviors above.