And the risk of failure
This is an update to an essay I originally wrote a few years ago. It’s a mental model I keep returning to over and over again, especially in light of recent events.
We often judge opportunities based on the potential benefit or “upside” as it’s usually called. If we do ‘X’, we get ‘Y’. Typically, the risk we consider is not getting ‘Y’ if we fail to accomplish ‘X’.
I’ve come to rely on an additional layer to judging both opportunity and risk. I call it the “cost of failure”: what’s the cost of not getting ‘Y’?
It’s quick, easy, and now one of my most important evaluation tools.
