ROKC Means Risk Reduction

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Thanks for allowing me to share this thread with others.

To my way of thinking, people value only things that reduce the risks in their life.

If you look at history, when we were cavemen we already lived in small communities for protection. When we started to settle villages those groups became bigger also for protection but with the start of organized labor; people specialized in certain tasks. Many of the stories we still tell ourselves are based on the known limits of our environment, like don’t do into the forest or risk getting eaten, or there are monsters out there. Usually the monsters were simply people from a neighboring village who spoke differently and maybe dressed differently. Europe is full of stories like this. Religion is a great way to create communities of people with shared values. Even though people may dress and speak differently they can still connect through a common religion. As time marched on, cities evolved and with that the city-states of the renaissance. People developed an identity with the state and still do, while maintaining an identity with their neighborhoods. However, in the Renaissance you also guilds develop where some people belonged to the guild because it reduced the risk of not having a trade and not being paid a fair price. Guilds are the beginning of Trade Unions which serve the same purpose; collective bargaining. More recently, there are those who argued that people identified with a nation-state but today I can honestly say I do not believe that but that is for another discussion. However, the nation-state did a serve a purpose; it created a uniform jurisdiction within which commerce could be conducted throughout the nation in the same way; thus reducing the risks for businesses to expand. And even more recently, you have supranational organizations that try to even out the rules of commerce in a larger geographic area reducing the risk of business expansion a bit more. Think of the European Union and what its function is and you will see this action.

But let’s go down to street level. How do you feed yourself? You no longer grow your own food. You go to the market. The market reduces your risk of starving. There is trust relationship between you and the market that they will always have enough food on hand of the kind you like so you can feed yourself. You also count on the market to buy good quality food with all the nutrients necessary for you to survive and free of pesticides that will kill you. The organic food movement is a response to people’s insecurities about the quality of the foods they eat; in other words, organic food reduces the risk of eating poor quality food. The same can be said about every other product or service you acquire.

  • A doctor reduces the risk you are unhealthy.
  • An airline reduces the risks associated with traveling large distances.
  • A car reduces the risk of traveling a short distance.
  • Lipstick reduces the risk of not being attractive.
  • A branded handbag reduces the risk of other people not seeing you as successful.
  • Education reduces the risk you don’t learn (maybe).
  • Google reduces the risk of finding pertinent information on one side while reducing the risk of your ad reaching your target audience on the other.
  • A glucose tester reduces the risk of not knowing what your glucose level is and falling ill.
  • A wallet reduces the risk of losing your cards and cash.
  • The iPod reduces the risk you can’t consume cultural content.

And, so the list goes on and on. But don’t believe me try the opposite test: would you acquire something that increases a risk?

  • Would you go see a doctor who isn’t very good and does cure you?
  • Would you use a browser that serves up nonsensical search results?
  • Would you use a vehicle that always breaks down?
  • Would you belong to a church where you weren’t part of the community?
  • Would you live with people who wanted to kill you?

I don’t think you can answer yes to any of the questions above.

Leaving the issue of money aside, you should also understand that one of government’s roles is to make sure you are protected from people who would go into certain businesses and harm you. In other words, government knows there are certain risks and will legislate and regulate to protect you. This is why a doctor has to pass a state exam and receives a license to conduct business in a jurisdiction. This is why food is inspected. This is why airlines are regulated. This is even why measures are adopted to limit what a company can do with your personal information. And, these laws and regulations are increase the cost of doing business thus reducing the returns for the business.

So yes, Peter, it is all about reducing risk for the customer. Whether that customer is a person or a business they will only acquire a product or service that reduces a perceived risk. This is why I reason based on risk reduction.

Hope this helps your understanding of the ROKC Method.

Best,
Alessandro


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