The lie of high risks = high returns

I have a side job where a couple of times a month I work on the game night media relations staff for the Utah Jazz. The blurry picture you see here was taken from my seat during the Jazz/Clippers game the other night. (The Jazz put the hurt on the Clippers and advanced to a 7-1 record, which is the best in the NBA).

This is also the section where the NBA scouts sit, and my job is to feed them stat sheets and play-by-play records at the end of the quarters. What I’ve learned here is that NBA teams do some of the most extensive “market research” that I have ever seen, and they do whatever it takes to capitalize on wins.

Think about it. These scouts track every single play that Utah runs against the Clippers, and these scouts represent teams that Utah will play a few days from that current game. Toronto, Phoenix, Portland and all other NBA teams also have scouts investigating every angle of every “competitor” they have in the market for wins.

The point is, they do everything possible to capitalize on wins by minmizing risk and maximizing knowledge. There’s a valuable business lesson here because I think too often entrepreneurs and business people feel that there is some equation (which is a lie) that high risk = high returns and low risk = low returns. Minimized risk and maximum knowledge = high returns.