Fear of Catastrophic Loss
The fear of catastrophic loss is one of the important tools available to the strategist who seeks to keep potentially dicey situations under control. On the one hand, if an adversary can be made to fear a catastrophic loss out of proportion to its actual probability, then the strategist can influence the behavior and therefore the performance of that adversary with comparatively little investment of resources that would be necessary to make the probability of a catastrophic loss a reality. One well-executed and publicized lawsuit, for example, can prevent the need to launch many more lawsuits in the future.
The fear of catastrophic loss is another strategic element that needs to be managed and employed well, because as much as it can work for you, it can also work against you if your competitor does not have a suitable orientation. A capable adversary that does not fear catastrophic loss--either from ignorance, overconfidence, or a mental framework that allows him or her to accept catastrophic consequences that may happen--becomes a danger that must be addressed in as efficient a manner as possible. This is especially so when the collateral costs of your adversary's catastrophic result, or the means from which it is created, put your own position in jeopardy. Many lawsuits, for example, create two losers. This adversary needs to be combated, avoided, or in some other way educated to appreciate and respect the gravity of the situation.
This blog post is excerpted from my new book, Outpacing the Competition: Patent-Based Business Strategy.
