Risk - the bridge between professional and investor

Risk - the bridge between professional and investor

"So far" we have seen a generic world of productivity, which deals most of the time with the business life in the organization. Before stepping into the specific world of investments, it is useful to show the linking pin between the two worlds.

And the linking pin is risk. in both worlds people, whether professionals in the organization, self-employees or entrepreneurs take risk.

Risk taking in the investment world is a no-brainer. Every one takes risk and as an investor you are aware that taking more or less risk will or may influence your performance.

An example. Risk orientation for the sales profession.

Risk Profile:		low	high
	(Competitive Sales)	40%	50% (1)
	(Innovative Producer)	10%	10%
	(Conservative Trader)	30%	25%
	(Collaborative Supporter)	20%	15%
	Overall risk score	50%	60%

The risk profile of this category of professionals is also high. Mind you that this is a profile, with an estimated distribution of productive roles. For the sales-profile the competitive sales has obviously the highest score.

The Clown / Comedian

 One of my earliest memories - being productive - was at home. We were all sitting at the table for breakfast, and the climate was tense. My brother and my sister were continuously arguing, and my mother tried to keep up appearances. Rather than calling for a time-out, she was unable to manage the emotions in our family very well.

So what did I do? I setup a little performance, it was nothing spectacular as my public consisted of three people, but I was able to deviate their attention to something more peaceful: I made them laugh. Normally I would make a joke or a simple statement that was funny, and if you ask me now I would not really remember how I did it. But the tension was gone for a moment and everybody was happy.

At school, I started with some experiment - that's what I would call it now, but this came sort of natural and not premeditated. I started to make funny remarks again. Although the school setting was completely different, there was no tension, I used the same trick. And most people would laugh. Apart for the teacher whose work was interrupted, the climate improved in my experience. Everybody was happy.

But then, after being expelled more than once from the class, sent to the headmaster (male in those days) and being reprimanded by his words combined with a serious look, I realized that being a clown was not always a good thing.

Especially when the course ended, and most of the pupils started to prepare for a next level of education, I was told that I was still too youngish to proceed, and it was better to try the same course in another school. 6 to 8 kilometers further away.

That ought to have taught me a lesson.

But it didn't. Really. After that year, I went to the same school where my class mates moved one year earlier, and we lost contact as it was a big institute. In the first two years I continued with my mechanism of trying to improve the climate, but apart from some support in the class - I thought I had - the teachers got more and more annoyed. It ended before summer the second grade that they no longer wanted me there, so I got expelled.

That was a big wake-up call, and I start realizing that I got behind in education and worst of all, having "improved the climate" in the end nobody cared, everybody else had just continued they course.

Improving the climate was what I thought I did, but perhaps, besides a few laughs I was more of a nuisance. And the clown in me resigned all though on occasions he entered the stage with a swift remark that could light up the temperature in a room.

My next step in my "career" was to gather the bits and pieces I had left behind, meaning trying to figure out what everybody had learned and I not. I could manage to enter a technical career after all, leading to a degree in engineering, but I knew nothing of the more softer sciences, like literature, philosophy and what more have you. On my own account I started to make up the lost time learning everything I could learn.

That made it difficult to connect with my students in my career as they were focused on their technical problems where my priorities were somewhere else. It were the days of growth in IT and after finishing my career I had already a part time job that they were eager to change in a full time assignment.

I asked for a leave first, because I wanted to see the world, so I left for Japan for two months. Then I worked for the company another three more months after which I resigned for good. I wanted to travel some more. This time a world trip. With a real "objective:" South America.

To shorten the story, I came back started a career in the IT, followed my official education by getting a degree in economics and wondering what to do with my productive life. I had been observing others during my trips and found hundreds of people occupied with their profession. A journalist on the Island of Goree, a Lawyer in Buenos Aires, business owners, coaches, teachers, physicians, nurses, mail deliverers, researchers, authors, investigators, and so forth.

In my career, I had been a programmer, designer, consultant, project leader and finally a so called business architect, in the IT world, but still had not found my real passion. Even after studying what others do, I could not make up my mind what To Do for myself. What was I supposed to be: an architect (wrong career), musician (a bit late for that), consultant (join the league), advisor, but offering what exactly? ... 

Until at one moment when I started my own consulting practice - offering online consulting, all those travel experience, observing people, economics and culture came together with an idea about what people - professionals self-employed and entrepreneurs - Do. Basically they all follow the same pattern.

That idea turned into the productivity-matrix, of which this is the latest version.

All professionals follow the same pattern of productive roles, of which there are only four basic roles. But not everybody puts the same amount of energy in each of these roles. Some are preferred over others.

This model not only helped me in finding what I do best and there for focus more on my strengths, it also gave me an idea for a more purpose-full live. I have been observing the world for so many years standing on the side line, I could now offer something back to the world. Many people find themselves in similar situations that they are not completely happy with what they do, and want to change. Others are more focused already and just want to improve what they do.

My matrix just offers that, insight in what you are good at, productivity-wise and means to change of improve your style or role entirely.

Differences between Professional, Self-employed and Entrepreneur

Professionals, Freelancers and Entrepreneurs have a different economic role. The differences and their impact on organizational and economic life are gathered here. The idea is to gain more consciousness about the various roles in the organizational or market environment.

The topics in this discussion are as follows.

1. Space. Space occupation of productivity role in internal (organizational) versus external (business) market.

The professional occupies a space within the organization, being physical (room, ICT capacity, etc.) or psychological. The Self/Employed occupies either space in the internal organization or a separate place in the external market. The entrepreneur only occupies place in the external market by selling a product or a service.

2.  Growth. Growth in relation with organization and or market.

The professional grows within the organization. This can be either promotion in depth and vertical ways or in a broader sense, horizontally. Growth in this sense is compared to the growth of the organization or smaller group in which the professional operates. He or she can grow more or less than its peers in the group. The Self-employed will grow professionally by means of organizational standards and opportunities, and by growing towards more external and entrepreneurial roles. The entrepreneur can only grow as a business, but will grow also in terms of experience.

3. Internal employee versus external networker.

The professional is - for as long as his or hers career is concerned - always an internal employee. The laws of Coase transaction theory apply where internal employees transact within the organization because of a common trust. The Self Employed can choose to be either internal (substitute, representative) or an external networker. The entrepreneur is more an external networker, meaning he has to gain trust by doing his own marketing. Self Employed often have agencies working for them to find new assignments.

4. Rules. Organizational rules versus market rules.

The professional is bound by organizational rules. The Freelancer is bound by either organizational or market rules, and the entrepreneur is dealing with market rules only.

5. Scalability. 

The work of the professional is limited scalable. The Freelancer's work is limited as for his organizational role, but more scalable for his role in the marketplace. The entrepreneur has a scalable role by being in business, which are in general scalable.

6. Organizational Role: expert, manager or leader.

The professional is most likely to be either an expert or a manager, and in a few cases a leader, for example of a new business unit. The Self-Employed is more often an expert, which he can lease to more than one organization, the entrepreneur is more often a leader, by doing and developing new innovative businesses or by instructing others to follow him or her.

7. User, Flexible or Owner.

The professional is a user of an organization. The Freelancer is either User of Owner, and the entrepreneur is Owner of the organization.

In the area of investments...

8. Return type

The professional is in general focused on relative returns. The Freelancer is either focused on relative return of absolute return and the Entrepreneur is also both focused on either absolute or relative returns.

9. Style. More uniform and formal or more creative and informal

Organizational life requires professionals to be more formal and uniform. Compare this with professional sportsmen where they have to comply with f.e. 50m swimming pools. The entrepreneur could design a swimming contest of 75 meters free style.

Professionals must exchange material, services and such within a company and in order to do so, the exchange must be formalized. Entrepreneurs have more liberty to come up with creative solutions as long as clients can accept these.

Dress code. For professionals this is more often formal code, f.e. when dealing with clients, but also within the organization. Entrepreneurs can be more informal (wearing a T-shirt). Or are inclined to wear more casual clothes.

10. Risk.

The risk of the professional is bounded by the rules of the organization. The Self-Employed takes more risk, but depending on either the rules of the hiring organization or the market. The Entrepreneur is the most risk-prone, having the image of having a larger risk appetite (skin in the game).

11. Structure.

Professionals have a fixed (income) structure. The Entrepreneur is completely variable in his structure, or more variable. The Self-Employed is somewhere in between, being more flexible and less fixed to structures.

12. Behavior.

The professional is in practice more loyal to the organization for which he works. Image is important. When a professional switches easily between jobs and companies this will reflect on his image, and weakens his loyalty. A voracious job-hopper is in fact a Freelancer. The Self-Employed / Freelancer is limited loyal to a certain organization and more loyal to his own practices and professionalism. The Freelancer can change more easily when market condition require. The entrepreneur is the most pragmatic. Meaning that he adapts his focus and organization to the needs of the moment.

13. Opportunism.

The professional can only be opportunistic in a limited way. When opportunities arise within the company / organization the professional can behave like an (internal !) entrepreneur, but the same as the job-hopper, this can be only the case, when there are opportunities (the organization is growing) or by weakening the professional image. The Self-Employed can be more opportunistic, but depending on the relations with offering organizations. The more flexible and opportunistic, the less loyal. Ina certain extent, the Entrepreneur can be more opportunistic and seen as a profiteer, benefitting from the often opportunistic problems that arise.

14. Knowledge and expertise

The professional is the most knowledgeable in his or her field. Professional means that there is a well-defined profession that does not change all the time. The freelancer is perhaps less professional in the technical sense are he or her is more flexible to do work that is beyond the organizational standard. The entrepreneur is engaged in a field where the knowledge is often less clear and open for scrutiny. In order to find new innovative business the entrepreneur need competences from professionals (Freelancers for a start, often), that are not too well defined, or new in that (geographical are, for example). The entrepreneur has to find out new professions that will be become more professional shaped when the organization of the Enterprise starts growing and formalizing.

15. Investment Style.

Professionals play defense, Freelancers are more "offensive" and Entrepreneurs are offensive. 

--