My least favorite course in business school was Investments. My professor was a lunatic: a paranoid, condescending, insulting lunatic. True story: he once tried to get a stranger arrested for standing in the back of the lecture hall and watching, convinced the stranger was trying to steal secrets worth millions… from an intro investments course. While he does still teach investments in Chicagoland, it is not at my school. I pity those poor kids to the north, though.
Despite Professor Lunatic, I did learn a few things, especially about the definition of risk. Most people in the finance industry publicly define risk as volatility (the variance from what is expected). But this professor insisted that risk is something you should rationally expect to get rewarded for, not just any degree of uncertainty. Every investment entails some risk that you will lose your money, of course. But if you expect the same gain, on average, from two different investments, and one of them has more ups and downs on the way, you’d be stupid to take the more volatile one, right? His point was that risk is what comes with reward, and any additional “risk” beyond that point is not risk–just bad decision making.
Semantics, perhaps? Yes. The English language is rich enough that the word risk can carry with it lots of subtle texture and shading. Half the time, when I hear the word risk, I think of Kamchatka. But lets get to the lesson from this. We mentally connect risk and reward, as well we should! Great rewards often require great risks. Getting married is a pretty big risk in this culture. The rational approach to marriage is not to insist that a couple is immune to this risk for whatever reason. The rational approach is to determine whether the potential rewards from marriage are worth the risk. That is not only rational, but much more romantic.
See? There is romance in rationality. Which brings us to theatre. Theatre carries LOADS of risk. Each practitioner risks economic stability, mental health, and relationships. Each company risks economic stability, reputation, and audiences. Audience members risk their consumable income and their time. Donors risk the chance to support somebody else that will reflect better on them, and foundations even risk their mission. Why? Don’t give me “for the love.” We all take these risks because we think that we’re going to get something profound in return. If we don’t think we’re going to get something profound in return, truly, then it isn’t really a risk–just bad decision-making.
And, so what? How should theatre approach decision-making that contains uncertainty? How do you choose a season or a new AD? Or decide to go for your first Equity contract? Or try to take a production to NYC?
- Decide what rewards you really want. This hopefully, goes beyond survival as a company. More on this in part 2.
- Look at each path towards your goals, and figure out what risks will be required to get you there. Whenever you have multiple roads to the same goal, be smart and choose the one with the least volatility. Don’t take a risk that doesn’t have a bigger, and more preferred, payoff than your less risky option. This will help keep the drama onstage.
- Examine all the risks you’re currently taking, and determine which ones take you to rewards you really don’t want (or the ones that don’t take you anywhere). As we’d say in investing, close those positions. Realize that was a bad decision, and get out of it.
Part 2 will discuss some examples, particular to Chicago storefront theatre. If you’d like to contribute to that discussion, or weigh-in on this one, please comment below!