Playing safe vs risk-taking - the dilemma for leaders
Risks are necessary to make changes in anything you do. In business
there will always be decisions with potential for gain or loss, with
uncertainty built in.
While in theory there no point in taking risks that don't pay off,
there are hundreds of things that need risk taking for improved results.
Innovation is a big one
Innovation is when you look for new ways of doing things, building
things or perhaps new ideas being realised as a product. This needs
breaking new ground and so there are risks involved.
People and companies unwilling to take risks will become stagnant
with no ability to innovate or change. In the eternally changing world
we live in today, innovation is necessary to lead people towards growth.
It enables change and opens opportunities that were impossible to see
before the change occurred.
Don't get information paralysis
People fear making that initial decision, thinking that it may be
wrong. They need to evaluate and attempt to consider all possible
options without making a decision. There is always more information
available and it is easy to get stuck in information paralysis where you
do nothing and just continually analyse the possibilities.
A leader needs to have confidence that an early decision can make
things progress faster, even if that decision is wrong or needs to be
changed later on.
The risks can still be minimised by having options, alternate paths
and a reasonable level of consideration, but the decision needs to be
made and a leader must have confidence in it to lead others towards that
path as well. It's not possible to have all the information necessary to
make decision. To beat time and have the edge, make the decision when
'enough' information is available.
Prudent vs biased risk taking
Comfort zones are everything from an individual's daily routine to
their lifestyle, to their work environment and habits or roles in their
life and job. All of these things that are repetitive and lasting become
comfortable and only the new things in life really make things change
over time.
A decision made under risky circumstances can be sounder when the
decision maker is circumspect and prudent. But he or she has to know
which risks to pursue and which to abandon or modify. In most
work-related situations, probabilities are less precise and more
subjective. They're coloured by a person's past experience,
organisational culture and propensity for risk taking.
It's important to understand one's risk taking patterns, one's
perceptions rooted in personal and professional history, and the degree
to which cultural injunctions encourage or deter prudent risk taking. To
what degree do employees think your organisation supports prudent risk
taking? Some companies routinely question each proposal, whether
marketing, production, or engineering, by asking, "has the issue of risk
been addressed?"
Institutionalise risk taking to grow the business
Some employees succeed every time and when leaders want success. But
100 percent success suggests that the employee doesn't take any risks to
improve the business, be creative or continually look to change for
better returns.
Leaders want their team members to stick their neck out far enough to
take some reasonable risks to grow.
Willingness to take risks also means the willingness to step outside
your comfort zone. One who is too afraid to step outside his comfort
zone will also be afraid to take the risks that are often needed as a
leader. Playing safe takes you nowhere with the level of competition you
encounter.
If you want to support risk taking, you will have to raise your
tolerance threshold for when your staff or team members may miss the
mark. Instead of blaming them, ask them what they learned from their
'failure' and make sure you communicate to them that you realise that
falling short of expectations is inevitable from time-to-time. When
employees feel vulnerable, that's likely to fuel their risk avoidance.
Some companies institutionalise risk-taking in their performance
review process. Such actions assure that risk-taking will be embedded in
a company's culture. Most importantly, organisations need, by word and
deed, to encourage employees' innovation, reward their creativity and
not punish occasional failure.
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