Playing safe vs risk taking - dilemma for leaders

How has the year been so far? Better than last year? Tougher than last year or do you prefer to say "no comment"? I guess for most of you, things have been tougher than expected.

Yet you got to deliver results as a business and you need to look for game changers, transformations and innovations. Nothing in the world guarantees results and every new idea has an element of risk.

Risks are necessary to make changes happen 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 isn't any point in taking risks that does not pay, there are hundreds of things that need risk taking to make them happen in various areas with different decisions for improved results and of this, innovation is a big risk.

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 that no one has done before and so there are always risks involved.

People and companies unwilling to take risks will become stagnant with no ability to innovate or change.

In the changing world we live in today, innovation is needed to lead people towards growth. It enables change and opens opportunities that were impossible to see before the change occurred.

Information paralysis

People fear making that initial decision, thinking that it may be wrong. They evaluate and consider all possible options without ever making a decision.

There is always more information available and it is easy to get stuck in information paralysis where you do nothing and 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 does need to be made and a leader must be confident of it, to lead others towards that path as well.

It's not practical to have all the information necessary to make the decision. So 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 a person's daily routine to his lifestyle, to his work environment and habits or roles in life and job. All 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.

Growing the business

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 from marketing, production, or engineering - by asking, "has the issue of risk been addressed?"

Some employees succeed every time when leaders want success. But 100% success suggests that the employee doesn't take any risks to grow the business, be creative or change for better returns.

Leaders want their team members to stick their neck out far enough to take reasonable risks to grow. Willingness to take risks also means the willingness to step outside your comfort zone.

Anyone who is too afraid to step outside his comfort zone is also 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 when your staff or team members 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 it may fuel their risk avoidance.

Some companies institutionalise risk taking in their performance review. Such action assures 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.