The 4 Principles of Risk Taking—Why and How You Should Foster a Culture of Risk Taking

— April 17, 2017

Nearly 67% of American employees can name at least one thing that would prevent them from taking any kind of risk at work. Some say they don’t have enough support from managers or leaders, others are afraid of mistakes or failure may result in, and many don’t know where the risks should be taken or how to start.

Many leaders may be okay with people who are risk-averse—that makes things much more predictable. But that can also be a detriment to any business that prioritizes organic growth.

Yet, leaders don’t want to do anything that could potentially cost the company money. As a result, most people are playing not to lose instead of playing to win.

The irony is that by not empowering people to take some risk, leaders and managers are likely costing the company more money by playing it safe because a certain level of controlled risk taking and embracing failure are imperative for any organization to be successful.

The real question we need to ask is ‘how do we risk our assets to keep growing, but not put everything at risk?’

Creating a Culture of Risk Taking

Most leaders struggle to understand why people won’t take risks to innovate. The reality is people have heard enough stories where someone’s attempt at trying something new didn’t go well—and people tend to have long memories.

So how does a leader truly invoke and support a culture of risk taking? By demonstrating they are truly serious about it. They need to be willing to hug the failures, rather than dismiss them or make an example of people who try something new and fail. This requires a strong and persistent culture change.

Here’s how to do it:

Challenge the Status Quo. Leaders and the rest of the organization need to get comfortable challenging the status quo and make it a very public statement to the effect that risk taking is okay under the right circumstances. This most commonly can occur by challenging a practice, habit, norm or behavior that is not aligned with a vision or performance goal.

Provide Air Cover. Leaders must partner with their people to provide air cover when they challenge the status quo. It is helpful to know someone has your back when you climb out on a limb. Without the challenge and the air cover, we really won’t know what is possible.

Embrace Failures and Successes. Leaders must harvest the learnings from success or failure that can be scalable to other areas of the business. Celebrate these learnings, what they led to, and the individuals who gave birth to the insights. Once these learnings are harvested, expand and scale whenever possible.

Four Principles of Risk Taking

But, of course, you can’t just turn people loose to take risks. You need to create an environment that is safe for risk taking, but isn’t a free-for-all. The best way to sponsor risk taking is to remember these four principles:

  1. All Big S’s, or successes, come from small f’s, or failures. There is no way to be successful other than taking the failure route.

  1. Make risks small, fast, and cheap instead of long, slow, and expensive.

  1. Leaders must “chalk the field” when they most want risk-led experiments to drive change and innovation. Otherwise, taking risks on everything can lead to outright chaos.

  1. Think of experiences as experiments over time instead of chronological years. Thus someone with 20 experiments over two years can see more experience than someone with one experiment over 20 years.

Risk Taking in the Real World

Some organizations embark on risk-taking by creating no-limit challenges—but they limit the scope of the focus. This works well when a company wants to liberate beliefs on what is possible in select areas of the business and then open the doors for the risk taking, experimentation, and failure that might ultimately show how to break through previous ceilings of experience.

An example of a no-limit challenge with a very specific focus would be a fast-food restaurant that challenges the way employees handle service at the cash register.

The restaurant opens the doors for its employees or managers to try different approaches to service and see what kind of results it delivers for two weeks. It could impact sales at that franchise, but people would know it’s okay if the new process doesn’t go according to plan.

What do the no limits or chalk the field options offer? By publicizing that a challenge encourages shattering old beliefs and experimenting with new ways to be successful, leaders let employees know they are serious about making it safe to take risks.

Risk taking shouldn’t be scary for organizations. It is a necessity if leaders want to grow or transform their business. But risks can be taken in a safe environment that can lead to very powerful results.

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Author: Jim Haudan

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