What is the first thing you feel when you hear someone say, “Take a risk?”
Are you so excited that you can’t wait to dive in, or does the word “risk” make the hair on the back of your neck stand on end?
Does the notion of risk cause you to feel anticipation, fear, joy, or pain?
Many people spend their entire lives avoiding risk because that word is so heavy. In our culture, risk is almost always viewed negatively.
From almost the day we are born, we are taught to be careful, to avoid risk. We grow up hearing cautionary tales about children who strayed too far from home or stood too close to the edge.
These stories were designed to keep us safe, and they were important lessons. Unfortunately, some people have also interpreted these lessons to mean that it’s okay to quit if you are afraid, or that it’s okay to avoid trying anything that feels too uncomfortable or strange.
After all, “It’s better to be safe than sorry.” Right? With all of our risk-avoidance conditioning, it’s amazing that anyone grows up to be an athlete, a rock star, an entrepreneur, or anything that requires even a little bit of risk taking!
But despite the odds, many people take risks anyway, and as business leaders, we absolutely must.
Part of the risk aversion we experience at work and in life is also tied to the fear of failure or making a mistake—and the belief that those outcomes are bad. Our cultural beliefs and assumptions can lock our thinking to the status quo.
At times, this can be helpful and appropriate, but it can also get in the way of our taking risks that could lead to new opportunities. There are many reasons why leaders or managers might not support risk-taking in their business.
Maybe the company is new or the business has experienced recent setbacks; maybe the leaders’ beliefs and values make taking risks at any level of the business almost impossible. Whatever the reasons, overlooking risk’s potential to create competitive advantage isn’t smart business.
While it’s true that risk has the potential to cause harm, we would argue that one of the greatest and potentially harmful risks a leader can take is doing nothing at all. As the world changes (and those changes are coming faster and faster), business leaders have to find new processes, new solutions, and different approaches to keep their competitive edge.
They must learn to take smart risks, even if they aren’t risk-seekers by nature. We think it’s time to change risk’s bad reputation, lead boldly, and start promoting a risk-tolerant culture.
So, what’s the first step?
Let’s keep it simple. Before taking on any massive changes or making any bold moves, it’s important for a leader to take a step back and look at the level of risk involved and how it could impact the business. You can use this formula to get started.
First, ask simple best/worst scenario questions:
- What is the best thing that could happen if I act on this risk?
- What is the best thing that could happen if I don’t act on this risk?
- What is the worst thing that could happen if I act on this risk?
- What is the worst thing that could happen if I don’t act on this risk?
Look at your answers honestly and decide which option is best. You will probably need more information than these answers provide, but this is a great place to start. Once you know the best/worst case, start filling in the details: the who, what, when, where, and why of your initiative.
- Who—including you—will be directly and indirectly affected by the risk?
- What type of risk is it? What are the potential outcomes? What are the knowns and unknowns?
- When can/will you take action?
- Where are you now; where are going; where will you start?
- Why are you doing this? Why does it matter to you and others who will be affected?
The next step is to expand the ability to identify and implement effective risk-taking to the broader workforce. When leaders demonstrate the benefits and processes for taking smart risks, they empower others in the business to do the same.
However, cultivating a culture that supports taking intelligent risks does not mean leaders abandon supervision or structure.
In fact, building a risk-tolerant culture often requires leaders to be even more engaged: They must actively communicate with their team members, letting them know what level of risk is appropriate and how to assess the risk, as well as overseeing those procedures.
Throughout the process, leaders need to stay involved, seek alternative opinions or ideas, and define the desired outcomes—not just the solutions.
Leading boldly means you are being innovative and creative, proposing new solutions, thinking outside the box, and taking smart risks.
It means you are allowing others to do the same. We challenge you to move beyond cultural conditioning or your seemingly innate risk aversion and have the courage to do what others might think is impossible.
Lead boldly by promoting a risk-tolerant culture in your business and you will find yourself on the leading edge of change.