Risk Taking and Innovation

risk-takingRecently, I’ve talked about innovation and what stops us from taking advantage of opportunities. A recent article in the WSJ – “What Makes a Risk Taker” – summarized several studies to conclude that in the right context even the most cautious individual can be a risk taker. And what does it take for innovation to happen? Someone has to take a risk.

Margie Warrell, author of “Stop Playing it Safe,” says that “most people overestimate the probability of something going wrong,” and that they also “overestimate the consequences of things going badly.” However, she and the researchers also found that environment had a lot to do with people’s risk taking behavior. If the environment was “safe” and people could try out new things with what they perceived as limited risk, they were more likely to do something they would not normally try. For example, a cautious, stay at home Mom, got a tattoo because a friend took her to a tattoo parlor “for moms.” The environment felt “safe” to her and so she was willing to take the risk.

This got me thinking about the workplace. Businesses do everything they can to mitigate risk, but perhaps this intense focus on risk mitigation or prevention keeps employees thinking the consequences of taking risks are in fact worse than they really are. This prevents them from taking risks and therefore also dramatically reduces innovation.

We need to allow employees to feel safe enough to take risks, and not so comfortable that they feel they don’t have to. Some companies actually allow time for “creative thinking.” Google gives employees at least one day per month to work on anything they like. No requirements except that they do it. Bottom line, it comes down to the company’s culture. Just like the tattoo parlor that made it comfortable for a mom to take a risk and get a tattoo, an innovative and creative business culture says it’s okay to take risks, to challenge the norm, and that employees will not be “punished” for doing so. Of course, risk taking must happen within the values and norms of the firm, but so-called “safe” risk taking is rewarded as part of the culture.

How can you create a culture for “safe” risk taking? As the leader, you go first. Show your employees you are willing to step out of your comfort zone to try something new. If you fail, handle it gracefully. No matter what you say as a leader, employees will observe and follow your actions and the example you set. If you model positive risk taking a few brave souls will follow and then a few more and before long, people will routinely test new things, and more importantly think differently. The potential for innovation will grow. It’s also important to explain that you value safe risk taking and encourage your employees to give it a go.

What’s in it for you and your organization? Fresh thinking, innovation, new ideas and possibly some amazing growth for the company. There will certainly be growth among your team members because you will have unleashed their inner risk taker and encouraged them to reach and stretch to new levels of potential and contribution to the organization.