In my many years of managing and leading people, I never cease to be amazed by the notion of employees taking a risk.
Organizations talk about this all the time, and if you listen to what they're saying, you'll come away with the notion that as long as you take "smart" risks, all will be well.
That all sounds good, but the fact of the matter is that risk taking only succeeds if it is successful, and taking "smart" or "dumb" risks has nothing to so with it.
Forbes wrote about this a few years back in The Risk-Taker's Dilemma, where they observed that in both experiments with mice as well as real-world business experiences, the subjects become highly confused when the same behavior sometimes is rewarded and sometimes is punished? The end result is that they becomes risk averse and "they stop taking risks, which is the safest possible behavior."
A "self-defeating" pattern?
As the Forbes article pointed out:
Such behavior inevitably creates a self-defeating pattern. If the firm does not create an environment where people can take risks and occasionally fail, then innovation will be stifled. And if innovation doesn’t occur, the firm won’t grow and will need to continue making its numbers through cost-cutting. Such an environment will create more anxiety and trigger a continuation of the cycle. Eventually, the firm will shrink itself out of existence."
The notion of risk taking has been on my mind a lot recently, and it seems to be on the minds of others, too, because it was mentioned by Hamid Hashemi, CEO of iPic Entertainment, which manages theaters, restaurants, bars and bowling alleys, win this week's Corner Office column in The New York Times.
Here's what Hashemi said when asked, "What's a key leadership lesson you've learned?"
If you’re trying to build something new and different, you’ve got to create a safe environment where people feel comfortable taking risk. If you don’t feel comfortable about taking risk — and worry that you’re going to be fired — you’re not going to go beyond your limitations."
You can't send mixed messages about risk taking
Just like the mice in the lab, managers and employees need to be rewarded and reinforced for taking risks, and not given mixed messages about whether or not it’s acceptable. If you want to encourage more risk-taking in your company or your unit, you’ll need to reduce the conflicting signals and create an environment where the benefits of taking a risk outweigh the costs."