Risk

Risk Taking for Leaders: Smart Strategy or Perilous Planning?

“If you’re going to grow, you’re going to have to do things that put you at Risk.”
-Ginni Rometty, former Chairman, President and Chief Executive Officer of IBM

Taking risks implies making decisions that pose potential threats.

Not acting can be risky, too. Especially in leadership.

Yet risk taking is not something many folks are generally comfortable with.

As Daniel Kahneman, a Nobel Prize winning psychologist stated, “For most people, the fear of losing $100 is more intense than the hope of gaining $150.”

Understood.

High achieving, impactful business leaders are willing to take risks – and often, their careers boast of big wins. If there were losses at times, those “failures” often provide a framework for valuable learning lessons.

So how do we successfully approach risk as leaders?

Begin With More Conscious Leadership

Knowing our personal “why” is key to our own personal – and professional – development. It’s surprising that many people go through the motions of each day (focusing on the “what” – and usually the “what” of other people, as they perceive it) without truly having an understanding of their own “why” behind what they’re doing.

When we know our unique ‘why,’ we’re better able to lead. Our teams will follow not just because we’re “the boss”, but because they want to out of sense of shared values and beliefs.

When you and your team are grounded in your ‘why’ and you’re working on the same page, challenges turn into opportunities, and gradually an attitude of courage develops in a leader – and risk taking becomes part of the agenda.

Bill George, writing in Forbes, explains leaders with courage take risks that often go against the norm of their organization. In other words, they’re not afraid to make bold moves in the name of their purpose and values. He says courage is “the quality of mind or spirit that enables a person to face difficulty, danger, pain, etc., without fear.”

Some leaders lack courage, George notes, because they’re too focused on numbers or reaching a particular mark or milestone. Leaders with courage forge ahead boldly – despite the risks. They are conscious of and grounded in their abilities, skills, and values.

Risk Taking: Is it For Every Leader?

Don Kurz, DEO of Omelet, a successful ad agency, says risk is a business strategy that ultimately is served by asking one question: will it enhance the brand and the value of the company?

Risk taking isn’t for everyone, he explains. While it can be a source of innovation, it can be a difficult step for startup companies. Without performing risk assessments, the unknown holds many back from stepping outside their comfort (or financial) zone.

A Harvard Business Review article notes that risk assessments are generally not conducted; a project is simply presented to managers with projections. The authors suggest a handful of assessments be done to fully understand the risks involved.

Risk Assessment Plays a Role

Srini Pillay in HBR offers a counterpoint, suggesting that risk assessment is based on other issues besides just financial ones, such as:

  • Understanding how our brains handle risk, whether unconscious or conscious. Studies reveal that impulsive, social, or aggressive people may be more likely to take risks.
  • Realizing risks can be a good and very fruitful experience. Contrary to what some people think, taking risks doesn’t carry negative or “scary” connotations.
  • What about failures, shortcomings, disappointments? Valuable lessons can be learned from them that often serve as a springboard to greater fulfillment later on.

How we bounce back from failure depends on our resiliency. Pillay uses specific tools to measure burnout and how it may affect resiliency.

His points are well taken: As much as each of us longs for a pre-pandemic world and hope for a return to a so-called normal, it cannot be. Just as people learned to live outside the box, so too, businesses need to look for more innovative and progressive business methods.

Risk assessments can provide the data needed and skills to be honed to overcome aversion to risk taking. Ultimately, it is up to each leader to calculate the risks … and make choices accordingly.

Authentic Leaders Navigate Stormy Seas

All the strategic characteristics of a great leader provide a firm base when it comes to taking risks:

  • Courage. Letting our authenticity shine, being willing to show vulnerability, takes courage. To take the road less traveled – even amidst self-doubt and nay-sayers – takes courage.
  • Vision. Focusing on our intentions, keeping true to ourselves, our inner values, who we are at our core. It’s all about being present now. Lead your team with intention, with acceptance, not with authority, know the impact of your words. Ensure you and your employees are co-creating the same “why,” the same purpose
  • Focus on the “we.” Not the “me.” Conscious leadership can be a foundation in cultivating conscious organizations.
  • Encourage feedback and LISTEN. This helps us see the “bigger picture” rather than just our own (often narrow) visions.

There isn’t a one-size-fits-all approach to risk taking.

For grounded leaders with vision, who share the same goals with their teams and are valued by their teams, risk taking can be a successful leadership strategy.

“Make the choices that make you nervous.
If you make the choice that’s the easy way out, that wasn’t the big vision or big choice to make.”
-Eileen Burbidge; Partner, Passion Capital

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