Innovation and progress demand that you get out of your comfort zone rather than simply replicate what you perfectly master. Knowing how to take risks is thus essential to keeping abreast. How do you encourage reasonable risk-taking?
01
Fight against natural cautiousness
Many people tend to overestimate risk.
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Estimate the failure probability, but also a success probability: quantify maximum losses and positional gains. You will thereby minimize the impact of emotion on your decisions.
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Beware of the group dynamics that often lead to a cautious consensus, e.g. Dare to impose an audacious decision.
02
Don’t dramatize failure
We tend to forget that risk-taking necessarily means there will sometimes be failures!
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Openly discuss your own risk-taking experiences, including those that led to failure, e.g. Explain what you have learned, and how this will enable you to better adjust your decisions on another occasion.
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Ensure you don’t systematically punish failure, e.g. Distinguish between a lack of luck and a mistake. Recognize the ability to take a risk that makes sense, even if the outcome is not according to plan.
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Adapt your recognition system to ensure it does not implicitly promote excessive caution, e.g. Don’t promote or give bonuses only to those who have participated in successful projects.
Take action
Share the lessons from a mistake you recently made (20 min)
Sharing your useful mistakes will help your team members to take more initiatives.
Think back to a mistake you recently made and that proved useful. Make sure you draw the lessons in a few key points. How would you avoid reproducing it?
In a forthcoming meeting, or eventually during an informal exchange, share your experience and its teachings with your team members. Make the difference between what you analyze after the fact as a mistake on your side from what is due to a lack of luck.
Then initiate a conversation with your team members to collectively learn the lessons from it.
Toss a coin to make a decision! (5 min)
Counting on luck will enable you to reveal your preferences and/or to learn how to adapt.
When facing a choice of limited stake, for which you have difficulties arbitrating, dig out a coin and toss it.
Check how you feel: it is common that faced with a “fait accompli”, our real preference suddenly emerges as obvious. If it is clear that you would have preferred the other option, you still have time to change course.
In the opposite case, it is time to stop considering the various options, and to focus on the implementation of the decision, whether it is the best possible decision or not!
Help your team members put risk into perspective (30 min)
We tend to confuse uncertainty and proven danger.
Identify an initiative that is held back by the fear of a hypothetical risk, e.g. not raising your prices for fear of the market’s reaction.
Take a moment with the concerned team members to define the extent of the risk more clearly:
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Identify several scenarios covering the fullest possible range of possibilities: worst-case and best-case scenarios, as well as one or two intermediate scenarios.
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Then estimate the relative probability of these scenarios to develop a more nuanced view of the situation.
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Concerning worst-case scenarios, ask yourself what possible measures you could take to anticipate their occurrence and limit the damage caused.
This process will help you identify concrete ways to move forward while managing risk more effectively.
Practical Tips
> Create a context that encourages people to take calculated risks
> Introduce disorder into your organization to leave room for chance
Find out more
> Dispel some common misconceptions about risk
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