As a collaborative team value, the ability to take calculated and well-reasoned risks is a foundation for building an effective organization with the capacity to learn about itself, to expand and grow. It requires good problem solving and root cause analysis skills.

 

 

Copyright TIGERS Success Series

By Dianne Crampton

 

Imagine yourself standing on a platform 75 feet above the ground.  There is no safety net and in front of you a trapeze bar swings toward you.  It’s time to leap.  Do you?

– Or –

Imagine yourself reviewing your organization’s performance indicators.  Your company is not doing well.  Something needs to change.  You have to relinquish some of your control and listen to what your employees and customers are telling you.  Can they speak candidly about what is on their minds?

Both scenarios require risk. 

Risk is a potential exposure to loss or injury. It creates fear of the unknown.

On the downside, fear of risk results in stagnation. This is because if people are penalized for calculated risk-taking, they become fearful of new ideas. On the upside, risk is the fuel behind change and implementing new ideas.

As a collaborative team value, the ability to take calculated and well-reasoned risks is a foundation for building an effective organization with the capacity to learn about itself, to expand and grow. 

Peter Kline and Bernard Saunders, in their book, Ten Steps to a Learning Organization (1993, Great Ocean Publishers, Inc.) write about the paradigm shift that was occurring in the 1990’s and is still occurring today as the Industrial Age gives way to the Information Age.  For many organizational leaders, making the shift feels like leaping to catch a trapeze.  So many hesitate because they believe they will be left dangling in the air.

For one reason, with this shift a higher percentage of workers are required to make decisions on their own without management intervention.  Instead of being passive extensions of production lines, their involvement and commitment is required.  Accountability is expected and training in problem solving and decision making skill development is required. 

At the same time, in organizations that reward individual achievement over the team dynamic, leaders who climb the management ladder firmly believe that they achieve ongoing levels of success through their own judgment and decision-making power.  As a result, learning to effectively delegate responsibilities to “subordinates” is a transition leadership skill. The ability to do so depends on trustworthy and trained subordinates. However, in times of business recession, organizations cut their training and employee development budgets, leaving these managers holding the bag.  

Organizations that fail to spend time and resources on training their employees in problem solving and decision making are still stuck in the Industrial Age mindset.  This is why CEO’s of larger corporations are often paid 1,000 times more than front line employees, even though statistics show that a well informed leader, operating on their own information in new territory will make the correct decision less than 50% of the time.  In today’s marketplace, these are not bankable odds.

For another reason, the new hope for American businesses is their ability to draw the fullest amount of creativity and innovation from their employees.  In order to do that, organizations have to supply their people with the necessary systems and tools to take well-reasoned risks.  Kline and Saunders insist that progress towards a learning organization has to be an organizational transformation.  This requires frame-breaking change where mistakes happen.

Therefore, organizations that fail to look at errors as just another step toward success lose a valuable market edge. They are not as responsive to external change — such as the declining housing market or market competition — as are more innovative organizations.

As a result, when employees and customers are asked for their opinions, fear and denial often surface.  Fear of accountability, of speaking out, of change and denial of those fears leads to paralysis and wasted time.  Therefore, organizational fear has to be confronted on all levels from the custodian to the CEO.  And, fear is inversely correlated with the ability to risk.

Moderate risk-taking is a learned skill as long as fear and threat of retaliation are absent.  More importantly, risk-taking is an organizational attitude that is modeled throughout the organization, especially at the top.  

A good safety net requires a mutually accepted problem solving structure, nurturing the learning process, minimum critical feedback and maximum constructive coaching, debriefing time to discuss problem resolution actions that have been taken, and encouragement for well-reasoned risk.