You either WIN or you LEARN
Successful innovation requires taking smart risks
“Don’t be afraid to take risks.” We keep hearing that risk-taking is essential in leadership. Risk is defined as a ‘situation that involves exposure to danger.’ In an environment where “risk management” is often synonymous with “risk prevention”, it is difficult to be encouraged to take risks which can end up being a mistake and failure. A research from CEB highlights the concern: 60% of the corporate strategy officers surveyed said that their company’s decision-making process is too slow, in part because of an excessive focus on preventing risk. Disproportionate fear of the risks/actions and underestimating the opportunity costs of inaction are common reasons for people and projects to get stuck.
Some people are fundamentally risk-averse, by nature. They can be so ruthless about eradicating the risk of simple daily discomforts or of any big decision. They get fixated, paralyzed and avoid even smart risks because of worst-case scenarios. Life is good now, why risk the apocalypse? On the other hand some people seek risk out to the point of recklessness and may jump without a parachute in the pursuit of adrenaline. Culturally, we tend to think of the first group as the “wise ones”.
But how come the leaders of today should be smart risk takers while risk-eradicators are considered the wise ones?
Which direction should I take???🤔
Taking risks means moving forward despite fear and uncertainty. Whenever you engage in any action where the outcome is uncertain, you are taking a risk. You are taking a risk whenever you venture into the unknown, where your possibilities and probabilities cannot be determined to an exact degree. But you know you need to move at some point although you cannot have a functional crystal ball (well you may kind of have it in the near future with AI…but this is the topic of another post) and you cannot know everything. Ninteeen years ago, the then US secretary of defense Donald Rumsfeld famously argued, with respect to the US invasion of Iraq, “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.” History tells, unknown unknowns are clearly the biggest reason we experience epic fails…
BUT… What a boring life it would be to constantly live with known knowns and to take decisions based on them! What a waste of time it is to expect known outputs from known inputs.
It should be encouraged to live life out to its edges, and to explore the limitless potential within each of us — and this requires us to take risks-. In business and in life, leveling up always requires us to take the risks of being criticized, being uncertain about outcomes, failing and — yes — the risks of succeeding. Life is short, environment is ever-changing, and there are no guarantees that the opportunities and chances you have today will still be around tomorrow.
I believe risk is not something to be feared by leaders, it’s something to be managed by uncovering the knowns and unknowns. When risk stares you in the face, it takes wisdom and instincts to jump out of your comfort zone. As IBM CEO Ginni Rometty puts it: “Growth and comfort don’t co-exist. I believe it is true for people, companies and countries. Ask yourself: When did you grow the most? It was the time you were taking a big risk.” Until you experience discomfort, real growth and development do not exist. Moreover, we can safely say that lower risk often means lower returns.
When risks and unknowns are analyzed objectively and assessed realistically, fears related to risk can be managed more easily with the potential of reaping some serious benefits. Taking a risk doesn’t mean doing so haphazardly. While risk taking can clearly be beneficial, it doesn’t occur in a vacuum, either. People don’t benefit from risks without doing their homework, preparing to take them and educating themselves on the possible fall-out. Here is a report published by PwC that I recommend which details “Being smart about the risks you take.” And here is an interview I published on Strategic Learning that talks about smart risk taking.
One major a-ha moment is understanding your own cognitive biases while you assess a risk. Here is the world famous cognitive bias framework designed by John Manoogian III:
Here also is an article from HBR on how to take less biased decisions.
Eventually, I think we need to remove the word “failure” from our vocabulary. We have to understand that there are only two outcomes possible with risk-taking. And they are not either success or failure. Every time you take a risk, either you will succeed at reaping benefits proportionate to the risk you took, or you will succeed at getting an education.
As my childhood hero Leo F. Buscaglia wrote: “The person, who risks nothing, does nothing, has nothing, is nothing, and becomes nothing. He may avoid suffering and sorrow, but he simply cannot learn and feel and change and grow and love and live.”
With love and light 🤗,
Ezgi Tasdemir
Ezgi Tasdemir, PhD is a Novartis Oncology employee. This article is created by Ezgi Tasdemir. Views, analysis, and perspectives do not necessarily represent the views or opinions of Novartis or any other company or organization. The author does not receive any funding or support from Novartis or any other pharmaceutical/non-pharmaceutical company for this blog.
