Risk Aversion Makes Us All Feel Ordinary

It really depresses me when you hear the remark “actually, in all honesty, we have no appetite for innovation, we are so risk averse.”  Actually it is heard a fair amount if you ask about risk and innovation. This is often never stated in earshot of others within the same organization, it comes in a sudden burst of honesty, perhaps over drinks, and always outside their ‘normal’ working environment.  Sometimes you have a rare exception, especially if you have been called in to help, when someone has just been appointed into the position to simply “do something about innovation, we are dying as an organization”

We all need meaning but we don’t like the risks associated with it

I was reading an excellent article by Teresa Amabile and Steven Kramer on “How leaders kill meaning at work” and they offer the insight about the lack of recognition that everyone within any organization requires as the single most important need,that  is the feeling they are making progress in meaningful work. Managers often undermine the meaningfulness of work to us as individuals; it is too often dismissed or not thought as relevant to the work at hand.

In the article they suggest four traps to avoid and one of them ‘Mediocrity signals’ triggered this blog.  The organization they used as the example within this trap drove new-product innovation into the ground as the top management was so focused on cost savings they no longer were a leader in innovation, they simply became followers. One comment made by an employee was “mediocre work for a mediocre company”, yet it was not previously like that. Risk aversion had become dominating and the organizations leadership was signalling “they were really more comfortable being ordinary”.

How do we arrive at this point of being just ordinary?

Human being have always been risk takers, otherwise we would not be where we are today. As a species we survived because we took risks, but was this because we were threatened? There is a strong argument that we really only innovate when we are in crisis, being threatened, either with our jobs, within our organizations when we feel under attack.

So do we only feel we can take risks to survive? It is often amazing how the barriers are unlocked to innovation, within those deadlock meetings when someone signals “we can break the rules, we can go beyond our normal comfort barriers, into uncharted waters, it is acceptable, it will be supported”. We can change in seconds; it becomes liberating, exciting and risky.

The argument goes that risk-taking enables growth

We have all heard the mantra “without risk, there is no reward”. Yet the very opposite occurs more often than not. Those that do take a risk, often find their ‘reward’ is in being fired, demoted or being warned “this behaviour is not something we encourage in our organization”

So if you want to be an average manager or an average employee, then you need to find the average organization were little risk-taking is required. Does that fill our lives with meaningful work? I think there are better ways to go through life than hating the very thought of getting up and going into work. If we lack fulfilment, and being in an environment where work begins to have, each day, less meaningful purpose then we have taken out one of the major factors of life surely? If risk is being progressively taken out of the equation I think innovation suffers, let alone us as human beings having to live with this feeling of working in such a mind-numbing environment.

How often do we hear managers quantifying more on all the downsides of risk, looking at the possibilities of loss and less at the probabilities of success? Risk-taking becomes threatening to them, their tenure, so they work the downsides wherever they can, rework the product so it can still be innovative but is simply ordinary as against the original idea where it was potentially extraordinary. Risk aversion took hold and we are left with this “no appetite” and being ordinary.

We need a shift in risk thinking to help innovation

Organizations need to work at ways to reduce fear, discomfort and resistance. To allow for opposing views, seeking out a diversity of opinion and establishing that one thing we all would love to be part of, this is an authentic culture that matches the promise with the reality . One that shifts away from conventional thinking to embrace risk and not try to always control but to seek actively experimentation. It is through experimentation we gain our best learning. Equally experimentation should be at the core of every organizations drive to innovate, we accelerate our knowledge the more we attempt something different, proving or disproving is exciting work.

Shaping ideas, taking risks, allowing experimentation, providing tolerance, exploring the unknowns all should be an integral part of innovation. Innovation is risk-taking.

Kouzes and Posner back in 1987 suggested that individual’s be encouraged to keep trying despite failures, and focus more on on the learning from this than just simply from the outcome alone.

They suggested three points as a way forward to improve risk tolerance:

1. Choose tasks that are challenging but within the person’s skill level to build a sense of control
2. Encourage people to see change as full of possibilities and to build an attitude of change
3. Offer more rewards than punishments.

Over time this increases our risk-tolerances, we become progressively more creative in this risk-taking orientation to seek out and push for more innovation. We allow-in a greater desire for the capacity to be innovating and how we want things we are working on to improve, to give us a greater meaning within our lives. More purpose, more satisfaction, greater identification.

Equally allow those who are willing to take risk, as their more natural position, the head room to explore, to push boundaries. Outline the guidelines, expect them to be broken on a few occasions but work with them, talk with them and talk about what they are doing where ever you can. Work towards expecting more positive surprises through your engagement than fire fighting the negative ones because you were unaware.  Do also make sure others above you or alongside you are party to the risks. There is a certain thrill in any ride if it has a little edge to it but equally it is in a successful finish. Risks always need active but positive managing, keeping them within a certain tolerance.

Building environments that encourage risk-taking should be sought

If we can provide environments that encourage risk-taking and they are consistent in what is expected this becomes a big step to change our present thinking about innovation.  If the leaders within organizations lay out what they want to achieve, breakthrough innovation for example ,and this is clearly articulate and laid out in the governance, the culture and in the environment and linked to the purpose of the organizations goals, then risk becomes better managed and valued.

Risk-taking can come through experimentation, through more open learning and discussing, through testing and pushing for greater innovation alters the tolerance levels. These tolerances change over time as more confidence seeps into the way we evaluate and make the betting on the outcome more risk-rewarding. We begin to move back into truly innovating. As I suggested earlier: “innovation is about risk-taking”.

We look for a meaningful contribution as Teresa Amabile and Steven Kramer suggest. It boosts the “inner work life” and as they equally suggest “inner work life affects the bottom line” if employees are allowed to be engaged, part of something that allows them to be more creative, productive, committed and collegial in their jobs.

I would add fostering risk tolerance can push innovation beyond the ordinary back into the extraordinary. Nothing is better than being associated with extraordinary moments, we all need them, and they give us real meaning and purpose, just make sure you add a certain spice of risk into the mix. If you can’t live with risk, risk may come and live with you.

image credit: raimondoarchitects.com

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Paul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities.