Risk taking
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Today I caught a news release titled: "CEOs taking fewer risks, report finds" about the findings of a study commissioned by the UK's Institute of Leadership and Management. I have to confess that the language of "risk taking" in business makes me a little crazy.
We talk about the need for "risk taking" to drive innovation. In that sense it's always we want someone else, usually "employees" to do.
So we talk about creating climates where "employees are willing to take risks." Wrong. What we should be doing is creating work environments where you can try things without risk.
In this study the term "risk taking" seems to mean "trying new things." But when "risk taking" is used this way in a corporate setting it usually seems like a way to prove someone is right.
When it comes to business changes, I prefer an experimentation model. Instead of risk taking to prove that something or someone is right, experimentation seeks to discover if something is right. The difference is the difference between embarking on something new because someone thinks it's a good idea, and trying something new to see if it's worth continuing.
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Many corporate leaders are wrestling with trying to get their organizations to innovate through taking risks on-the-job.
After years of cost-cutting initiatives and growing job insecurity, most executives don't feel like putting themselves on the line. Add to that the heightened expectations on individual performance, where a one-year term determines a large bonus, managers postpone risky decisions for fear of failure---making mistakes that could lead to innovative successes. That's why it is difficult for executives and their direct reports to make the shift from a play-it-safe corporate culture to an innovation-driven culture.
Here in Detroit, automotive leaders are talking about an innovation-driven culture that is imperative in today's globally competitive world. But walking the talk within the culture will require corporate leadership to recruit or promote new business unit executives and engage outside executive coaches to help them get onboard and up-to-speed quickly.
Lee Iacocca's career within the automotive industry illustrates how emerging leaders can change corporate cultures to walk the talk of innovation. When the overhyped, oversized and overpriced 1960 Edsel failed in the marketplace, Ford Motor Company needed to listen to new ideas from emerging leaders within the company. The introduction of the 1964 Ford Mustang was an innovative product tuned into customers' call for stylish affordability.
Involved with the design of several successful Ford automobiles, Lee Iacocca is remembered for most notably the Ford Mustang but then was ousted, by Henry Ford II, from Ford on October 15, 1978. He went on to become president of the struggling Chrysler Corporation, which was saddled with an inventory of gas-guzzling road yachts, just as the fuel shortage began. Iacocca made history by talking the government into offering Chrysler $1.5 billion in loans. The bailout worked, with the help of Iacocca's streamlining measures and new product innovations, including the first innovative front-wheel drive Dodge Caravan minivan. Research from consumer surveys had indicated that people were buying large truck-chassis converted vans to take the place of the station wagons but, with the gas availability and cost concerns of the mid-1970s, consumers would be interested in lighter weight and fuel efficient vans. The front-wheel drive chassis reduced weight while maintaining the large interior required by soccer moms.
To survive in today's global economy, in which product cycles are shorter than ever, is extraordinarily hard and, after a period of downsizing, requires a personal development investment in the remaining executive talent now in new leadership roles.
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Thanks for sharing that post, John. Lee Iacocca is a business phenomenon who did much amazing stuff for both Ford and Chrysler. In a way he was the ultimate "car guy."
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Hello Wally,
This is an important topic, and as usual you have cut right through the hype to the substance.
My vote for best line: "So we talk about creating climates where 'employees are willing to take risks.' Wrong. What we should be doing is creating work environments where you can try things without risk."
This touches on the problem here with form rather than substance - we want an attitude or faddish atmosphere without anchoring it to purpose or a real issue before us. Then, as you say, it leads to actually establishing an environment from which senior executives can pick and choose our results and the credit or blame for them.
Your recommended approach is problem-centered, not person-centered. This is what we need more of with respect to many issues in management. Thanks!
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Thanks for stopping by and for the kind words, Jim. I think we have a tendency in our management writing to put the onus on the workers and team members instead of on the system they work in. We say, "If only those danged employees would take risks!" But that flies in the face of human nature. We human beasties want to be safe and secure, except for a minority of thrill seekers, and we're not likely to expose ourselves to management wrath if we can avoid it.
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