Only those who risk going too far; can possibly find out how far they can go. ~T.S. Eliot
Risk taking is a critical element of leadership and essential for a leader’s effectiveness. Risk taking can be defined as… “Undertaking a task in which there is a lack of certainty or a fear of failure.” The problem at the core of risk taking is fear; fear of failure, fear of success, fear of looking like a fool, fear of seeming ignorant, fear of seeming too aggressive…
Taking risk means confronting the fears/challenges and having the courage to move forward, or recognizing that the calculated risk is beyond the tolerance of the consequences… the difference between calculated risks and risky behavior.
According to Seth Godin; “playing it safe and not taking a risk is probably the most dangerous thing you could do in today’s rapidly changing and highly competitive business environment”. Without an element of risk, nothing would ever be accomplished.
According to Elaine Love; “whether you are starting a new business or working on a new marketing plan within your current business. There is an element of risk. You can reduce the risk, but nothing ever removes all of the risk.” Reward comes in direct proportion to the risk involved. The best results come to those willing to take a chance; an important reminder for entrepreneurs, financiers, and political leaders as the global economy navigates through rough times…
In the article “Leadership Requires Risk Taking” by Steve Adubato writes: Leaders of all stripes say they want their people to ‘think and act outside the box’. While everyone talks about risk taking, employees who actually have to take the risks are often reluctant to do so. Why is that?
If real leadership sometimes requires the taking of smart and calculated risks, why are there so many barriers and obstacles to making this happen? Consider the following:
- Employees aren’t really convinced that senior organizational leaders want them to take risks. They hear the rhetoric, but aren’t sure that their bosses will still stand behind them if the risk goes bad and things don’t turn out right.
- All the horror stories about someone who took a risk and got his head handed to him. Organizational culture is shaped largely by these stories.
- Not enough success stories of people who took risks. If people can’t readily identify others around them who have thought and acted outside the box and who were recognized for it, it can be really tough to get people to “buy in.”
- Fear: Fear of failure. Fear of succeeding. Fear that as a risk taker you will be perceived as ‘kissing up’ to upper management.
- Employees aren’t clear on the organization’s top priorities and strategic objectives. People need to know that the benefit derived from the risk they take will be directly connected to the goals that are most important to the organization.
In the article “Swimming With The Sharks: Perspectives On Professional Risk Taking” by Julie J. McGowan writes: Risk taking is a defined component of leadership, but risk taking must be grounded, a favorable balance of benefits weighed against the potential dangers of taking the risk. Risk taking is done on a daily basis, although some embrace risk taking more than others.
Risk taking is hard to adopt among leaders, because recognized leaders have the most to lose and aspiring leaders may be discounted as lacking in knowledge or common sense. However, most well-known leaders at some point face a challenge that requires risk taking. This becomes a measure of their greatness. This will set their leadership apart from others. In looking at the global marketplace, technological innovations, and leadership, a number of studies focused on the future have all concluded that risk taking will be an integral part of any successes.
Sharing risk is also considered a critical attribute for the new global business leader. Key to success in any undertaking is to understand that risk taking is an integral part of leadership. However, risk taking by itself without understanding the nuances of the challenge will doom any project to failure. ‘McLean and Weitzel’ propose a classification of risk as it relates to decision-making.
They suggest that the likelihood of risk taking is found in a four-quadrant grid, with ‘high reward, low risk’ the most likely to be selected and ‘low reward, high risk’ the least likely. In addition, they look at common generic fears that accompany risk taking and find the most motivating to be fear of failure, fear of embarrassment, fear of disappointing others, and fear of resentment.
Successful risk takers acknowledge their fears… Jimmy Johnson, football coach, once said, “Do you want to be safe and good, or do you want to take a chance and be great?”
In the article “Risk Strategies: Are You a Rule Breaker, Shaker, Maker, or Taker?” by John Kador writes: To determine your company’s attitude toward risk, you need to examine whether your enterprise would be considered; a rule breaker, a rule shaker, a rule maker, or a rule taker.
Each of these terms reflects a strategy or posture that people or companies take-on to define their willingness to take risks. Successful companies excel by engaging in one of four types of relationships to deliver value to their chosen customers. The key is focus on a single strategy:
- Rule breaker: Rule breakers bust up business models. They explode in an industry by offering a new paradigm so compelling in its benefits that it simply cannot be ignored. . Rule breakers often have first and preferred access to: Customers and markets, best talent in the market, funding and venture capital, most valuable partners.
- Rule maker: Holding a position as a rule maker is a highly desirable state because it is a token of the fact that you dominate the industry to such an extent that everyone else has little choice but to play follow-the-leader.
- Rule taker: You don’t have to be a trailblazer to be successful. Rule takers can look at what competitors are doing, benchmark companies outside their industry, get track records of what’s worked, and then copy whatever has been successful.
- Rule shaker: Rule shakers believe that a good way to get fruit is to take the branches of a tree and start shaking. Not every initiative will bear fruit, but some will. Rule shakers distinguish themselves from rule breakers by being content to Web-enable or otherwise juggle a larger number of non-critical business processes.
In the article “How to Become a Successful Risk Taker” by Steve writes: Of all the skills in life to learn, I believe risk taking is the most important. Imagine how dull your life would be if you never took chances. Becoming a risk taker seems to have a negative connotation, and it brings up images of danger, hazards or even loss. But no matter how dangerous the idea of risk taking, there is an even greater danger of not taking risks.
Risks are a key ingredient to living life to the fullest and, fortunately, the skills of becoming a successful risk taker can be learned. When you understand how fears limit you then overcoming them is easier. Gambling is an extreme form of risk taking. The key difference between a risk and a gamble is the consequences. If the situation you’re taking would seriously set you back or even ruin you, if it didn’t work out; that’s a gamble.
A calculated risk is something that even if it doesn’t work, you’ll easily recover, and be able to function normally afterwards. There is a fine line between the two, but if you carefully ease into risk taking, you’ll get a good instinct of where the line (tolerance) is for you. Once you learn how to become a successful risk taker, you’ll be able to take-on just about any challenge and work for the best outcome.
Fear will still be there, but it can be managed. As Dale Carnegie once said, “Take a chance! All life is a chance. The man who goes the furthest is generally the one who is willing to do and dare.”
In the blog “Why Creativity And Risk Taking Is Critical To Leadership Success” by Duncan Brodie writes: Leaders are ultimately judged on the results that they deliver. Sometimes it can be easy for leaders just to tread water, especially when things seem to be going well. Yet in truth continued creativity and risk taking is critical to leadership success:
- Leadership success is about finding new or better ways of doing things or meeting needs of customers or clients.
- Leadership success is about finding different solutions to long-standing problems or issues that are getting in the way of results.
- Leadership success starts with an idea or concept that needs to be developed.
- Leaders need to be willing to dip their toes into the pool of uncertainty without fear of failure.
In these highly competitive and fast-moving times pushing the boundaries; personal, team, and organization is not an option, but a necessity. Leaders who want to achieve success understand that taking risk is an essential part of achieving results.
Leaders must discover their ‘risk tolerance’ by stepping-out of the comfort zone and engage:
- Don’t let restricted thinking stop you.
- Focus on the rewards.
- Learn from mistakes.
- Recognize that success and failure are connected.
If you want to be successful as a leader you need to be comfortable taking risks. Risk taking is a vital part of leadership. Leaders have the courage to begin; while others are waiting for better times, safer situations, or assured results. Leaders are willing to take a risk because they know that too much caution and indecision rob them of opportunity and success. They are willing to fail in order to succeed… President Harry Truman said, “Life is risky”. Leaders take risks.
“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.” ~ Leo F. Buscaglia