Averse to or accommodating risk


Averse to or accommodating risk

With 1 being don’t do anything until it is checked, checked again, discussed in multiple committees and then left in a drawer for a year, and 10 being don’t worry about scoping let’s do it; where do you sit on the risk scale? More importantly, what does your answer say about how you lead and how you deliver innovative solutions in a VUCA world?

Yes, I know that one of the general duties of a director as set out in the Companies Act 2006 is the duty to exercise reasonable care, skill and diligence. But the same act requires directors to exercise independent judgement and to promote the success of the company. And you certainly aren’t going to help success if you lead a culture of sitting on your hands and doing nothing.

From my work with companies across the world, I see, time and time again, that failure to build corporate innovation capability sits firmly with leadership teams. When they don’t transform culture, continue to promote silo working and restrict resources. When individuals are rewarded in line with short-term targets rather than long-term outcomes, and when risk is prioritised over potential rewards: inevitably, the lack of innovation capability can be traced back to leadership.

Now that’s not to say that risk should be seen in terms of anarchy, rather that leaders should be more open to potential outcomes. But it is certainly true that something has to change if organisations are to reap the rewards of their innovation efforts. Take the comments from Futurebuild which I shared in February 2020 to the effect that in the construction industry, innovation is the exception rather than the norm and that construction needs to see a radical shift in thinking. And what is right for the construction industry plays out across every business sector.

So what’s the answer? Recently listed by Thinkers50 as one of the top ten global business thinkers, my fellow innovation expert Scott Anthony suggests that leaders take another look at the day-to-day routines and rituals within their organisations that stifle the practice of innovation. Having identified these innovation blockers, he suggests that leaders neutralise them with behaviour enablers, artefacts and nudges (BEAN).

And one of the first places to start is with how leadership teams view risk and as a consequence, how they see failure. In an article in the Irish Times [2] Scott highlights the ‘Dare to try’ award introduced by Tata as an example of how companies can move away from damning failure to rewarding, novel, daring and seriously attempted ideas that do not achieve the desired results.

Risk-averse leadership is never going to deliver innovation. Conversely, leaders that understand and accommodate risk are on the pathway towards building an innovation-led organisation.

[1] https://www.futurebuild.co.uk/about/lead-innovation-partners
[2] https://www.irishtimes.com/business/innovation/leadership-needs-to-neutralise-innovation-blockers-and-here-s-how-1.4138168

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