Encouraging Calculated Risk Taking

I hear a lot from leaders that they want to encourage “Calculated Risk Taking” in their organizations and across their companies. My perspective might surprise you, but I believe it’s all about whether you build a culture of “Psychological Safety”

I believe you get more risk taking when your organizational culture values and promotes psychological safety as compared to a focus on rewarding risk takers when things pan out. So what is psychological safety and how do you create it in your own culture? Well, first, Wikipedia defines it this way

Psychological safety is a shared belief that the team is safe for interpersonal risk taking. It can be defined as “being able to show and employ one’s self without fear of negative consequences of self-image, status or career” (Kahn 1990, p. 708). In psychologically safe teams, team members feel accepted and respected. It is also the most studied enabling condition in group dynamics and team learning research.

Put simply, evidence shows that people are more willing to take risks when they don’t fear blowing up their careers for saying or doing one wrong thing. You’re not working for the Mission Impossible Team (and you are not Tom Cruise).

What’s calculated risk taking? It’s not wildly swinging at every pitch. I’ve seen it described as “thinking big”, making “bold bets” or simply “going for it.” It’s all about stretching into new areas that alter your trajectory vs. settling for small wins or incremental progress. Remember, the results of 1000 micro-optimizations are still small — you need to take risks to really move the needle!

So how do you create a culture where psychological safety flourishes? It’s easy when you already agree with everyone, or you came up with the “big new idea” and others are merely executing on it. But we already know you’re great since you rose to the top (work with me here). What you want is to get amazing ideas from all the awesome people you worked so hard to hire and retain. You need others to feel like they too can contribute without fear of blowback. Your job as the big boss is to be a force multiplier.

So, start with your own behavior. How often do you listen vs talk in meetings? When you do talk, how often do you ask a follow-up clarifying question vs launching into whatever your immediate conclusion is? When you do state your own perspective and you disagree — in itself fine — do you speak with care & respect for their humanity? Or do you try to “make sure” the other person knows the idea was wrong and/or that they didn’t phrase it correctly?

Creating a culture of psychological safety means active listening, follow-up questions & probing for detail until you bottom-out on perspectives that might be radically different than your own. Otherwise where will you find what you weren’t even thinking about?

None of this means you have to have a “low bar” when it comes to validating risky ideas, especially if they involve large cash outlays, hiring lots of people or could hit the company reputation. I just reject that having high standards is synonymous with being aggressive and/or loud — it’s what we’d refer to in logic as a “false dichotomy.” You can ensure that people maintain the appropriate amount of operational, security or financial rigor for these big new ideas while still being encouraging.

Being overly harsh or dismissive is demoralizing and destructive to engagement. If you get aggressive to “ensure” folks know their ideas won’t work, it generally doesn’t result in more ideas. It silences debate & flows downhill.where it is mirrored by less calibrated leaders, who eventually build a culture based on fear of “stepping out of line” — which wasn’t your intent! Go watch the movie Multiplicity with Michael Keaton & see what happens when you make a clone of a clone of a clone (hint: not good things).

Another important downside to this approach is how this harshness can be experienced by women, people of color & underrepresented minorities (note: these are not mutually exclusive categories) who often feel like they’re not on the “inside” with those who have “acceptable ideas.”

Now sure, you can absolutely create all-company awards and publicly celebrate the risk taking. Especially if you do this in a way that amplifies “reasonably well-thought-out” risks that didn’t work out, or weren’t the big successes people anticipated — that’s how folks know risk-taking itself is something to be celebrated. But fundamentally, the level of risk taking is in your org results from the culture you create, and reflects the lived outcomes for the people who speak up, propose new ideas or tackle ambiguous, ambitious problems with no clear solutions.

That’s my take on this. What have you seen work out in terms of encouraging healthy risk taking and a culture of innovation within your organizations?

Thanks for reading! If you liked this and somehow made it to the end, follow me on twitter @joshuaseattle — and please note: all opinions are mine unless otherwise stated.