How much are you willing to lose? … and to stop winning?
The level of risk aversion that we have, determine our way of doing things and this in a very integrated manner. How much are we willing to lose? … and to stop winning? We can change or mitigate our risk aversion in a several ways. It is in our hands.
It is not about saying things, but about doing them. And in the way of doing things there are big differences.
When we talk about innovation, digital transformation, and other kinds of changes, I always raise the same question with my interlocutor: Is there “real” tolerance for error in the company? Beyond the fact that there is a formalized value published on the Intranet, that is innovation, for example; Or that we say that we take a chance at it, and that we have mechanisms to foster it … How is our real behavior? What do our teams do and what do we let them do? What do we want from each idea?
How much are you willing to lose? What is our security “threshold” beyond which we do not accept new proposals?
I systematically question sentences like ” …in our business we have to act very carefully…” And when I listen to them, I always wonder what kind of reasons are behind those words. And even more so from my track record, which is the world of IT services, and I know how critical some services can be in depending on which environments.
Motivation is what moves people. Our motivation will move us in the direction we have integrated.
Question #1: What could bring about risk aversion in me?
If we analyze a little the motives behind a risk aversion, we can see several aspects, which, when added up or not, could make it more intense:
- One’s own culture: according to the country where we were born, our training, religion, the family environment, we received a kind of learning that we integrated. It marks us in our sense of security or insecurity.
- Culture of the company: Depending also on the organization in which we are, and the type of leadership that it has, there is risk aversion, to a higher or lesser degree. It is not only the leadership coming from the General Director / CEO, but also from the Board, and the social contract that the company has, which explicitly defines a company in its way of doing things, Criteria of investment and risks are strongly defined by the Management.
- Personal leadership: Being an entrepreneur or not. You can be an entrepreneur within a company, even if you are not the owner. And, of course, more so if it is your own. The way I see it, being an entrepreneur means you are willing to go beyond your limits, to learn, to try, and to made mistakes, and to learn again. It is a mindset. And with that mindset, you are more open to reviewing your safety criteria: where are real red lines, and which ones limit the work. And be willing to accept personal leadership in your team. And give them the space and mentoring that they need.
- Personal Situation: And it is also true that sometimes, as a result of the “backpacks” that each of us can carry around with us or impose on ourselves, we can develop a lot of risk aversion. And this is also the fruit of our understanding of security. Who does not recognize affirmations of the type such as … ?:
- I cannot afford to lose this job.
- We have to do this, because the boss asks me to do that. You cannot change, otherwise he/she will get angry, and then he/she cannot do his/her report correctly.
- I would like to do it differently, of course, but I always find barriers and I have got tired of it. In the end, I work for a salary, and if that is good, I do not worry anymore.
- I want to get the bonus, and this idea is not in the objectives. Do not bother me …and make me waste my time.
- Just In case the boss does not like it, we better not make changes. They will tell us.
A sum of several factors can lead to immobility. And in the end, to losing a lot.
Question #2: What makes the difference in risk aversion?
What makes the difference in risk aversion is the degree of error tolerance. Let’s look at the mistakes a bit. What kind of mistakes can there be, made by you…?:
- Those linked to experience: they are positive, and they allow you and your organization to grow! Do not be afraid of them!
- Those linked to too much workload, due to fatigue: they have an impact on productivity and the quality of the outcome. Act! A good prioritization of key activities and the elimination of what is not necessary will be your solution. Know how to say no, or know how to prioritize your resources.
- Those linked to lack of knowledge: train you, or surround yourself with talent that knows it and from whom you can learn.
- Other types of mistakes: if you think about it, each one of those mistakes have a management path. The first step to the solution is In your attitude of acceptance.
Question #3: How can I reduce risk aversion in my business, in my area of influence?
There are several ways to achieve this, and you can take small steps to consolidate change. Here some recipes …:
- Accept that nobody is perfect. Neither are you. We can all be wrong … we are PERSONS, not robots !!, and your team sees that you can also be wrong. It does not matter. Recognizing this humanizes you. And you will make your teams, the people with whom you collaborate, also recognize and share them. And you will learn more. And you will solve problemas earlier.
- If a mistake has a very big impact on the operation of your company, and can cause many problems in the service, you should prepare and get organized for that. Define the necessary security framework, define a framework of tests, explain what causes each limit, so that your team understands better where you put the degree of freedom and where the security … And you must be open to actively listen to the whole team. In a “critical mission” environment, all comments are important, even if they are only supported by one person. You should respect the expert rank of your team.
- In any scenario where innovation and real learning are to be supported, it is necessary to allow for mistakes and learn from them. You can decide to put a frame to how much you are willing to invest. And to allow it to go well or not. Keep within the frame of action. Loosen up with innovation, and do not put more restrictive rules halfway. For example:
- Define how many innovative projects and investments you can risk in a year.
- Define whether for certain types of innovation you need an agile organization, a lighter structure, allowing for much more interaction between teams, transferring of knowledge and, therefore, get better results.
- Define everything you need …. And transmit it, share it. And be consistent with it in your way of acting. You yourself must also respect the framework defined.
Facilitate and be generous in the exchange of knowledge. Machines will more and more replace repetitive tasks, even those we cannot imagine yet. What they do not replace is the human capacity to learn and innovate. Let’s change our attitude.
How much are you willing to lose? … and to stop winning?
The capacity for growth is directly related to the ability to allow for mistakes and to learn from them. And this applies at the personal and company level.
We as people, and even more so as leaders in organizations, have to be very aware of the impact of phrases like “This cannot be …” before saying them … to avoid “who has been?. and go more to “what has happened?, what can we do differently?
An investor asks you to identify up to which point you are going to risk, how much are you willing to lose? We can put a frame to the loss, we have already seen it. But focusing on what you can lose does not hide what you can stop winning!
If you are willing to lose very little, you just stop winning a lot!
I encourage you to check your tolerance for error and your risk aversion. If you have doubts about how to prioritize, how to create the framework that supports innovation, you can write to me on email@example.com and we could talk about how to approach it.
And if you want that we help you on your own development or on your team development, you can also contact us at In Movement!