What are the best ways to build a culture of calculated risk-taking?

Leveraging shared mental models on how to think about risk taking across the team drives empowerment and consistency. You can leverage existing frameworks such as one way two way door decision making. One-way door decisions have lasting effects, are significant and are hard to reverse (careful and calculated action). Conversely, two-way door decisions are reversible and less impactful (move faster and reverse if outcome is not materializing as planned).

Few things that I have learnt from Bezos' shareholder letters First step is physiological safety, leaders need to create a safe space where employees feel safe to take risk while having comfort of a safety net. The next step is identifying what we call two way door decisions, i.e. the decisions or actions which are reversible if things don't materialize. Third is defining the blast radius, i.e. what is worst that can happen if things go wrong and if we have appetite e. g. financially to absorb it. Last is regret minimizing framework, i.e. project yourself in future and ask yourself if you/your team will regret not taking this bet? For Indian readers, I will end this with a cheeky OTT dialogue just for fun "Risk hai to Ishq hai"

One of the ways is to encourage everyone to set clear intentions regarding their vision for this culture (risk-taking appetite differs greatly among individuals), possibly through a facilitated process. This practice not only establishes common goals and parameters for risks but also creates a safe environment for experimentation and learning from mistakes. Leaders need to demonstrate consistency in their approach, feedback, and communication, ensuring that shaming of failures is a strict No-No. When people feel safe enough to take risks, equipped with tools for gaining insights, and provided with channels for giving and receiving authentic feedback, the desired culture can gradually take shape over time.

Just as Lord Krishna guided Arjuna, leaders should provide clear vision and purpose to their teams, enabling them to make informed decisions. Encourage individuals to assess risks and rewards, emphasizing that taking calculated risks is essential for growth and innovation. Like Arjuna's determination on the battlefield, foster a sense of commitment and responsibility within the team. By aligning actions with a greater purpose, an organization can embrace risks intelligently, ensuring that they lead to valuable outcomes and personal growth."

Building a culture of calculated risk-taking involves creating an environment where failure is accepted as a natural part of the learning process, encouraging open communication and collaboration, providing resources and support for experimentation, and recognizing and rewarding innovative thinking. It requires a shift in mindset from avoiding mistakes to embracing them as opportunities for growth and improvement.

As a leader, I encourage my team to understand that failure is not a dead-end but a detour on the road to success.In fact, I often share the story of my son's high school class called "FAIL." In this class, each week, students embark on experiments that may or may not succeed. The essence of this experience is that failure is not something to be feared but rather a valuable teacher. It rewires our thought processes, prompts self-reflection, and encourages us to explore the 'why' and 'how' of our endeavors

Set 'learning goals' alongside your performance goals. For example, instead of just targeting X amount of sales, a goal like "Test out a new sales strategy I learned from a workshop." Even if the strategy doesn’t result in a sale, acknowledge the team's effort because it was a step towards innovation. I reckon if more companies adopt this mindset of valuing the process (and the learnings that come with it), it'll pave the way for some breakthrough moments.

Experiencing failure and extracting lessons from it is a success in its own right. If we foster a culture where individuals openly acknowledge their failures, share the insights gained, and discuss how to avoid them in the future, it will stimulate innovation and nurture a learning culture. Besides celebrating individual and team triumphs, we should also encourage failures that yield valuable lessons and teammates who bring forth fresh ideas and solutions born from these setbacks.

As a leader, sharing my own decision-making while evaluating and taking risk while also sharing what failures I have personally had resonates well. I encourage people to share so that someone on the team doesn’t have to make the same mistake me or a colleague have already made. This approach increase dialogue, proves that it is ok to fail and learning is faster if the entire group is sharing the details of wins and losses directly related to the current problems we are working through or new ideas we are pursuing.

We need to ensure that all learning is rewarded and shared amongst the team. Knowing something didn’t work and why can be equally positive for a strong culture; being able to experiment safely and try new things leads to better processes and efficiency - saving costs or generating new revenue. As such rewarding that behaviour when it works is key.

Before you send an email or host a meeting intended to generate actual discussion, talk to an employee you that disagrees with at least a part of what you are suggesting and ask them to be the first to speak up. Then, if they do, praise them publicly and generate robust conversation around their points. People want to see and not just hear that new and different ideas are welcome and seriously considered, so leaders need to be very purposeful about creating an environment that celebrates finding a better way.

The first step to cultivating an environment of collaboration and diversity is leadership taking a close look at their desire to actually consider diverse perspectives. Often times leaders check off the diversity box by external indicators (ie race, gender etc) but miss the opportunity to consider and include diverse perspectives in the decision making process. Embracing diversity isn’t limited to building a diverse looking team but to building an environment that empowers the expression of diverse ideas without negative implications. One application is the application of Think-Tank pods based on your teams self-identified strengths. These strategic 20-min problem solving sessions allow collaboration and collective decision making.

As someone who hosts a weekly LinkedIn audio event on “Women Leading the Collaboration Revolution” what often shows up is women find current collaboration models to be lacking and reward biased behavior. My offering is to ask you where are you questioning how collaboration is done now where you work and what are the gaps participants see and experience? Be willing to start over with a better foundation if you want genuine adoption and success.

I love what you can see with Microsoft’s insight features for this, specifically where you see the “people you work with most” (based on teams, emails, meetings etc). This will tell you a lot about yourself and others. Specifically- how diverse are the people you work with regularly? And the same for your team? If your teams aren’t collaborating with people who are different from them (whether job type or protected characteristics) you are missing out on innovation.

In order for there to be goal-oriented cooperation, the goals and framework conditions must first be communicated in such a way that everyone involved understands and accepts them, and this is often a problem for senior managers because they have learned to focus on key figures such as turnover, margin or market share and easily overlook the daily challenges of their colleagues in the field. So before the next meeting takes place, you need to take the time to talk to colleagues at lower management levels to understand their difficulties and daily challenges.

Coaching is a powerful and effective tool that can be used to build the necessary foundation of trust when it comes to risk-taking. A coach-approach to feedback relies on asking intentional questions that create an opportunity for team members to reflect more deeply on their performance, results, and learnings. Start by offering your own observations then follow with clear and direct open-ended questions. Here are some examples to try: What went well from your perspective? What would have made it even better? What did we miss? What lessons or new skills are you taking away? What else would you need if we were to do this again? Notice how these coaching questions build trust by demonstrating a commitment to your team's growth and success.

Adding to a previous comments is leader coach is good but also if the entire team works well together you can get multiple perspectives on what you are working though. This increases data points to your decision making allowing more mitigation of the risk you are thinking of taking.

The problem with giving feedback is that managers are not taught this at most universities and even employees from the HR department have weaknesses here. A balance must also be maintained between detailed and example-based feedback and basic advice, because the discussion after the feedback must not be limited exclusively to the examples - which the employee may not accept. And last but not least, the employee must also want to accept feedback.

After 30 years of working with leaders one of the most common mistakes is to rush over any Wins the team has made. Leaders tend to assume that their team know they performed well and race to focus on what isn't working. Take the time to celebrate! It boosts morale and also helps everyone understand and learn from what went successfully. One way to integrate into your day is to start each meeting by asking and/or communicating a recent WIN.

I don't know what's worse: that managers always praise the same teams and the other colleagues feel overlooked, or that when praise is finally given, an example is set that is so irrelevant that everyone praised asks themselves "What's the point?"

You cannot undersell the need for communication and celebration in leading a team through change, and it makes a strong foundation for a culture that embraces risk instead of shying away from it. The cynicism that resists change is only overcome through confidence and trust, which a leader builds by directly addressing the fact that human beings are not risk-takers by nature, but can become more open through encouragement (which literally means 'to give courage'). Showing that you appreciate their contribution will show them not just that you care, but that you as the leader believe in their ability and capacity to successfully overcome, and learn from, the challenges they're going to face.

I believe a better term is "growth" culture versus "risk" culture because the emphasis is on the growth and innovation. Ultimately this is the WHY behind these practices. It is to grow the team and the company to innovate, iterate and excel. It is critical that your framework for creating a growth and innovative culture is aligned with company Purpose and Values and that every team member understands how they fit into this bigger picture.

Create a conducive environment for calculated risk taking, onboard the right people with the right mindset and start small (eg pilot project) before scaling up.

1. Leadership Role Modeling 2. Clear Vision and Values 3. Open Communication 4. Transparency 5. Education and Training 6. Failure Acceptance 7. Risk Appetite Framework 8. Reward and Recognition – We repeat those behaviors we are most rewarded for. 9. Cross-Functional Collaboration 10. Continuous Monitoring and Evaluation 11. Feedback Loops 12. Risk Assessment Tools 13. Flexibility 14. Long-Term Perspective 15. Documented Processes Organizations can foster a culture where calculated risk-taking is seen as a pathway to growth and innovation rather than an intimidating challenge. When employees feel empowered to make informed decisions, they are more likely to embrace calculated risks that drive positive change.

Fail. And fail again and fail again. And try again and try again. And learn again and learn again. As a leader. Over and over. Normalize it, for ourselves, for our teams and the organization. Making it part of your culture will provide valuable information into what works, what doesn't and how to best calculate risk moving forward. Leaders need to stop talking about risk and actually demonstrating that it actually is OK to take them. Saying and doing are two very different things.

Leadership Example: Leaders should lead by example in taking calculated risks. Open Communication: Encourage open communication and idea sharing. Learning Culture: Promote learning from both successes and failures. Resource Support: Allocate resources strategically to back risk-taking. Celebrating Successes: Recognize and celebrate successful risk-takers. Empowerment: Give employees autonomy and decision-making power. Incentives: Consider rewards for calculated risk-taking and innovation. Role Models: Highlight successful risk-takers as inspiration.

Taking calculated risks can be challenging, if culture is not compatible, especially if it's a blame culture. Often, employees find themselves in a dilemma, unsure whether to prioritize speed or accuracy. To foster innovation, consider the following: 1. During the brainstorming phase when there's no clear solution in sight, emphasize speed. Act swiftly, be prepared to encounter failures, and iterate based on the outcomes. 2. When you are confident in a solution and believe it's the right one, prioritize doing it well and correctly. In this scenario, quality takes precedence even if it means sacrificing a bit of speed, ultimately allowing you to move forward more efficiently in the long run.