Connecting Dots 28 ◎⁃◎ Risk
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Hello,
Welcome to Connecting Dots by Brett Macfarlane. A monthly newsletter for innovation leaders and change-makers.
This month we unpack risk from The Innovation Leadership Map and how it influences our leadership performance. Risk is hard to quantify and rarely qualified. Let’s get a practical handle on how it derails us or enables us to perform.
After exploring risk I’ll share an update on my attempt to shift G20 policy discussions to human-centric outcomes through design principles. Plus, The Innovation Leadership Map at Innov8rs Connect.
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The Risk of Risk
My relationship with risk was formed by my experiences as an athlete. As an alpine ski racer, every time I slid into the start gate I was actively negotiating the risk ahead. Mentally, I’d have rehearsed the course and chosen the racing line. With thorough anticipation, I envisioned all the turns of the course, the contours of the ice-hard snow, the changes in light and the blind spots.
As my skis pushed out onto the precipice, one or two cue words narrowed the focus. Last second course reports of dangers ahead as conditions changed were assimilated into real-time adjustment. All to inform the best approach for it all to go right. Which never happens.
The training prepared us for when it went wrong, with chilling awareness that it could go catastrophically wrong. Denying this reality was a reckless and dangerous denial of risk. Equally dangerous was paralysis from being obsessed and consumed by risk.
The space between risk denial and overwhelm is where performance happens. It’s the same for our work as innovation leaders and organisations aspiring to innovate. Anxiety and disequilibrium must be present, they create the vital energy of progress in the face of risk.
I find that how a leader relates to risk in a specific situation is one of the most influential and insightful indicators of what is really going on. Either within themselves or with the wider team and firm.
Many assume it’s always the firm that’s risk-averse. Though just as often the firm is keen to accept reasonable risk the leader for individual dynamics doesn’t take up.
Now, as with all the scales, those reactions and their reasons are individual. The Innovation Leadership Map is a clinical intervention to illuminate what's really going on. Born from the medical philosophy that you treat the patient in the bed as an individual. Rather than the industrial philosophy where you treat all as one.
That said, from individual lived experiences I have observed two common themes:
From the innovation leader —> “they” are so risk-adverse I can’t do anything
From the authorising executive —> “they” think innovation is the only thing that matters and don’t care about the consequences to the rest of us
While not universal each does mirror the regressive ends of the Risk scale.
What’s a Tolerable Degree of Risk?
In the real world, how we perceive risk and respond to risk is entirely situational. Typically innovation leaders are more risk inclined than others, risk-seeking even, but just as risk unaware as anyone else.
Beyond some form of mathematically calculating risk leaders typically don’t engage with how risk is being experienced. They don’t look at how their relationship with risk is affecting their judgements, their analysis nor their behaviours. Causing miscalculation, wasted efforts and putting the program, their position or even the firm in jeopardy.
To tune into The Performance Zone of risk is to acknowledge the positives and negatives of the situation. An ambivalent relationship with risk means you’re able to hold in sight both the upside and downside of any innovation. The danger zones are either Omnipotentet denial of any downside in pursuit of the upside. Or the Impotent overwhelm by the downside regardless of the potential upside.
Ambivalent - able to reconcile the positives and negates sufficiently to act
Omnipotent - perceives infinite power acting primarily on positives
Impotent - helplessly consumed by fear lacking courage and strength to act
“Ambivalent” is a word a lot of leaders misunderstand. They instinctively relate it to indifference or indecision. Reality couldn’t be more different. It is a sophisticated position where the positives and negatives of the situation co-exist without one overwhelming the other so that intentional action can happen.
It is delusional to think there is a 100% certain upside with no potential downside. A healthy leadership state is to equally make an objective assessment of risk and accept that it will never be wholly known with all risks neutralised in advance. Leadership is the act of taking action with sufficient yet inevitably incomplete data.
With innovation, Impotent leaders withhold or side-step action meaning no data and no data meaning no action. They remain stuck like a child at the edge of a diving board desperate to jump yet unable to do so. Equally, Omnipotent leaders bias only validation without accepting the spectrum of reality that validation is always flawed. They run blindly into darkness eventually hitting avoidable walls. As one leader put it, “I thought it was infinity, but then real life happened.”
Developing Risk Ambivalence
As a leader, risk Ambivalence enables you to reconcile the underlying needs of the organisation and your underlying ambition. Following are some practices that enable you to see and work with the good and bad of an innovation while keeping it whole.
Do not be a perfectionist, strive for quality and know when to stop
Expand Pros and Cons assessment to account for intuitive and emotional data by also assessing Hopes and Fears
Spend as much time on ‘what could go right’ as ‘what could go wrong’
Use a ‘premortem to identify risks and make space to creatively problem solve, mitigate and get a better picture of how risky the risks really are
Rather than obsess over the fantasy of a perfect innovation or change, ask your team how much innovation or change can we as leaders and an organization tolerate between now and the launch target
The more senior you are focus and worry more about the climate of risk discussion over the technicalities in the hand of the innovators to give them the confidence to exercise their authority
Champion balanced debate with multiple perspectives such as the Six Thinking Hats (logic, emotion, caution, optimism, creativity, and control)
Sleep on big decisions —> strike when the iron is cold rather than while it’s hot
Often we try to disassociate risk from ourselves. We make it a purely rational thing separate from us. Which of course is a defence against truly engaging with risk and leading through it. By learning to assess our responses to real or perceived risk we can better pick up on how it’s affecting our performance and develop practices to better lead through risk-full situations.
After all, there is always risk when doing something new for the first time. That’s the job.
Next month we will look at how leaders experience and perform in relation to Actualisation. The final of the six scales that unpacks how we really act and why no matter what we tell ourselves 😁
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Brett’s Diary
On the 15th of October, I’ll briefly introduce to the G20 Rome summit my V20 communiqué on the Digital Solidarity Principles. The Values20 (V20) is an engagement group that represents external and independent contributions related to values to the development of G20 policy. It’s an experiment to enhance collaboration and reflexivity on multi-lateral digital topics.
My contribution is to propose a tool and process to insert human centricity into the heart of multi-lateral discussions and policy related to digitization. There are a number of valuable topics being shared and you can join us by signing up here.
Last month I was kindly invited to share The Innovation Leadership Map at the Innov8rs Connect https://innov8rs.co/ series focused on leadership. It was a lot of fun and I’m very pleased with the format of my speech. Another session will be held in January for their people and culture summit.
The material I presented at Innov8rs works great for strategy summits and top management forums, so let me know if you’d like to explore for your end-of-2021 or next year's activities. I’m happy to do team talks or leader assessments.
As always your thoughts and feedback are appreciated.
Till next time, keep pushing the boundary of possibility,
~Brett