How does risk affect you when leading innovation?

It’s unusual to hear that question because typically we think of risk as a technical thing to manage through numbers and processes. Yet, how an innovation leader relates to risk in a specific situation is a strong indicator of their performance, resilience and well-being. Our responses to risk directly affect our leadership practices by influencing how we feel, think and behave in real-time. Each leader relates to risk uniquely based on their lived experience and how these imprints influence us in present moments.

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 changing conditions ahead were assimilated into real-time adjustments. 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. Where tragic outcomes become real ending a race, season, career or even sadly life itself.

Equally dangerous was paralysis from being obsessed and overwhelmed by perceived risk whether real or not. A failure to even push out the start. Or to go through the motions of performance with little prospect of progress. Tragedies of unrealized potential.

The space between risk denial and overwhelm is where performance happens. It’s the same for our work as innovation leaders and organizations aspiring to innovate. Anxiety and disequilibrium must be present, they create the vital energy of progress in the face of risk.

However, too rarely do we directly address what our relation to risk is doing to us, our decisions and our acts of leadership. Unlike today’s groundbreaking Olympic champions, often it’s unacceptable to acknowledge the presence of pressure and its effect on mental management.

In my research and development practice, 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 experience scales in my tool The Innovation Leadership Map, those reactions and their reasons are individual and specific to the real world system they are operating in. The Innovation Leadership Map is a clinical tool 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 regularly observe two common themes:

From the innovation leader —> “they” are so risk averse I can’t do anything
From the authorizing 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 is the Risk Performance Zone?

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 or ad hoc debate, leaders typically don’t engage with how risk is being experienced. They don’t see 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 Omnipotent 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 leaders often 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 a situation co-exist without one overwhelming the other so that intentional action can happen.

It is delusional to think that 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 neutralized 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 to some extent. They run blindly into darkness eventually hitting avoidable walls. As one leader put it, “I thought it was infinity, but then real life happened.”

The risk scale and The Innovation Leadership Map is a flashlight to illuminate your mental performance state. So you can avoid running blindly into avoidable walls or staying stationary in the dark room of risk unable to step forward. Enlighten your path with Ambivalence.

How to Develop Risk Ambivalence

As a leader, risk Ambivalence enables you to reconcile the underlying needs of the organization 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.

This is a guest article by Brett Mcfarlane. Brett is an innovation leader and educator recognized by over 200 creative awards and patents. He helps leaders, teams and organizations grow their leadership capabilities. The Innovation Leadership Mirror is his one-on-one leadership development process based on distinguished research completed at INSEAD that integrates systems psychodynamics, leadership and innovation.

To elevate your innovation leadership practice he invite you to learn more about The Innovation Leadership Map and subscribe to his newsletter Connecting Dots. To understand more about The Innovation Leadership Map and work with Brett, join Innov8rs Connect on Careers & Personal Development, 11-13 January 2022.