Risk. It’s a word that has come to have a lot of negatives associated with it. How do we mitigate risk? How do we avoid it? However, in the right context, is a certain level of risk exactly what someone needs to be an effective leader?
Let’s break it down.
What exactly is risk?
You can think of risk as any action you take or task you undergo where there isn’t a clear, defined outcome. It’s where there’s some sort of uncertainty or possibility of failure involved. And therein lies the real kicker that turns people off taking risks.
The fear of failing is a big one, and nobody wants to encounter it. No matter how many times they’ve heard mantras spouting wisdom that success relies on learning from inevitable mistakes and failings, actually taking that leap can be scary.
For a leader, the stakes are even higher, with a whole team or department to be accountable for.
So, why take risks at all?
On the flip side of all that potential failure, not taking a risk can be even more dangerous in this day and age. It’s the job of a leader to incite change, navigating their industry to try and better their organisation. That can’t be done from a stagnant, static, stale position.
Deakin University’s Vice-Chancellor, Jane den Hollander AO, is not averse to taking calculated risks. She is continually looking to challenge the ways in which Deakin does things, all with the end goal of creating a better experience for students.
“My view is that if you’re in your safe little space, you sometimes don’t think as courageously,” she said in a recent feature in Deakin’s this. In other words, complacently staying in your own comfort zone won’t bring you any rewards, especially when risk is such an essential ingredient in propelling forward movement.
The link between leadership and risks
To dig down a little deeper into the correlation between successful leaders and their abilities to take risks, we have to examine what a leader does in a bit more detail. We know that a leader:
- Focuses on finding ways of doing things that will ultimately benefit the experience of customers/clients
- Finds creative solutions to even long-held, seemingly impossible problems
- Inspires others around them or within their team to continually strive towards greatness.
None of these things can be achieved without – you guessed it – the willingness to engage in a bit of risk taking.
How leaders can use risk most effectively
All of this isn’t to say you should be pulling off crazy stunts with reckless abandon. Risks should still be taken in measured ways, having calculated the potential pitfalls to make sure they’ll provide worthwhile returns.
There are three things you can keep in mind to make sure you’re taking the kind of risks that will benefit you and your organisation.
- There should be a balance between innovation and maintaining everyday business. You can’t live in a space where you’re just taking big, creative risks, but you also can’t dwell too deeply in the day-to-day routine of keeping your business on track. Finding that balance is key.
- Approach risks from an analytical perspective. Before charging in on a new idea or product, sit back and think about whether it’s really going to be the right one for you. It may seem like a great opportunity for your organisation, but is the timing going to be right for your team to handle it? What will the possible return on your risk be? What are all of the potential outcomes, and are you willing to deal with the worst case scenarios? These questions should all be considered before you commit.
- Learn to not only be OK with making mistakes, but willing to learn from them. If you can turn a failure into something you grow from and improve on next time, it hardly can be seen as a failure at all.
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