Some teams would greatly benefit by taking on more risk.
By avoiding worst-case and what-if scenarios, they too often make decisions that fail to seize opportunities or leave gains on the table.
As much as pundits think making big bets is what gets teams in trouble, much more often it is risk aversion that undermines team effectiveness.
More teams suffer from the fear of embracing risk than those who swing for the fences and have a bias for reckless chance-making.
All decisions come with risk and downside.
Effective teams and decision-makers balance risk against the potential windfall of success to arrive at a quality decision.
Risk-averse teams typically select the safest option and miss the upside that could propel the organization forward.
Leaders who understand this do their best to promote a more objective view, but once a team is risk-averse, it is difficult to break the pattern and push people out of their comfort zones.
Leaders can stimulate more risk-taking by learning how to position the downside of any decision and to assign a probability to it.
When it comes to encouraging teams and team members to take more risk, where the conversation around a given decision begins has a tremendous influence.
People rely heavily on the first piece of information or point they encounter. They use it to anchor their views and work from there to decide what they are comfortable with.
During the discussion of a decision that involves significant risk, leaders who anchor the conversation on the potential negative consequences discourage risk-taking.
This anchoring effect is especially strong with those who are risk-averse or have a play-it-safe mentality. They prefer to overstate the probability for trouble to confirm their bias for caution.
Simply by first focusing the discussion on the advantages and opportunities afforded by any option allows team members to think more rationally and objectively about the balance of risk versus reward.
Beginning the discussion on the positive possibilities creates a more adventurous anchor.
Once both the upsides and downsides have been fully explored and debated, leaders who want to encourage more risk are smart to have the team assign probabilities to the possible outcomes.
What is the likelihood for each anticipated outcome and consequence, both good and bad?
When the team decides collaboratively about how likely each outcome is, they often find many of the risks (and sometimes the opportunities) are so low that they really shouldn’t carry much weight.
Assigning probabilities to both the possible positive and negative outcomes has been proven to improve decision quality for exactly this reason.
A Daily Dispatch from the Front Lines of Leadership.
