The word “risk” elicits different feelings based on where you are as a company. When you’re starting up, everything is risky. As you grow and stabilize, the amount of risks you’re willing to take become fewer and farther between. I know about this firsthand–once my company figured out the special sauce to consistent, predictable growth, I wanted to prevent disruptions at all costs, and that meant minimizing risky decisions.
But disruptions are usually out of our control. Who would have predicted COVID-19 and what that would do to the economy? This isn’t a post about preparedness, though, it’s about acceptance that no business is ever free from disruption, and so taking risks isn’t as risky as it may seem.
In fact, taking risks might be what pulls your company through a hard time. A brick and mortar bookstore in Dallas had to shut its doors amid the pandemic. A few weeks later, they relaunched as a “travel agency” with just a website. Visitors could choose a destination they wanted to visit, and be taken to a book selection for that place. Pretty big risk to completely change your business model in a matter of weeks, especially when you’re out of cash, and it turned out to be a smart move. Not only were they back in business, sales increased 200%.
The real magic about taking calculated risks is that it can and should come from anywhere within the company. Every employee within your company is capable of learning how to take healthy risks. This can be as small as pitching a new SOP, or as big as proposing a new revenue stream.
And it should be encouraged. When we create an environment of little-to-no risk taking, It can have a chilling effect that stifles creativity and makes employees feel like they’re walking on eggshells.
When we encourage risk-taking, we open the door to constant improvements, innovation from within our own walls, and a culture that honors people for thinking as much as doing. Here are some ways to bring risk-taking into your company culture.
Set the tone
Most leaders of small business love to talk about failure… in theory. I’ve met very few leaders who actually allow it to happen in practice.
Employees know when they’re in an environment where what the boss says goes, and new ideas are not met with gratitude. This isn’t to say you need to implement every new idea. You should, however, show appreciation for the initiative, and provide the green light enough times that it encourages continued ideation.
This of course means opening your mind and your organization to failure.
Don’t punish failure
Think back to your early days. Your business was running on failure almost 100% of the time. That’s how you learned what worked and what didn’t. Helping your employees learn how to fail is a gift you can give them that will make them, and your business, more successful.
Some employees will have a very low tolerance for risk. Others will have a huge appetite for it. As the CEO, it’s an opportunity for you to mentor your team on how to take measured risks, and how to learn fast. This growth mindset can’t exist in a culture that punishes failure.
When your employees learn that yours is a safe environment to be creative and try new things, they’ll bring all kinds of new ideas. Most won’t work, and that’s great because it’ll get you faster to the ones that do.
Reward calculated risks
In every company there are budding entrepreneurs. They might not even know it yet. These team members can be extremely valuable in ensuring that your business stays relevant and competitive. If you can create a system of rewarding calculated risk taking, you can root out these MVPs.
For some people, giving them resources to pursue ideas that you feel are calculated can be enough to keep them very happy (and loyal).
You can have a literal “risk reward” at your weekly all-hands meetings. Recognizing someone for their innovation in front of their peers can be motivating. Be sure to reward small risks as much as the big ones, because for many people, even small risks can feel huge.
For most people, feeling heard is vitally important. At our weekly team meetings, we have time dedicated to “what’s weird.” Everyone is encouraged to point out things they believe could be done differently, or present entirely new ideas. By making this discussion a priority, our employees know their input matters.
Taking risks doesn’t have to mean being rash. You can take measured risks at any stage of business, and you should. New ideas can be the catalyst for growth, and they can safeguard you in times of unexpected disruption.
Patrick Sullivan Jr. is the CEO and co-founder of Jigsaw Health, a nutritional supplement company based in Scottsdale, AZ. Patrick is a frequent contributor to small business publications. He loves helping other small business owners tackle the hard things like culture, hiring, and marketing.