Risk taking is about establishing an organizational climate where people feel able to try out new ideas. While it is obviously important to avoid taking inappropriate risk, a healthy organizational culture seeks a balanced assessment that avoids prematurely rejecting ideas due to over-estimation of risk. It also requires leaders who show they are quick to provide emotional support to those willing to try something new, regardless of whether the idea is eventually judged a success or ‘failure’. Leaders in innovative organizations demonstrate that they are more interested in learning from failure than in punishing it.
While there are many definitions of innovation, a common theme is that the practice is new or different from the status quo in some way (Schumpter 1942, Rogers 1995, von Hipple 1998). Doing something new always entails some risk of the unknown.
Jaskyte’s (2009) research on innovation in 20 human services organizations in the US found that the most innovative ones were “willing to experiment, quick to take advantage of opportunities, and risk taking”. Miller and Oileros’ (2007) study of innovation in multi-national corporations identified factors such as learning by doing as key. ATKearney’s “Best Innovator 2004-2007 Competition” found that “openness to new ideas” was one of the features that distinguished innovation leaders.
A study undertaken by the National School of Government (Dennis, Tanner, Walker 2005) identified several ingredients that indicate the importance of a balanced assessment of risk that were common in organizations in the public sector that excelled. Among these were: “clear and simple risk management processes that are embedded in decision-making and in the way the organization works” and “a decision making culture where the expectation is to challenge and be challenged about assumptions and evidence”. However, Christensen and colleagues (2002) notes that the typical structures of health care organizations around regulation compliance and powerful committees of established individuals, while having their obvious strong points, often reinforce the status quo and block new, untested ideas.
Adams (1986) and Basadur (1995) noted “fear to make a mistake” and “fear of appearing foolish and looking bad before others” as key blockers of creativity in organizations. Dewett’s (2004) literature review concluded that the emotional support and behaviors of supervisors and peers following creative efforts played a key role in employees’ subsequent willingness to take risks. Clegg and colleagues (2002) found in a study in two large aerospace firms a significant correlation between the trust that design engineers had that they would be heard and supported if they put forth an innovative idea, and the number of ideas submitted and implemented.
Learning from failure is a key theme in the biographical research on great innovators. Thomas Watson, founder of IBM, famously remarked that, “The fastest way to succeed is to double your failure rate”. In describing the process that led to his best-selling vacuum cleaner, Sir James Dyson noted, “I made 5,127 prototypes before I got it right. But I learned from each one. So, I don’t mind failure.” This ethos is institutionalized in innovative organizations such as Johnson and Johnson where “freedom to fail” is articulated as a “key value”.
NOTE: All of the information on the Elements of a Culture of Innovation, Assessment, and Tips for Leaders were adapted from Maher, Lynne, Paul Plsek, Jenny Price, and Mark Mugglestone, (2010), “Creating the Culture for Innovation: A Practical Guide for Leaders” published by the National Health Service (NHS) Institute for Innovation and Improvement in the United Kingdom