What strategies can you use to encourage calculated risk-taking for innovation?

1 Define and communicate your risk appetite

One of the first steps to encourage calculated risk-taking is to define and communicate your risk appetite, which is the level and type of risk that you are willing and able to accept in pursuit of your goals. Your risk appetite should align with your vision, mission, values, and strategy, and it should reflect the trade-offs between risk and reward. By clarifying your risk appetite, you can set clear boundaries and expectations for your team, and help them understand what kinds of risks are acceptable, desirable, and unacceptable.

2 Reward effort and learning, not just outcomes

Another way to encourage calculated risk-taking is to reward effort and learning, not just outcomes. Often, managers and employees focus too much on the results of their actions, and overlook the process and the learning that occurred along the way. This can create a fear of failure and a tendency to avoid risks that may not pay off immediately or at all. However, if you want to foster innovation, you need to recognize and celebrate the effort and learning that your team members demonstrate when they take calculated risks, regardless of the outcomes. You can do this by providing feedback, recognition, and incentives that emphasize the value of experimentation, iteration, and learning from mistakes.

3 Provide psychological safety and support

A third strategy to encourage calculated risk-taking is to provide psychological safety and support for your team. Psychological safety is the belief that one can speak up, express opinions, ask questions, and make mistakes without being punished or embarrassed. Psychological safety is essential for innovation, as it allows your team members to share their ideas, challenge assumptions, and collaborate effectively. To create psychological safety, you need to model and encourage openness, honesty, respect, and trust among your team. You also need to provide support and resources for your team members when they take calculated risks, such as coaching, mentoring, feedback, and backup.

4 Encourage diversity and collaboration

A fourth strategy to encourage calculated risk-taking is to encourage diversity and collaboration among your team. Diversity refers to the variety of perspectives, backgrounds, skills, and experiences that your team members bring to the table. Collaboration refers to the way your team members work together, share information, and solve problems. Diversity and collaboration can enhance innovation, as they can generate more ideas, stimulate creativity, and reduce groupthink. To foster diversity and collaboration, you need to recruit and retain a diverse team, promote a culture of inclusion and belonging, and facilitate effective communication and teamwork.

5 Learn from successes and failures

A fifth strategy to encourage calculated risk-taking is to learn from successes and failures. Learning is the ultimate goal of innovation, as it allows you to improve your products, services, processes, and strategies. However, learning is not automatic; it requires reflection, analysis, and action. Therefore, you need to create a system and a culture that enable your team to learn from both successes and failures. You can do this by conducting regular reviews, debriefs, and feedback sessions, and by documenting and sharing best practices, lessons learned, and recommendations for improvement.

6 Inspire and empower your team

A sixth and final strategy to encourage calculated risk-taking is to inspire and empower your team. Inspiration and empowerment are the fuel and the engine of innovation, as they motivate and enable your team members to take calculated risks and pursue their goals. To inspire your team, you need to communicate a compelling vision, mission, and purpose, and to show how their work contributes to the bigger picture. To empower your team, you need to delegate authority and responsibility, and to provide autonomy and flexibility in how they work.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?