Risk avoidance is not something that transformational leaders do.
Some managers do everything they can to avoid risk, thinking that if they avoid risk they will not have any problems to deal with. They use risk avoidance as a strategic filter. If you are leading a transformational change there will be risks involved–it is part of the game. Tweet this: Transformational leaders don’t avoid risks, they manage risks. They manage the risks and make the tough calls to ensure they achieve their results. If you go through life avoiding risks, you miss out on the payout of stair-step development growth and the personal satisfaction of having IMPACT.
Tweet this: Transformational leaders look for opportunities to generate real value for their organizations. They weigh the potential value proposition vs. the potential risks involved. They ensure they understand all of the risks involved, such as resources, reputation, timing, political, complexity, cost, etc. They assign values to the risks involved and suggest potential mitigation plans to manage the risks if they occur. They plan and then they make the decision. They do not second guess their decision if the facts do not change. They stay the course.
Transformational leaders don’t simply take risks for the sake of taking risks. They do it to solve a real problem that faces the organization. Perhaps the marketplace is changing, customer demographics are shifting, or new competition is entering the market. Leaders need to be able to identify and understand their ever-shifting business environment and make tough decisions and balanced the risks to best position their organization for the future.
When weighing an important decision with risks involved, ask yourself three simple questions:
- If I were to make this decision what is the best thing that can happen as a result?
- What is the worst thing that could happen?
- What is the most likely thing to happen?
Now, clearly, a lot more thought goes into making complex strategic decisions; however, after gathering all the facts and information available, these three questions help simplify and clarify your decision. I think you would agree that, more often than not, the extremes aren’t the ones to happen, but rather something in the middle is what usually happens. So, if the most likely thing to happen will get me closer to my goals, and I am willing to deal with the worst thing that could happen, then I will go for it.
But if the most likely thing to happen, does not get us closer to our goal, does not help us achieve our mission, does not improve customer service, does not save us time, energy and money, or if we’re not willing to deal with worst that could happen, the worst that could happen could be too expensive, could cause even bigger problems for our organization and its people, then I would clearly not make that decision!
I would start again and I would review the 7 Steps of Effective Problem Solving to help me structure the solution to the problem. This is how leaders excel at managing risks to make tough decisions and create solutions for the issues facing their organizations. Are you a risk taker?