Ron Ashkenas uses his blog on HBR.org to state the case for taking risks in tough times.
He observes that the first instinct in times of stress and confusion is to stop taking risks and revert to the safest possible behaviour.
He explains: "I was reminded of this dynamic recently when I interviewed managers and key contributors in a hi-tech firm to find out what it would take to accelerate growth. I discovered that while executives genuinely wanted innovation, they simultaneously wanted to control costs and report consistent earnings.
"So while a few people had been recognised and rewarded for innovation, many others had been laid off. As a result, the strongest and most consistent message from the interviewees was that people in the company, at all levels, were risk-averse."
However, this kind of behaviour, explains the author, creates a "self-defeating pattern". If a company doesn't create an environment where people can take risks and fail, it runs the risk of stifling innovation, resulting in lack of growth and cost-cutting.
"Such an environment will create more anxiety and trigger a continuation of the cycle," explains Ashkenas, adding that "eventually, the firm will shrink itself out of existence".
The author suggests three steps that managers can take to "break the vicious cycle" and help companies grow rapidly while allowing their employees to feel comfortable about taking risks:
First, evaluate. Ashkenas says: "Take an honest look at your own company or business unit and assess the extent to which people are avoiding risks… and get it out in the open."
Second, facilitate safe idea-sharing. Establish a "safe space" forum where managers and employees can share their concerns, feedback, and ideas without fear of retribution.
Finally, experiment. Ashkenas explains: "If you have specific areas of the business that you want to grow or improve, ask a team to conduct rapid-cycle 100-day experiments to test new ways of working. Most important, make it explicit that failure is acceptable as long as something is learned."
Taking Risks in Tough Times