The appraisal season is just around the corner. Many folks are busy with some hectic last minute catch-up, to push some metrics to deep green before the verdict gets inked.
Are you a manager or leader? Good, you can bring out all that canned and pickled abstract jargon, just in case! And get ready to be ambushed once in a while, in your own performance reviews! Highfalutin slogans like risk appetite are the season’s favorites. And Why NOT? They sound tantalizingly cool, and can leave even seasoned players sufficiently gobsmacked when unexpectedly unleashed on them!
Are you keen to tame this brute once and for all? Especially this Risk Appetite thing? After all, it isn't as if you’ve got wide leeway to make mistakes, sort of push the envelope and waltz your way into that zone of optimal risk that would please your higher-ups enough, and not more! So, even if it’s kind of late for this time round, maybe there’s hope for the next one?
Let’s look at this Risk Appetite beast squarely in the eye.
Well, who wouldn't like to be in a position to explore the tough terrain, get appreciated for playing the big-stakes game, win big, and all the while feel fully in charge? Isn't that something many of us want, to escape getting stuck in monotonous drudgery at the workplace? This desire to crack tough challenges that others have shied away from, feels familiar, doesn't it? For leaders and managers, it is all the more a validation of their capabilities to be seen as someone willing to take bold risks and stay on top of the game. You’d have noticed how the best team members flock towards such leaders and their teams. That adrenalin rush is infectious in a way!
Well honed risk appetite has other salutary effects and outcomes too. Radically new business opportunities, creativity, innovation, superior problem solving skills, adaptability, change management, resilience… You don't get to realize the full value of these by playing it too safe! Just take a look at some of the celebrated industry domains, and checkout how the competitive landscape has evolved in the last five years. Yes, you’d agree that risk appetite is increasingly also about survival, even if you choose to ignore everything else!
The trouble is that we have glamorized it, and all the while talked about it so loosely in our organizations without helping people get a grip on it. What is clearly missing in most cases is a lack of proper reference points that people can relate to, with ways of working that reflect an attitude of risk appetite in action. As a team member you’re mostly expected to “stay within the limits”, defer to the manager’s wisdom (who in turn defers to his/her boss and the customer, who is king in any case!), and keep the show running. This goes on for a number of years. One fine day, you get promoted as a lead or manager. And suddenly, you’re expected to transform into this paragon of the bold and the risky! And that’s because your job description has decreed so! How many of us have been groomed well enough to confidently demonstrate risk appetite before we don the “Leader’s new clothes”? Your guess is as good as mine.
Risk by its vary nature calls for comfort with uncertainty. But, in an overtly process oriented work milieu how does one get going? The support system is woefully inadequate when people are mortified of failure and its knock-on effects. The pressure to achieve targets and objectives that have been handed down to you is so immense, that stepping out of line seems a scary prospect for one and all. The limited understanding of risk evaluation and quantification isn't helping either. Do we really have a work culture that promotes and celebrates well thought out risk taking by our teams?
If it isn't hardwired into their brains at the early stage of their careers, how can you expect them to turn out different, years later? What are the values that we get to see in action in our workplace day in and out? How often are we encouraged to say “No”, to disagree with popular wisdom and team consensus, and transparently talk about what is the “real” reality, with brutal frankness albeit in a professional manner? Do we celebrate the final outcome and pay scant regard to the mini-successes that led us to it? Will the latter be ignored altogether in the absence of unqualified success in the finale? Because, the winner takes it all, as ABBA sang many decades back, is our defining credo? How do we frame failures in our organizational memories and narrative? Not all of these questions have easy answers and for a change that is good!
And Why Not? Don't you think it will be exciting if you can look around and proudly proclaim that “this is how it works over here”? So that taking the bold and audacious moves is the norm than the exception, but at the same time not done in a reckless manner? Ambition seems to take wing at every level in the team, people look forward to problems with a daring “bring it on” attitude and don't get unnerved in the process? Even daunting crisis moments are genuinely seen as opportunities to push the limits and excel. And finally, you get to experience “readiness” across the floor, that absolute must-have for any succession planning initiative to take root. Redundancy and attrition lose a bit of their sting, and that can’t be bad!
What can get you there from where you are?
- Compelling Vision, Goals & a Relatable Context
- Risk Management in Action
- Enabling Culture & Support Structures
- Compelling Vision, Goals & a Relatable Context
So, you want to be a best-in class provider of services or products, and what not. Have you taken out the time to demystify your vision to a form that people can relate to and connect at an emotional level? Or, as is often the case, is this vision thing seen as some collection of fancy words bereft of any significance on the ground? Do people innately sense the connection between their work goals, ways of working, and the overall vision for the organization, as well as the vision for your department, program or projects? How would you know?
Even as a collective, when you put your heads together and do brainstorming sessions, do you allow for a bottom-up approach to this “sense-making” exercise? Where team members (including the junior most folks) get to discuss and identify ways and means to get to that overarching vision of the organization? Where each person articulates specific steps in his/her work items to help the team get closer to this vision? And is encouraged to identify the resources and support needed for the same?
And most importantly, to fearlessly express what they don't know, well in time?
The key operative questions here are as follows. Get each member in your team to answer these questions:
- What specific outcomes/goals in my work will help me and my team to align best to this vision?
- “What will I do differently, going forward?” What actions are required?
- There is one action that looks almost scary to many, but holds the potential for the most amazing results: It is ________________________________________________ ________________________________________________________________________
- “What is the support that I will require?”
How often is this exercise done? If there is an inability to sort out this connection, what do you do? Revisit it later, or simply leave it unattended in the fond hope that “out of sight” will be “out of mind”? While a lot of these questions may not seem urgent, pause for a moment and imagine what would happen if there is a genuine buy-in from people to the vision, followed up with behaviors that reflect the same. For the next six to eighteen months for instance. Would you rather have that, or keep things the “way we’ve always done things here”?
- Risk Management in Action (Strategy for Risk Management)
How well do you think you and your team does forecasting of potential risks, and managing them?
If there are several risks that pose a threat to your vision and goals, how do you rank and prioritize these risks? After all, you’ve got to work with your limited resources to ensure that the risks don’t cause your project or program to turn turtle. So, even as you expand your risk appetite, it is important to pay attention to some of the vanilla ground rules of risk management. While on the face of it, these points are pretty obvious, in that very simplicity lies the potential for complacency and hubris that have unmistakably proven to be the undoing of many leaders and teams! So, it is worthwhile to mention a few of these “obvious” points here.
Is there a way to quantify the risk scenarios, even if with subjective assessments, assumptions and criteria? Do you proactively identify mitigation plans to reduce the probability of risk occurrence? And if the risk scenario actually happens, what contingency measures can you invoke to minimize the damage, and get back to a steady state? How often is this plan reviewed?
To what extent are you getting your team to be included in risk management planning? Tools and processes like failure mode effect analysis, scenario projection brainstorming, role play based activities can be of help.
- Enabling Culture & Support Structures
So, how conducive is the culture in your organization, and specifically in your team to foster risk appetite? Do people feel unfettered enough to tread the offbeat track? Or, is there a subtle unwritten rule that the “higher-ups” know best, and all they’ve got to do is fall in line like good boys and girls? Just to let you know, your hot-shot risk planning and quantification spreadsheets and dashboards ain’t gonna get you this Culture roll in! So, let’s look at few important areas you might want to address to have a truly enabling culture. I call it the 8-Fold Path to nurturing a sustainable risk-embracing culture!
The 8-Fold Path
- Communication Best Practices
- Cross-Functional Teams
- Sharing of Tacit Knowledge
- Acknowledgement & Appreciation
- Support and Bandwidth for Fledgeling Initiatives
- Healthy Competition and Audacious Challenges
- Channeling learning and feedback from wins and losses
- Capability/Competence Enhancement
It is vital that you encourage transparency and trust-building at the core of all communication in your team. Wherever feasible, give people the freedom to express their opinions while actively being part of the decision formulating process. Encourage them to not just bring problems to you, but also come up with potential solutions. You can help in this case by asking well-framed non-directive questions that lead them to insights and new perspectives. Resist the urge to give ready made solutions, and turn these conversations into discussions that bring out brilliant ideas, and sometimes even more questions. Encourage expression of “healthy” disagreements and non-conformist ideas/opinions, but with ground rules in place. This will ensure that the “smart cookies” don’t end up hogging all the airtime in discussions. And also, ideas aren’t chopped off soon after they are articulated.
Have you taken care to develop rapport with your folks to allow for bad news to reach you soon enough? And, how do you react when people confess they just don't know, or are clueless? What is your non-verbal language like when that happens?
If you think some of your team members may need training in assertive communication, don’t delay it further! Help them to develop skills in articulating and pitching their opinions firmly and at the same time respectfully. Not just within your team, but even with your customers.
This one is luckily catching up big time in technology companies. Having cross functional teams can help you bring together diverse perspectives under one umbrella. Your job is to act as an enabler, and not the prima donna! So, recede to the background a little more than you’re used to, and allow the team to take ownership. Encourage collaborative behaviors with the right rewards, incentives and ground rules.
Yes, stories from the grand successes and failures in your department, organization and even beyond, have the power to inspire your folks. Much more than those hyped up metrics and targets you and your bosses love to talk about till the cows come home! So, in your interactions with the teams, bring in these experiences in the form of stories, anecdotes that you seem to be “casually” sharing by the way! Cleverly bring in metaphors, some unanswered questions and riddles… These can all help in generating those insights which suddenly seem to open many possibilities in their minds. And that is the real trigger for thinking different and radical. Yes, stop giving those cliched sermons about out-of-the-box thinking. Most of your team were anyway sleeping while you were pontificating! Provide the enabling environment and go sit in your box! For a change, the team will handle the rest more often than not!
And talking about sitting… Take a look at your office layout, and see what can be done to encourage free flow of communication and exchange of ideas. I’ll share more about it in a separate post!
Shoddy criticism and insufficient appreciation/acknowledgement can ground all your dreams for risk appetite in your team. Start behaving like an inspiring leader and stop acting like grumpy hostel wardens, waspish matrons and foul-tempered middle-school headmasters! Occasionally try installing good ideas in their minds, to enhance their own, and let them bask in the limelight when things go well. The reflected glory works much better for you.
Appreciate liberally and genuinely as they keep making forward movements. Even if outcomes take time, don't be miserly and withhold appreciation as though you are rationing some precious resource you’ve personally mined from the deep sea! Use criticism when needed, but ensure that it is forward oriented and takes them towards solutions and breakthroughs not nervous breakdowns. Choose the timing wisely of course. Ill-timed criticism is the last thing you need when people bravely stick their necks out and express divergent ideas and opinions. Fledgeling ideas need to be preserved, and that’s your job as a leader. Don’t allow others in the team to shoot down ideas at this stage. Never!
Carrying the points mentioned in the previous section, it is important to provide a fertile ground for initiatives to be tested out. This is where your priority call becomes important. In addition to moral support, you may need to pitch in with resources and provide the required support system. And this is where your “political” influencing skills within the organization can make a huge difference. To access resources and help at the opportune moment. Not every initiative can be given this star treatment of course. This is where you need to have a robust screening and rating mechanism to select the right pilot initiatives for further support. Are you getting the best experts in the organization to whet these ideas from multiple perspectives? Some of your customers may be more than happy to pitch in with sponsorship if the ideas are going to add big tangible business benefits for them. You may have to only fight your own demons! Help may be available just around the corner.
As we’ve seen, at some stage, and sooner rather than later, risk appetite will get tested at the altar of tangible business benefits and outcomes. You want the best ideas to flourish, the worthy bets to be made, as the stakes are pretty high. Failure can sometimes mean a lot of bad press for you as a leader. Healthy competition within teams and people aids in this process of value creation. As a leader, you’ll need to nudge your teams and people with stretched targets, and audacious challenges. Maybe by drastically increasing the quality or reducing timelines, or making the benefits far more wide-ranging. Think of creative ways to build on this momentum. You’ll look back on it as one of the wisest choices you made!
This is also where a lot of tacit knowledge (knowledge that cannot be easily documented and codified for later re-use) is generated. So, make it a dynamic process of learning for yourself and the team members. Get people to share tips and ideas about how breakthroughs were secured, and what needs to happen differently to avoid some of the setbacks in future.
If you can define the interim-outcomes smartly enough, you may sometimes get knock-on benefits even if the final goal wasn't met fully. Ensure that any post-mortem exercise sufficiently acknowledges these add-on benefits. And further, when feasible, also showcase direct value-adding outcomes from those benefits. The key idea is to take up high-risk initiatives in a way that you can farm wide ranging benefits throughout the entire process. And it’s your job as a leader to pitch at every stage like a star marketer.
Of course, risk appetite cannot exist without capability enhancement initiatives. Remember the question, “what do I do differently to get a different outcome”? Explore this question from many angles, consult experts and people across the organization if needed. Look at productivity tools, process improvements, subject matter experts and best practices that can provide a solid foundation to your enhanced risk appetite. Training requirements can be defined with sufficient granularity based on these perspectives. Pay close attention to inter-personal skills that are critical, for yourself and key members in the team. Don't allow bold initiatives to falter for lack of influencing skills for instance!
As we saw earlier, it is vital to have a great environment that generates that extra rush of adrenalin. If you can lead by example, and passionately nurture this upbeat culture, you will see a radical shift in thinking across the floor. And you can proudly proclaim that one more jargon bites the dust, just like that! Go, and devour the RISK beast!