Organizational growth
by taking risks
Why making mistakes is important
You can analyze everything, make endless lists of “pros” and “cons,” and establish processes to prevent mistakes. Real innovation occurs only when you are willing to take risks. Organizations with an innovative culture encourage teams to experiment. Of course, mistakes are then made at times. That’s just as well! Research shows that you learn more from mistakes than from successes. Moreover, that knowledge remains useful longer.
Taking risks through creativity
Not innovating is the biggest risk in the long run, according to Reed Hastings, CEO of Netflix. Hastings encourages employees to make bold choices, as long as they do so based on what will help the company move forward. Mistakes are discussed so everyone learns from them. Michael Bloomberg, founder of financial media company Bloomberg and former mayor of New York, also emphasizes in Forbes’ The 100 Greatest Living Business Minds that rewarding risk takers is central to his organization. According to him, the biggest management mistakes are not missed targets, but missed opportunities. As Einstein put it, “A person who has never made a mistake has never tried anything new.”
Why your brain prefers to avoid risk
Many professionals take few risks of their own accord. This has psychological causes. Two well-known mechanisms play a major role:
- Omission bias: you rate the risk of doing something higher than the risk of doing nothing, even when the outcome is equally adverse.
- Loss aversion: loss feels heavier than gain. Someone who wins €40 and then loses €20 feels less positive than someone who only wins €20.
These automatic tendencies hold back change and inhibit innovation.
Accept and evaluate
If you want to encourage more boldness and creativity within your organization, it helps to provide clarity about the space available for experimentation. A clear framework provides safety. In addition, your team needs support when an experiment does not go as planned. That very moment determines whether someone dares to try again.
Harvard Business Review describes a clear trend: large companies such as Coca-Cola and Amazon link growth and innovation directly to past failures. Failures are not a burden, but information. By evaluating them openly, your team grows faster and the quality of decisions increases.
Want to learn how to develop a high performance team and apply motivational principles to increase performance? Then check out the High Performance Leadership training course.
