Most influential leaders are the ones who take risks. Impactful leadership also involves innovation. Innovation is finding new or improved ways of doing things while achieving goals that have not yet been reached. Both risk-taking and innovation work hand-in-hand with helping an organization attain success. But taking chances, managing their impact, and finding improved ways of doing things can be challenging. And taking risks can and sometimes does lead to failure. But you can realize vast opportunities and growth through risk-taking. Taking chances that are strategic, weighing the cost, stepping out of your comfort zone, and dealing with failure can lead to those opportunities.
What Is Risk?
In terms of finances, a risk is a possibility that an outcome or gain will be different than the expected result or return. There is an inversion relationship between risk and reward… in other words, the lower the risk, the less potential for reward.
Attributes of Reasonable Risks and Weighing the Cost
While taking risks and creating innovative ideas are inherent in being a solid leader, you should take calculated chances. Also, the leader must be prepared to manage the results, whether positive or negative, successes or failures.
Reasonable, Strategic Risk
A reasonable risk should serve the mission of the organization, and it should be strategic. Strategic means that the ventures are thoughtfully created or planned to support a specific purpose or benefit. The most successful leaders have discovered the creative edge between risk-taking when evaluating risk/reward probabilities. However, whether reasonable or strategic, risk-taking comes at a cost.
Weighing the Cost
Taking chances will cost time, money, and resources. Of course, you have to be comfortable with the potentially lengthy period it may take to get results. But leaders who can take reasonable, strategic risks after weighing the cost could greatly benefit the organization. And it’s through those risks that you’ll find strategic ideas that can help you reach your vision.
However, leadership has to move outside of their comfort zones to seek ventures and achieve those benefits. And stepping out may not be an easy task.
5 Ways to Step Out of Your Comfort Zone
Although there is no perfect formula for risk-taking, the following are five steps for helping you move out of being comfortable and attain positive rewards.
1. Listen to your intuition.
Your experience intuition is your informed gut reaction. Allow yourself to enjoy the process of following it, trying not to overthink the matter. Most often, your first thought or idea is the best one.
2. Don’t be frozen by analysis paralysis.
You will not achieve substantial results by playing it safe. You must give ventures due consideration but don’t become frozen in place by continuing to analyze. You can convince yourself not to take action. The timing and the circumstances surrounding risk-taking will never be perfect. Nevertheless, you may have to decide to make a move.
3. Don’t let what you believe you know guide all of your actions.
Be open to learning, exploring, and looking for new opportunities and answers. Think outside your comfort zone. The world is continuously changing. And keep in mind that what worked yesterday may not work tomorrow.
4. Begin with small steps.
Try a test run or a probe of your new idea before taking a big plunge. Starting small allows you to tactically alter your course when factors arise that you may not have considered. And it’s easier to recover from a small error than a larger one.
5. Prepare to make mistakes.
If you genuinely take a risk or think outside the box, you will not be spot-on every time. In fact, if you aren’t making mistakes, you probably aren’t trying hard enough, or maybe you are just lucky. However, rest assured that you’ll learn more from failures than you will from getting things right. Provided you honestly debrief events and fires that erupt. This step is essential.
5 Steps to Help You Understand and Deal with Failure
Risk-taking, regardless of how big or small the venture, will sometimes lead to failure. But how you handle those mistakes is vital in writing the success story of your business. Here are five steps to help understand and deal with loss.
1. Don’t worry about the approval of others.
The fear of failure often appears to be worse by the thoughts of others’ judgment and loss of respect. Therefore, it’s essential to separate the action from the person and continue to move forward.
2. Don’t take it personally.
You must not make failure your identity. Instead, separate the lesson from who you are. Work to debrief the process to ascertain the causes of failure.
3. Set aside your ego.
Choose to learn from what happened, thinking back to what caused the failure. Sometimes this involves working with or learning from individuals you may or may not want to take direction. Be greater than the situation and apologize if the circumstances demand it.
4. Do not let your failure dominate your thoughts moving forward.
Focus on the solution or another project instead of dwelling on what happened. Nothing slows down progression like regret. Have the patience to see it through.
5. Establish a new point of view.
If an employee fails at something, mark that as a positive, not a negative. Of course, someone who genuinely cares about producing will make mistakes. However, instead of focusing on the failures, establish that they won’t repeat them because failure is the best teacher, provided that you communicate the constructive analysis to the employee.
Risk-taking and creating innovative ideas may not be for everyone, but any successful leader must become comfortable with it. Taking chances and seeking ventures will develop your skills and abilities as a leader. You’ll also hone your intuition and problem-solving ability. In the end, risk-taking, moving outside of your comfort zone, and learning from failure will require you to believe in yourself. And it’s through those challenges that you’ll guide your organization to success. Here at Belfield, our team has over 170 years of cumulative experience. As a result, we can help equip you with the necessary tools to take strategic risks and achieve your goals. Experience the Belfield difference!