Taking calculated risks is essential for leaders who want to achieve explosive growth.
In this blog I am going to talk about why risk taking is a necessary skill for leaders and what are the 3 steps leaders can take in increasing their risk appetite.You will hear about the story of a courageous Army colonel posted in Kashmir, an entrepreneur who was risk averse and also learn from a Netflix- blockbuster deal that never happened.
In my work, I get to travel a lot for various teaching and coaching engagements, workshops, retreats, and things like that. For a few years in India, I was in the Indian army circuit doing different training programs and coaching programs for the army staff. They would arrange my talks in different parts of the country, and I would get to travel. I mostly did that in Mumbai and also did some for the Indian Navy. I would do it for the officers and also for the spouses to support them, and it's a service very dear to my heart.
In one of those trips, I ended up making friends with many colonels and brigadiers with whom I would interact. They are very friendly people, and one of them had just served in Kashmir. I met him in 2017, and he had just been posted in Kashmir as a colonel. Then he was reposted back to Mumbai, where he was handling some other functions. After I finished one of my training sessions, he was organizing all of that for me. As he finished the training session, I had some time to chat with him in his office, and he was sharing about his experiences in Kashmir during the height of terrorism there.
One of the things he had to do in Kashmir was door-to-door checking for militants. Whenever they got news that a certain militant was in a certain area, his job was to go door-to-door and check along with his team. They had to make an announcement, surprise, and then open the door, interact with the family, and enter inside with all their gear, vests, and guns, but also be extremely kind and empathetic towards the family members in whose house they were checking. I asked him how many they caught like that, and he said they caught quite a few. They would always encourage them to surrender and give them a chance to improve their lives.
Risk Driven by Purpose and Duty
As I was hearing his story, I was overtaken by fear in my gut. I asked him how he handled the risk of opening a door and potentially facing a militant with a gun pointed at them, ready to shoot. He said, "You have no choice, you just do it." I asked him about his greatest motivating factor for handling such a high amount of risk. He said that his motivating factor was that he was always the first person stepping in, even if he didn't have to as a colonel. He needed to show his team that he was willing to take the maximum risk to keep them inspired.
The Stakes Are High in Organizations Too
While the stakes may not be as high as those faced by the Colonel, running an organization also involves significant risks. Leaders must consider factors like:
Leaders who lack risk tolerance can hinder their organization's growth and even lead to its demise. Blockbuster, for example, failed to adapt to the changing entertainment landscape and lost its dominant position to Netflix, a risk-taking company.
There's often a greater risk in not taking risks. As my spiritual mentor once said, "Nothing ventured, nothing gained." Risks open doors to new possibilities in your personal life, career, and organization.
There are a few things that leaders can do to increase their risk appetite.
1. Self-Awareness: Understanding Your Personality Type
The first step is self-awareness in leaders. Having established that taking risks is important, if you find yourself out of depth with your own risk appetite, follow these three steps. The first step is self-awareness. This involves understanding your personality type. There are various tests out there to understand your personality type and whether you are risk-averse or have a massive risk appetite. I like to use the Indian Ayurvedic system of personality because it gives a holistic picture of a person's nature.
In the Ayurvedic system, they talk about the five elements: earth, water, fire, air, and ether, and the proportions of these elements in your body. Those with a higher fire element in their body are type A personalities with a great appetite for risk. Fire transforms things, and you need that fire in your belly to take risks. On the other hand, if you have a greater earth element in your body, you are more stable, structured, and slow-moving, and your risk appetite will be low.
In the Lead with Ease Academy, leaders who join the program get an assessment of their personality type and Ayurvedic techniques to increase the fire in the body if needed. We also teach about chakras and offer a personal power bracelet to increase the fire element in a healthy way.
2. Examining Beliefs and Needs
The second step is to understand your beliefs and needs. Even if someone has a lot of fire in their belly, sometimes their beliefs may block them. It's important to recognize the beliefs that are blocking your risk-taking ability. Emotionally healthy and well-integrated people are willing to take risks and live life as an adventure. Four beliefs to watch out for are:
The last belief reminds me of an entrepreneur who inherited a successful business. He felt a strong sense of responsibility of preserving the wealth created by his ancestors and parents who built the company's wealth. Consumed by a fear of loss, his primary goal became protecting everything they had achieved. He believed his job was to maintain comfort and avoid any pain, which translated to a complete aversion to risk-taking. Unfortunately, the business world is a constant upstream current. Stagnation means getting swept downstream. This entrepreneur, convinced he could stay afloat by minimal effort, missed the crucial point: the current's strength fluctuates. Inevitably, a stronger flow came, pushing the company out of relevance entirely. His fear of loss ultimately led to the very outcome he sought to avoid.
These beliefs can block you from taking risks. Identify and work on editing these beliefs. Also, recognize any absolute needs for certainty, stability, and predictability that may be holding you back.
3. Partner with others
The third step is to surround yourself with people who have a greater risk appetite.
1) Find peers and leaders who take risks and learn from their stories and actions. In the LeadwithEase Academy, community interaction is a key feature to inspire and learn from each other.
You might not be in the right season of life, or your personality might lean towards caution, or perhaps you're still developing your beliefs, but it's essential to take risks. To do this, you should surround yourself with people who have a greater risk appetite. Seek out peers and leaders who are more willing to take risks than you are. By mingling with them, listening to their stories, and observing how they push the envelope, you will find inspiration. High-level learning certainly comes from books and structured courses, such as those offered at the LeadwithEase Academy. However, learning also happens through interaction—seeing how others handle challenges and draw energy from their actions. This is why community is a crucial feature of the LeadWithEase Academy. Beyond structured learning, we emphasize creating ample opportunities for members to interact, learn from each other, and build long-term relationships. Witnessing others act with courage will inspire you to take action and move forward with confidence.
Hire individuals who have a greater risk appetite than you. If you don't naturally possess a high tolerance for risk, bringing on team members who do can be invaluable. Partner with these individuals, include them in your team, or make them your subordinates. As you work on increasing your own risk appetite, allow these team members to take the lead on certain projects, giving them the freedom to navigate and execute their ideas. This approach not only leverages their strengths but also provides you with a learning opportunity to develop your own risk-taking abilities.
2) Partner with other companies who have a greater risk apettite
For example, Netflix and Blockbuster. In 2007, Netflix proposed a partnership to Blockbuster, but Blockbuster didn't accept it due to their lack of risk-taking ability. Netflix became a major success while Blockbuster shut down.
We are currently in the "Netflix Generation," where streaming and on-demand content are ubiquitous, supported by small subscription fees. This contrasts sharply with the "Blockbuster Generation," when people visited Blockbuster stores to rent physical VHS tapes and later DVDs. Around 2007, as the internet began revolutionizing various industries, Netflix emerged as a disruptive force in entertainment by offering streaming services. At that time, Netflix's co-founders, Reed Hastings and Marc Randolph, approached Blockbuster with a partnership proposal. They suggested that Netflix could manage Blockbuster's online presence while Blockbuster promoted Netflix in their stores, offering to sell Netflix for $50 million. However, Blockbuster, confident in their dominance and unable to foresee the transformative potential of streaming, declined the offer. Despite the intelligence and accomplishments of Blockbuster's team, they were too comfortable with their current success and failed to recognize the opportunity to innovate. Consequently, Netflix thrived, eventually reaching a valuation of $28 billion, while Blockbuster faded into obscurity.
On the other hand many other companies were able to have the right mergers at the right time to remain relevant in the market.
In conclusion, there is a greater risk in not taking risks than in avoiding them. Assess your personality type, understand your beliefs and needs, and surround yourself with people who have a greater risk appetite.
As Zig Ziglar said, "You were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win." These three steps will help you plan, prepare, and expect to win. Whether you're running a large firm or a small venture, set your sights on your bold vision, take smart calculated risks, and focus on winning.
If you are looking to grow your core leadership skills, develop better inter-personal skills, strategy, organization development, succession planning and more I invite you to join the LeadwithEASE Academy- a community of high achieving leaders operating at levels very few aspire too.
Categories: : Leadership