Why do we avoid risk? How can we overcome our own risk aversion? Oftentimes, risk is an illusion—people are thinking they’re facing risk but it’s actually something else. So, if you want to “cure your aversion” you’ve got to see through the illusion to what is really happening in your mindset and adjust accordingly.
To cure this aversion: Ask yourself, “What is the real risk here?” “What are the beliefs driving me to see this action as risky?” “Am I actually risking my business or am I risking my adherence to these beliefs?” Sometimes the risk is real. But in those cases where the aversion to risk is greater than the risk itself, working it through in your mind can help you overcome the challenge.
Take the case of Randy Norton, founder and co-chairman of Great American Restaurants, who experienced difficulty in revitalizing one of his underperforming brands.
When Randy began working with consulting firm Gap International on a new approach to growth, he had to examine rules about the industry and his business that he had set for himself. He began with an important question: “What’s the worst thing that can happen if you take a risk?” Randy concluded he needed to pay wages above the industry standard and pass on some of the costs to customers. Satisfied servers started treating kitchen staff better, leading to better-prepared food and ultimately happier guests. As a result, the company not only avoided financial distress, but doubled in size over the next decade.
Another reason people have an aversion to risky action is because they haven’t considered the risk of INACTION. They think too much about what happens if they DO something, but not enough about what happens if they DO NOT do something. To cure this aversion: Look at the output of not taking the risk. It could be there is actually more risk in NOT taking it.
John Meiners, an executive vice president at the American Heart Association (AHA), took the risk to transform his entire organization. He had much at stake, given the importance of his AHA work: one in every three deaths in the U.S. is the result of cardiovascular disease, yet a person suffering a cardiac emergency receives desperately-needed CPR from a bystander only 32% of the time.
John rethought and retooled AHA’s entire emergency medical training/education model—a radical makeover within an organization still relying on paper textbooks and lengthy, in-person classes. His key realization:“If we don’t disrupt ourselves, someone else will. We have to act now.” This new mindset drove John to establish a mandate for CPR training as a requirement for high school graduation in the U.S. and project a five-year growth in revenue for the nonprofit of 30% by 2016.
As a leader, changing your approach to risk is only the first step. You must also share your new mindset with your team and better understand how your team engages around the topic of risk. Whenever a team member objects to a plan as “too risky,” take the time to engage in a discussion to dissect exactly what assumptions are driving a perception of risk and what would be potential consequences of inaction. This conversation will empower your team members by uncovering their fears and motivations and is a crucial step to creating alignment among teams and building an environment that encourages risk-taking.
When we can see the background drivers that create an illusion of risk, we create the choice to act differently in the moment. That choice gives us the edge to create something extraordinary.