This is what leaders face everyday. They need to decide without all information or data on hand. This is a risk. Not taking a decision is, in itself, a decision and, therefore, does not reduce the risk.
Many a time, we take decisions that go wrong. We end up facing the consequences and over years we start becoming risk averse. While organizations keep telling us that a vital ingredient of leadership is the ability to take risks, there is very little tolerance for errors in judgement. So, leaders become risk averse over time and some even reach a stage where they just don't take risks. This puts them, the organization and the employees at a greater risk because normal decisions that should have been taken, just don't get taken.
The previous Indian Government is a classic example. Stung by criticisms and asks for resignation due to so many scams that erupted, the government machinery just came to a grinding halt. During the last 3 years, absolutely no decision was taken. The ruling party got hit so badly that as they started campaigning during election time, we saw the same defensiveness and inability to take even calculated risks. The result was that they lost very badly.
I was staring at the new contract that we had signed up for a back office operation. It was a marquee account but if we didn't change our operating model, we were not going to make money out of it. I had called for a meeting of key leaders and we looked at the contract and worked on different options. What came out clearly was that we had to look at a totally different operating model for this account. A model that we had not tried before and were not sure will deliver what we wanted. Given the unknowns, we were also worried whether the quality of service delivery will be as good as what it was. So, the risk was one of damaging a great reputation that we had built over the years. As I thought through the pros and cons, it became increasingly evident that if we ever needed to make a profit out of this contract, we needed to change the model and we could take a calculated risk. So, I spoke to my operations manager, HR and my immediate manager. I told them that I was willing to go ahead with adopting a new model given that was the best for the organization at that point in time. I pushed on and we went through with changing our operating model. It became a huge success and became the model for some of our other contracts too. It was not an easy decision and making it happen also was not easy. However, with team work, we managed to pull through successfully with the model.
Sometimes, our decisions go well and sometimes they just backfire. If we are able to get 80% of our decisions right and limit the damage on the other 20%, we come through as successful leaders. No leader has reached a position of leadership and stayed there without taking risks. It is how the leader continues to take those risks and take decisions in the best interest of the organization that matters. Most importantly, leaders must be able to live down their errors of judgement and move on. If they are stuck at a wrong decision, life comes to a standstill and does not do good to anyone, especially, the leader.
So, let us be that leader that takes risks understanding fully well that there are consequences to wrong decisions. Not taking a decision is also a decision and carries with it far more risks!!!
Great post Ravi.. Most of the times, esp in describing it as a leadership trait, Risk is oversimplified, like a binary situation - either you take it or you don't. Great leaders take calculated risks. They learn from the every risk they take (however small, personal or professional), they almost know what are the likely outcomes and what will they do for each of the outcomes - some desired / some undesired.
ReplyDeleteLeaders don;t make speculations and bet on chance purely. They learn every day, from every action and every reaction. It's like machine learning, you get smarter with every transaction and you reach a point where a situation that seems risky to some, is no longer risky for the great leaders!!
Hope you agree.
Great comment Himanshu...what seems risky to some are not risky to others...that determines the risk appetite of leaders...
ReplyDeleteHi Sir, very nice article written on Risk taking.
ReplyDeleteI came across the below interesting message and thought of sharing :)
A man came to Junnaid, a Sufi mystic, and asked him, ”What do you say about pre-determination, kismet, fate, and the freedom of man? Is man free to do whatever he wants to do? Or is he simply a puppet in the hands of an unknown puppeteer, who simply dances the dance that the puppeteer chooses?”
Junnaid is one of the few beautiful mystics. He shouted at the man, ”Raise up one leg!”
The man was a very rich man; Junnaid knew it. All the disciples, the whole school knew about it – and he had shouted so loudly and so rudely, ”Raise one leg up!” And the rich man had never followed anybody’s orders; he had not gone there to follow orders. And he could not conceive even a far off, far-fetched, off-the-wall relationship between his question and this answer. But when you are facing a man like Junnaid you have to follow him.
He raised his right leg.
Junnaid said, ”That is not enough. Now raise the other, too.”
Now the man was at a loss, and angry also. He said, ”You are asking absurdities! I had come to ask a philosophical question – that you simply dropped without answering. You asked me to raise one leg, I raised my right leg. And now you are asking me to raise the other, too. What do you want?
How can I raise both legs?”
Junnaid said, ”Then sit down. Have you received the answer to your question or not?”
The man said, ”The answer to my question has not been given yet. Instead you have been training me in this parade!”
Junnaid said, ”See the point: when I said, ‘Raise one of your legs’ you had the freedom to choose either the right or the left. Nobody was determining it, it was your choice to raise the right leg. But once you had chosen the right leg you could not choose the left too. It is your freedom that has determined the fact of your bondage. Now your left leg is in bondage.”
Man is half free and half in bondage, but he is free first. And it is his freedom, how he uses his freedom, that determines his bondage. There is nobody sitting there writing in your head or making lines on your palms. Even an omnipotent God must be tired by now, doing this stupid thing of making lines on people’s hands. And so many people are coming... writing in everybody’s head what he is going to be, where he is going to be born, when he is going to die, what disease, what doctor is going to kill him. All these details!
You are free, but each act of freedom brings a responsibility – and that is your bondage. Either call it ‘bondage’, which is not a beautiful word, or call it ‘responsibility’. That is what I call it. You choose a certain act – that is your freedom – but then the consequences will be your responsibility.
Great story Hema...thank you...
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