By Daniel Bobinski
All of us have certain moments etched into our memory. For me, one of those occurred on July 20, 1969, when astronaut Neil Armstrong first set foot on the moon. It truly was “one small step for a man, but a giant leap for mankind.”
In the years since, I’ve often referred to mankind’s desire to engage in space travel as a parallel to our world of work. We seek challenges and rewards, but those rewards are almost always accompanied by risks. It’s been this way throughout all of time. From teams of cavemen hunting mammoth to teams at NASA figuring out ways for people to survive in space, people in charge of organizations drive forward to achieve certain rewards, and they’re always managing risks along the way.
Apple started strictly as a computer company, but they struggled to maintain even a 10 percent market share. In 2007 they risked shifting their business model to producing consumer devices, and now they are one of the most successful companies in the world.
The founders of Whole Foods Market started by borrowing $45,000 and got kicked out of their apartment because they were storing food products there. Then a flood wiped out their store. Undeterred, they rebuilt and looked for ways to expand. As you probably know, Jeff Bezos bought the brand in 2017 for over $13 billion.
The risk versus reward paradigm is at the core of any entrepreneur. In fact, the definition of an entrepreneur is, “a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.”
Ultimately, a business venture may fail and the entrepreneur may end up financially depleted. But successful entrepreneurs set goals, take risks and press on in pursuit of rewards.
Granted, not everyone is steering an organization’s ship and taking all the risks. However, I recently read and reviewed a new book by Larry Farrell, titled, “The Entrepreneurial Attitude: Lessons from Junior Achievement’s 100 Years of Developing Young Entrepreneurs,” and I have to say, I think one of the best ways people can increase their value to an organization is to think like an entrepreneur. Even if you’re not the person steering the ship, if you’re looking at situations from a leader’s perspective, you’re seeing things that the average employee does not see. You have a deeper understanding of the risks involved, and you look for ways to manage those risks.
This practice sharpens your critical thinking skills, which leads to better decisions, which, like I said, increases your value as an employee.
My neighbor, Chris Stevens, runs a nonprofit organization. But even running a nonprofit, Stevens says he wants people onboard who are “in it to win it.”
“When selecting leaders, you need people who want the organization to succeed. You want people who are willing to fill the gaps where needed, not people who are waiting to be told what to do. I want people who are willing to see what’s needed and make things happen without a lot of guidance,” he says. In other words, as the leader, Stevens values people who see the big picture and are willing to take initiative, evaluating and managing risk as they go.
With all this, you might be asking, “What should my role be in balancing risk and reward?”
Great question. Glad you asked.
What we’re talking about is called “risk management,” and it normally involves the following general steps:
- Identify the risk
- Analyze the risk
- Rank the risk
- Respond to the risk
- Track and review the risk
These steps can be called different things depending on who’s teaching them, but the basic process is the same.
That said, before I go over these risk management steps and what you can do with them, let me back up and reinforce some essential groundwork. The starting point for all action is knowing the overarching vision and mission of your company, followed closely by knowing the goals that are in place that will take your company in the direction of that vision and mission. Then, as you start looking at ways those goals can be met, you must also look for things that might get in the way. This is step one, identifying the risks.
From there you can analyze the possible obstacles and determine their potential likelihood as well as the magnitude of impact they might have on your plan. This is analyzing and ranking the risks.
The key from this point is to develop plans and suggest or implement actions that minimize or eliminate the risk. This is step four in the process (responding to the risk), and it’s also akin to the maxim offered by many leaders: “Don’t bring me problems, bring me solutions.” After all, it’s one thing to identify a risk (a potential problem), but you are more valuable to your organization when you can identify a plan to minimize that risk or eliminate it altogether (the solution).
It’s people who think and act this way that appeal to leaders like Chris Stevens. Leaders seek employees who look for ways to overcome obstacles in route to achieving the organization’s goals.
Finally, step five is tracking and reviewing the risk. You can’t just identify risks and then implement plans to minimize them. You really do need to keep an eye on potential risks to make sure they don’t flare up.
Most leaders love employees who think this way. Like I said, you don’t have to be the person steering the ship to be able to think like a person who steers the ship.
Whether you’re strategizing ways to take down a wooly mammoth or dealing with the problems of getting a spacecraft into orbit, as you find ways to minimize risks, you increase the likelihood of receiving rich rewards. ICE
Daniel Bobinski, M.Ed. runs two businesses. One helps teams and individuals learn how to use Emotional Intelligence. The other helps companies improve their training programs. He’s also a best-selling author and a popular speaker at conferences and retreats. Reach him at daniel@eqfactor.net or 208-375-7606.
