Risk is present in everything we do, even in doing nothing, especially in today’s uncertain world. What’s your appetite for risk, and is it balanced enough?
In hindsight, we can see that the West’s rushed decision to invade Iraq in 2003 didn’t consider the complex local conflicts. Similarly, Kodak’s Board of Directors ignored the opportunity to develop the digital camera, invented by Steven Sasson in 1977. They were too cautious, believing people wouldn’t want to view photos on screens, and worried about losing their 35mm film market. This lack of risk-taking, combined with impulsive attempts to adapt later, led to Kodak’s downfall in 2012.
Over the past 20 years, many big companies either didn’t take enough risks or acted too quickly without careful thought, damaging their businesses beyond recovery. Research shows that these failures often result from assumptions that create blind spots, preventing leaders from properly analysing risks and opportunities.
As a director or manager, you have your own preferences and traits when it comes to risk. It’s useful to understand the paradoxical nature of balancing risk and strategy. A good proverb for this might be: “Have the courage to pursue success, but understand and manage your risks.”
Dr Dan Harrison created a tool that explains several paradoxes in decision-making. These paradoxes involve two traits that seem to contradict each other, but when balanced, they offer a healthier approach. This idea reminds me of the story of the Buddha, who was meditating by a river. He overheard two musicians talking about tuning a stringed instrument. They said that if the strings are too loose, it’s wrong, and if they are too tight, it’s also wrong. This made him think about finding a “middle way.”
The same applies to the traits in Harrison’s paradoxes. If one trait is too strong or too weak, it can cause unproductive behaviour—either too aggressive or too passive. But when the traits are balanced, they lead to more effective decision-making.
The two key traits of the Paradox of Opportunity Management are:
Risking is an active trait, but when it is not balanced by analysing pitfalls, it can turn into Impulsiveness. This creates an imbalance where people take risks without thinking about the potential problems (‘High Risking’ and ‘Low Analysing Pitfalls’).
On the other hand, if analysing pitfalls is not balanced with enough risking, it leads to Cautiousness. This is when someone focuses too much on the possible problems and avoids taking risks (‘Low Risking’ and ‘High Analysing Pitfalls’).
When both traits are balanced, it results in Mindful Courage. This is when you take risks but also carefully analyse the potential problems (‘High Risking’ and ‘High Analysing Pitfalls’).
It’s also possible to have low levels of both traits, which leads to Cautious Inattention. This is when someone is cautious about risks but doesn’t pay enough attention to the potential problems (‘Low Risking’ and ‘Low Analysing Pitfalls’).
It’s important to remember that when we’re too aggressive or too passive, we can develop blind spots that might cause us to flip under pressure. For example, someone who is usually impulsive may become overly cautious, and someone who is usually cautious may become impulsive.
How many of these traits do you see in yourself or others?
Being a manager or director means facing challenges every day. Your ability to analyse risks carefully and take the right risks is key to success in your role. You likely have an idea of your own preferences and those of your team, but it can be helpful to take an objective look at these and discuss the impact with colleagues. This objectivity can reveal the team’s overall approach to risk.
If you’re part of the senior team, consider the following:
The ongoing uncertainty and complexity of the economy mean that we need strong self-awareness to understand our own traits and those of our teams. This helps us challenge assumptions, avoid behaviours that lead to either reckless action or inaction, and find a balanced approach through Mindful Courage.
To get a more objective perspective of your traits and your possible blind-spots in the Strategic Paradox, as well as the eleven other paradoxes in the assessment, just contact us at info@talent4performance.co.uk.
Check out the short 150-second video about this paradox on LinkedIn:
How much risk can you tolerate?
Remember, especially as you consider your strategic approach . . . stay curious!
David Klaasen
©David Klaasen – September 2016
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