8 Steps to Build a Team That Embraces Risk
Nov 29, 2021 | Business
When you look at iconic companies, there’s one undeniable shared trait: A willingness to take risks.
By contrast, dying companies suffer from risk-aversion. So how do you build a team that embraces risk?
1. Set a Threshold for Wrong
At Bolt, one of our favorite operating values is Chase 10X, Be 20% Wrong. (Credit: Reid Hoffman.)
The 20% figure really matters. It puts a real value behind our willingness to make mistakes. It gives the team something tangible to measure against, and it assumes that there’s a certain amount of creative give within the organization—that mistakes aren’t just tolerated, they’re expected and even embraced.
2. Praise Smart Failure
Failure is the lifeblood of a risk-taking culture. This requires a shift in mindset. Failure has to be seen as progress. It means you learned critical information to inform your next steps.
When giving feedback to your team, if they drove a smart strategy that led to a failure, praise it. At Bolt, we also grade people on risk taking in their performance reviews. You get points for the scale of the dive—not just the execution.
A person or a company that takes too little risk is not going to be moving quickly enough. Risk is what begets speed, and speed begets progress.
3. Default to Experimenting
There is nothing worse than wasting time theorizing about the perfect solution. If something can be easily tested, test it. If someone has a strong hunch, follow it.
Out with the theorizing. In with the action. Perfectionism has no place in a startup. The best thing a startup has going for it is the ability to be wrong, correct errors, and re-run the experiment. That’s the advantage of a small organization that is not hidebound by “the way things have always been done.” Use that advantage—often.
4. Don’t Be Too Shy To Admit Failure.
It’s one thing to say you’re a culture that embraces failure, but the only way that becomes a reality is if people admit failures. Make that okay within your organization.
A risk taking culture necessitates iterating quickly. Failures are fine if you learn quickly, pivot, and keep moving. Admit failure quickly to yourself, your team, and your partners.
5. Watch Out for One-Way Doors
Amazon has a great concept of one- vs two-way doors. Two-way doors mean that you can act quickly and take risks all day—because you can always go back through the door.
Avoid one-way doors, which, by design, mean you can’t go back. To put it differently, for the ones you can’t get wrong, don’t get it wrong. And avoid, wherever possible, situations that force you into that position.
6. Don’t Accept Sloppiness
Smart risks are great. Dumb risks are not. Calculated mistakes are great. Careless mistakes are not.
A mistake once is good. The same mistake twice is not. There is a difference between risk-taking and sloppiness. A calculated, measured action with a hypothesis that you can judge against…that’s a risk. A half-baked idea that you’re not measuring or testing, and with no clear ownership or strategy—that’s just shoddy work. Avoid it.
7. Balance the Risk Taking
As with all things, risk needs to be balanced. Balance risk-taking with the scale of your core business.
Invest too much in risk taking, and your core breaks. Invest too much in your core, and you’re not innovating. Pick a number. For example, 60% core, 40% risk. Align your team accordingly.
This is especially true as you achieve product-market fit. Your first instinct will be to batten down the hatches. Do some of that—but don’t forget what led you to achieve in the first place. Give yourself the room to take measured risks as you scale.
8. Don’t Break Prod
Our engineers love trying new features. But companies rely on us for their critical path software. We recognize this, and breaking for our customers is not covered by being 20% wrong.
This one’s simple: We don’t mess with our production systems. Our risk-taking should not become a liability for our customers, and there are ways to make sure that, even as you take risks, you do it in an environment that doesn’t negatively affect your customers.
And there we have it!
Risk taking culture defined in eight steps. There is nothing more important than creating a culture that embraces risk. Do it right, and you will unlock the X Factor in your organization.
Oh, and here’s another benefit: Risk taking ends up being a thrill. It’s so exciting, and it’s exciting to work at a place that’s always pushing the envelope.
Last but not least: Don’t forget the secret ingredient. Keeping it fun. The right balance of fun and risk-taking can hold a company (or a person) in good stead for a long time.