There is a fine line between risk-taking behavior and risky behavior. If you look at the outcomes alone, risk-taking behavior is a necessary tool for growing the company or success, but risky behavior is a tool for failure. Unfortunately, we can't predict the outcomes without taking the risk.
Another good reason to take risks, businesses in any industry often don't know where their next big competition will come from. Take Apple and the innovation of the iPhone as an example; they didn't invent the telephone, they simply made it better. In today’s industry, in which change happens at a relentless pace, standing still is not an option. You must take a risk at some point.
Risk-taking behavior implies some calculated measurements - that you understand the market, and that you have some confidence that your strategy will enable the business to grow forward. On the other side, if you don't understand the market, and you're not calculating your steps against a proper risk-value analysis for both your strategy and the organization at large, that's when you venture into the territory of risky behavior that could potentially put your company in danger.
Sounds easy enough, right? Unfortunately, there's not a black and white way to measure risks, and calculating the impact of them depends on your organization's overall culture and understanding of your customers.
First and foremost, you must create a fearless organization. A corporate culture that encourages creativity and outside-of-the-box thinking from all employees naturally lends itself to innovative ideas that challenge the status quo.
Secondly, make it a customer-centric organization. Because if you start thinking like your customers, then you have a better understanding of the solutions that will impact and benefit them the most.
With those two pieces in place, you are in a better position to look at every project or idea from both the technology and the business standpoint and determine the value that each project intends to achieve – whether it's customer retention, customer acquisition, operational efficiency or some other bottom line outcome. You must measure risk against value every step along the way.
With continuous success measurement taking place, the feasibility of projects quickly comes to light through rapid prototyping, close collaboration between IT and business, and technical execution. During this time, evaluate everything. Ask yourself, “Is this still the right thing for my customers? For my business?”
When the risk-value analysis proves that the idea is not working, it's time to fail fast. Simply put, you can't have an innovative idea for 18 or 24 months. You need to have an idea and execute, and if it does not work, course correct. If you don't already have your success metric established – that is, the value or outcome you are trying to achieve – you will have no indication of when to pull the plug on an idea. That’s risky behavior, and that's what causes organizations to fail.