Note: This blog focuses on taking risk, an important aspect of building an entrepreneurial organization. It also describes how risk aversion plays a central role in an organization’s failure to become entrepreneurial. Future blogs will talk about other aspects of building an entrepreneurial organization.
The choices individuals make in the face of events in the world around us can influence an organization’s culture and path forward for years to come. Choices organizations made in the face of 9/11 and its aftermath are still felt in companies over a decade later. The 9/11 attacks deepened a recession that has been in progress since the spring of 2001. When the stock market reopened four days later the Dow fell 617.98, the worst one-day drop ever. And while officially the recession ended in November, a threat of war continued, driving the Dow down, eventually almost 38% from its peak.
Company X is a marketing company headquartered in New York City with several regional offices. They define their mission as helping clients achieve marketing goals while increasing their own profits. Their approach was to design and implement only what they believed clients wanted. In the face of 9/11 and given the financial turmoil in the stock exchange Company X chose to adopt a highly conservative financial position, which included laying people off to insure profit margins were maintained. The conservatism seeped into the culture, quickly becoming pervasive in all functions in the company. They became even more fearful of taking risks with their clients for fear they might lose them.
Company X continues to feel the effects of those decisions made in 2001. But now their conservatism is negatively impacting client work. In today’s world continually evolving technology is present in almost every aspect of our lives. Clients are aware there are more possibilities; some now demand more risky, innovative technology solutions. And several clients understand they need to take risks if they are to survive and want Company X to lead the way in taking risks as well. But Company X is risk averse when it comes to trying out new technologies and is uncomfortable taking a leadership role when it comes to breaking new ground for clients.
Our stated engagement goals included helping Company X develop a more entrepreneurial culture. An entrepreneurial culture is one in which people understand they must take risks if they are to create spaces in which the new things needed for success can emerge. One thing that became clear in our initial work with Company X is that being risk averse was deeply embedded in their culture.
In the course of our early work with Company X we traced back to the immediate aftermath of 9/11 as a pivot point in their history. It was then they moved from being a marketing organization whose aim was to support clients while increasing Company X profits to one that was risk adverse in client work because they feared losing them and thus their own profits. Making this clear this pivot point was a first step. Once the company became aware of what had triggered the risk aversion, individuals became invested in doing something about it.
Of the number of areas where work focuses on learning how to take risks as a way of building an entrepreneurial culture, two are particularly worth describing. The first takes place at the individual level. The second is in the context of teams.
An important space for making the shift to an entrepreneurial organization is in the area of professional development. Professional development in this sense is not about learning additional function-specific skills. Rather it means giving individuals an opportunity to step out of their comfort zone and experience work in a different space, which often feels risky. Reflecting with individuals on what they are learning helps them develop a level of comfort with taking risks as well as strategies for adapting successfully in new contexts.
It might also mean giving an individual a broader role with greater responsibility and letting them grow into it, again using reflection on their experience to reinforce learning. Or it might mean moving someone into a job who doesn’t fit a narrow profile, a bit of a risk for both the person moving into the role and the hiring manager. Finally, it might be that in the formal performance review process not only is task performance measured and discussed but also how much they experimented and how experimentation influenced their work going forward.
Client work is done in teams. One way we find to support teams as whole taking risks is to continually cull out the best ideas, ideas recognized as having the most value or “edge” regardless of who suggests them. Team members begin to understand ideas with edge are the ones rewarded with recognition. Another thing that is helpful is to have conversations about taking risks with “pushing versus accommodating” clients and how to work with clients when there is a need push them into unchartered territory. The conversation itself provides a space in which teams become more comfortable with formerly risky ideas and supports development of strategies for taking needed action. Finally, encouraging teams to bring in members with different capacities and who see things with fresh eyes help others feel more comfortable moving outside their comfort zone.
