Change Your Risk Disposition

by Mike Shipulski

Change Your Risk DispositionInnovation creates things that are novel, useful and successful. Something that’s novel is something that’s different, and something that’s different creates uncertainty. And, as we know, uncertainty is the enemy of all things sacred.

Lean and Six Sigma have been so successful that the manufacturing analogy has created a generation that expects all things to be predictable, controllable and repeatable. Above all else, this generation values certainty. Make the numbers; reduce variability; reduce waste; do it on time  – all mantras of the manufacturing analogy, all advocates of predictability and all enemies of uncertainty.

With the manufacturing analogy, a culture of accountability is the natural end game (especially when it comes to outcomes), but what most don’t understand is a culture that values accountability of outcomes is a culture that cannot tolerate uncertainty. And what fewer understand is a culture intolerant of uncertainty is a culture intolerant of innovation.

By definition, innovation and uncertainty are a matched pair – you can’t have one without the other. You can have both or neither – that’s the rule. And though we usually use the word “risk” rather than “uncertainty”, risk is a result of uncertainty and uncertainty is the fundamental.

When a product is launched and it’s poorly received, it’s likely due to an untested value proposition. And the reason the value proposition went untested is uncertainty, uncertainty around the negative consequences of challenging authority. Someone on high decreed the value proposition was real and the organization, based on how leadership responded in the past, did not challenge the decree because the last person who challenged authority was fired, demoted or ostracized.

When the new product is 3% better than the last one, again, the enemy is uncertainty. This time it’s either uncertainty around what the customer will value or uncertainty around the ability to execute on technology work. The organization cannot tolerate the risk (uncertainty), so it does what it did last time.

When the new product has more new features and functions than it has a right to, intolerance to uncertainty is the root cause. This time it’s uncertainty around the negative consequences of prioritizing one feature over another. Said another way, it’s about uncertainty (and the resulting fear) around using judgement.

These three scenarios are reward looking, as the uncertainty has already negatively impacted the innovation work. To mitigate the negative impacts on innovation, uncertainty must be part of the equation from the outset.

When it’s time for you to call for more innovation, it’s also the time to acknowledge you want more uncertainty. And it’s not enough to say you’ll tolerate more uncertainty because that takes you off the hook and puts it all on the innovators. You must tell the company you expect more uncertainty. This is important because the innovators won’t limit their work by an unnaturally low uncertainty threshold, rather they’ll do the work demanded by the hyper-aggressive growth goals.

And when you ask for more uncertainty, it’s time to explicitly tell people you expect them to use their judgment more freely and more frequently. With uncertainty there is no best practice, but there is best judgment. And when your best people use their best judgement, uncertainty is navigated in the most effective way.

But, really, if you ask for more uncertainty you won’t get it. The level of uncertainty in the trenches is set by your risk disposition. People in your company know, based on leadership’s actions – what’s rewarded and what’s punished – the company’s risk disposition and it governs their actions. If you take the pulse of your portfolio of technology projects you will see your risk disposition. The thing to remember is your risk disposition is the boss and the level of innovation is subservient.

When the CEO demands you change the innovation work for the better, politely suggest a plan to change the company’s risk disposition.

image credit – suzanne gerber

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Mike ShipulskiMike Shipulski brings together people, culture, and tools to change engineering behavior. He writes daily on Twitter as @MikeShipulski and weekly on his blog Shipulski On Design.

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