The big plays your people are avoiding
Four months ago, as everything started to radically change, the question on the lips of most business leaders was, “how on earth will this play out?” But as we emerge from lockdown, that question has increasingly become, “how can we grow with the way things are now?”
And so now, more than ever, leaders are looking for new ideas and new market opportunities from their people. Ideas that have the potential to become a “big play”, that could cut through customers’ current anxieties, and engage them again with our products and brands.
We’re looking for our people to take an entrepreneurial leap; to experiment and innovate. To do things we haven’t done before, so we can start to thrive and grow again in this strange, and still unfolding, new world.
The problem is your people think like employees, and employees, CEOs, and entrepreneurs for that matter, all have a very different attitude to innovation and the risk that comes with it.
Imagine you manage a brand that turns over £100m a year. You have an idea to relaunch it with a whole new twist – maybe carbon neutral, organic, fully re-usable, lease instead of buy, whatever it may be. You know that it has a 50% chance of failure and losing half of its value; but it also has a 50% chance of success and doubling that value.
Roll the dice and that £100m brand could become a £50m brand, or a £200m brand.
For an employee, maybe a country head or brand director, it’s an existential career gamble that few, if any, would ever take. Psychologist Richard Thaler once performed this exact thought-experiment, by the way, on 25 divisional directors in a global organisation, and virtually all of them said they wouldn’t take the chance.
But for a CEO with half a dozen such brands in a portfolio, it’s a no-brainer: three will probably fail, but three will probably succeed, and £600m will become £750m, and that’s all that counts.
For most entrepreneurs, even those with just one brand, the gamble would be sorely tempting and eight out of ten would probably go for it, because they know they’ve built the brand once, if it all goes wrong, they know they can build it again. In contrast, the employee knows they would probably never get the chance.
This is why your people don’t take risks; don’t bet-heavy on innovation. They avoid making those big plays because of the personal consequences of failure.
The key to creating an environment where you’ll get those big ideas emerging from your people, where your organisation will ramp up innovation rather than relying on you to constantly drive it, is in the way you deal with that fear of failure. So, ask yourself, what do your people think are the consequences of failing? And what’s your part in reinforcing that perception?
The larger the organisation, the more critical it is to be able to accept local failures; to see them as a necessity for global success. That might sound obvious in the executive suite, but it’s a whole different ball-game if there’s a chance you could be that local failure.
If the people you need to be innovative, at whatever level in the organisation, think for one second that taking a risk, and failing, puts their job, their chance of promotion, or even just their reputation at risk, then just like Thaler’s divisional directors, your folks will avoid making the play as well.