The LEADing Edge: Mastering the art of smart risk-taking

In today’s business world, where change happens at breakneck speed, mastering smart risk-taking is no longer optional – it’s essential. 

As executive coaches, we work with leaders across industries who understand that staying competitive requires more than playing it safe. 

The most effective leaders know how to take calculated risks that fuel innovation and growth. 

This is the second article of three in our series on failure and innovation, and today we’ll explore how to embrace risk wisely, learning from failure along the way.

Smart risk-taking isn’t about being reckless – it’s about pursuing intelligent risks that yield meaningful outcomes. Here’s how successful leaders do it:

1. Opportunity-driven inquiry: Before diving into any risk, ask, "Is this worth pursuing?" Use further questioning to uncover unexplored areas of opportunity.
   

2. Explore new territory: If an outcome is already known, it’s not a smart risk – it’s playing safe. Explore unfamiliar areas – this is where true breakthroughs most often occur.
   

3. Informed decisions: Smart risks are informed by data, past experiences, and thorough research. This doesn’t eliminate failure, but it does ensure continuous learning.
   

4. Minimize the downside: Structure your risk-taking in a way that mitigates major losses. Aim for small, manageable failures that provide new learnings without significant cost.
   

5. Continuous learning: Build flexibility into your approach. Smart risk-taking allows for ongoing learning and course corrections, ensuring you adapt as you go.

The stakes matter. In high-stakes situations, be deliberate and cautious. When the stakes are lower, create room for experimentation and creative risk-taking. 

As a leader, your role is to set ambitious goals that encourage your team to take risks.

Reward intelligent failures and actively share the lessons learned. Consider hosting "failure parties" to celebrate lessons from missteps and inspire your team to continue innovating.

Focus on these traits

These principles on risk-taking can also help you as you delegate, coach and mentor others. 

One of the hardest transitions we see our clients make is stepping out of the weeds to make dedicated time for strategic planning. Do you need to block time for strategy? Additionally, delegating can come with some amount of risk but it also provides exceptional growth opportunities for both you as the leader and those you lead.

To truly master intelligent failure, focus on developing these key traits: 

• Persistence to keep pushing forward despite setbacks
  

• Reflection to regularly examine your actions and their outcomes
  

• Accountability to take responsibility for your decisions and their consequences
  

• Apology to prioritize making amends and rebuilding trust when mistakes affect others.
  

By mastering the art of smart risk-taking, you position your organization to thrive in a rapidly changing world. Stay tuned for the final part of our series, where we’ll explore how to build a failure-positive culture.

This article is the second in our three-part series inspired by insights shared by Amy Edmondson, the Novartis Professor of Leadership and Management at the Harvard Business School, from the 2024 Institute of Coaching Conference. Stay with us as we explore how failure can propel your organization toward greatness.

Marilyn Orr, M.A., CEC, PCC, is Coaching Services Manager at Vision Coaching and a leadership coach. Kelley Russell-DuVarney, MA, PCC, is a leadership coach with Vision Coaching.