CEOs, Innovation, and Risk-Aversion

Innovation is the lifeblood of every business. Yet, one of the most common excuses a CEO hears when people try to explain why the company isn’t coming up with any significant innovations is, “We’re just too risk-averse.” To which, the most common response from a CEO is, “Tell me which big idea I didn’t fund.” And so the vicious circle begins. But when a CEO or any other leader hears “risk averse”, what should they really be hearing? Turns out, “risk-aversion” is code for something entirely different and deeply personal.

One of the first lessons a facilitator learns is how to conduct a brainstorming session. And what’s the cardinal rule of brainstorming? No criticism or judgment of the merits of the ideas being thrown out. Why? Because it shuts people down. They won’t make themselves vulnerable by offering ideas that may be summarily judged and shot down in front of everybody else. As a result, goods ideas don’t surface. Hence, the cardinal rule in brainstorming.

Most people miss the most important aspect of the brainstorming rule: that to get good ideas to surface, people have to feel safe enough, trust others enough, to make themselves vulnerable. Consider this quote from Brené Brown, professor at the University of Houston Graduate College of Social Work, who said, “Vulnerability is the birthplace of innovation, creativity, and change.”

So, when someone says “risk-averse”, what he or she is really saying is “I don’t trust enough to be vulnerable”, the prerequisite for being innovative. Risk-aversion is code for an untrusting environment or culture that keeps people from being vulnerable enough to be really creative and innovative. When you hear “risk-aversion”, don’t try to make the organization prove their claim. Instead, you need a strategy for making the culture, and the people that make it up, more vulnerable.