Chapter Nine: Risk--Breaking Barriers Creatively and Courageously

Sometimes the prospect of risk can be daunting, particularly in uncertain times. As the U.S. economy continued to slouch through winter 2003, BusinessWeek senior writer John A. Byrne pointed to low confidence in CEOs as one of the many factors conspiring to keep American business in the doldrums. "Not all that long ago, with soaring stock prices and labor shortages, CEOs were almost cultural icons," Byrne observed. "Today, with the combination of a weak economy, an ever-lower stock market, and a startling succession of corporate scandals, they're embattled, belittled, and cursed."^[1]

The Role of Risk in Accountable Organizations

According to Byrne, CEOs across the board are paying for the sins of the few. The overwhelming public disdain, coupled with weak earnings and shaky consumer confidence, is not encouraging business leaders to take risks. Instead, they're homing in on cutting costs. Jeffrey E. Garten, author and dean of the Yale School of Management, says it's understandable that uncertainty drives leaders to circle the wagons and focus solely on execution. However, he goes on to caution that

execution alone will not lead U.S. industry out of its funk. We can all agree that having a vision without the ability to carry it out is no more than wishful thinking. But the opposite is no better. What good is execution if the strategy and goals are the wrong ones? In fact, the emerging virus in American business culture could be the penchant for playing it too safe—settling for nothing more than getting things done and gearing everything to meeting quarterly targets, while failing to exercise enough imagination about where to go and what to be.^[2]

Furthermore, chief executives shouldn't forget that smart risk taking is in their job description. "Dynamic capitalism isn't just about cutting costs or staying afloat," Garten writes. "It's about thinking of how to make the future better and placing bets on that vision."^[3] Indeed, leaders within Accountable Organizations must embrace risk as a necessary part of what they do. Otherwise, they may be trading in their company's future for an increased sense of security in the present. That security may be fleeting if the company isn't ready for new opportunities. In fact, we as consumers expect companies to take risks. We're always asking, "What's next?" We expect companies to be a few steps ahead of us with the answer.

Profits are the lifeblood ensuring that an Accountable Organization endures and grows, that it will be around to make a difference in stakeholders’ lives. And taking risks—educated, responsible risks—is necessary for an Accountable Organization to innovate and compete, to achieve and sustain profitability. Three concepts underlie this kind of risk taking:

1. Creativity. While corporate scandals have added an unsavory angle to the concept of creativity (e.g., "creative accounting" has become a common phrase), it's truly the stuff of our imagination that fuels our economy. It's the ability to imagine the possibilities—and the freedom to pursue and realize those possibilities—that motivates us to endeavor. In order for us to take a risk in the first place, we must have an idea upon which we're "placing our bets."

2. Courage. Creativity means nothing when there's no will to implement it. Organizations and stakeholders that wish to succeed must find the mettle within to make the leap. This can be especially difficult during uncertain times. Of course, it is during uncertain times when courage is most in need.

3. Conscientiousness. The courage to take risks should not be misplaced, however. Accountability means that risk cannot be taken without due diligence, without an honest audit of the foreseeable consequences, which includes identifying potential benefits … and potential casualties. The possibility of failure is inherent in risk, and risk takers in Accountable Organizations do their best to weigh the costs of that possibility against the likelihood of success.

During the heady days of the late 1990s, there was no shortage of creativity and courage—some would say audacity—when it came to risk taking. In the euphoria, conscientiousness seemed outdated. Now that the gold rush is over and reality has set in, some may be taking conscientiousness to the extreme, deeming any risk unacceptable. As Byrne and Garten rightly point out, this kind of thinking won't propel business out of its slump. Now is the time for educated, responsible risk taking—by both the leaders and stakeholders in Accountable Organizations.

^[1]John A. Byrne, "The Economic Drag of CEO Funk," http://www.businessweek.com, February 27, 2003.

^[2]Jeffrey E. Garten, "Listen Up, Execs: Playing It Safe Won't Cut It," BusinessWeek, March 3, 2003, 28.

^[3]Ibid.