The People Equation by Deborah Perry Piscione

Author:Deborah Perry Piscione
Language: eng
Format: epub
Publisher: Berrett-Koehler Publishers
Published: 2017-04-05T16:00:00+00:00

The People Equation Prescription

Any decision that is made to start a new venture or enter a new market involves many factors. If it was a thousand years ago, you were the son of a baker, and you were about to start your own bakery business, perhaps you would be in a position to understand most of those factors. The likely market size in your town, the price of flour, and the cost to turn that flour into a loaf of bread might all be known and understood. Today, however, the situation is rather different. You are fortunate if some of those factors are known in advance, but some will not be. As we move to the fluid economy, and the routine transactions of everyday life become standardized, the only businesses that will remain as open niches will be ones where the very factors that the business depend on will be necessarily unknown. Many of the important factors may be highly ambiguous; it may even be difficult to know what the important factors are. As such, any business venture has to be one that involves risk—risk that stems from what we don’t know about the business we are entering, or what we don’t know we need to know. Just as when the iPod was released, it was far from clear it would be a success. But in a world of unknowns, how can you take risk? What can you do that enables you to embrace risk but ensure success?

Risk-taking needs to be at the heart of your leadership. Em bracing risk is vital to enable the exploration of ideas that otherwise might seem absurd, and it is only through embracing risk that one can do something truly novel. After all, if the outcome were known, it wouldn’t be new.

You actually can’t do or say anything useful without taking risk. For example, if someone asked me if the weather might be suitable for a walk, I could say yes, which would risk being wrong but would lead to a clear decision as to what to do. In the alternative, I could say the probability of it raining is somewhere between 0 and 100 percent—an entirely accurate statement that is completely without utility and adds no value.

Because of the rate of change in the fluid economy, managing risk and making it safe to take risks are critical components of the leadership style that is required. This means that leaders must acknowledge the risks that people in an organization face and accept the fact that failures are part of this process. For your people to perform at their best, they must have a sense of psychological safety, so it is up to the leader to set the tone that risk and failure are okay. Only if the leader has embraced risks and shows comfort with failure will your people feel safe enough to share ideas.

Think like a chief innovation officer, not a chief executive officer. If execution can be largely automated, it’s innovation that counts.

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