Speaking of Leadership®, Vol. 2, No. 2
Phil Holberton

With each passing day, we learn of more companies heading into the red, more employee layoffs, and more troubled forecasts. We're in a recession the likes of which we haven't seen in a long time. Should we simply hunker down and maintain the status quo? Or, does this lean environment provide us some room for risk-taking?

Tipping my hat to the old cliché, it is true that taking no risk at all can be the biggest risk. After all, few companies can afford to simply do business like they have in the preceding days, months, or years. We need innovation and the resulting new products and services to remain viable competitors. We must take risks, as companies and as individuals. However, in a period when miscalculated risks can have dire consequences, we must ensure all risks are measured, incremental, and the desired benefits of such risks are clearly identified.

With the upcoming Winter Olympic Games continually making news, I am reminded of athletes who need to decide whether to accelerate their risk in subsequent rounds of their competition in order to earn the gold medal. Take a platform diving competition I remember seeing some years ago. An athlete was preparing to complete her last dive. Her previous scores were strong, but not exceptional. We learned that the young woman had a super-difficult and potentially high-scoring dive in her arsenal of dives. But, the dive hadn't been perfected. Sometimes she landed it, other times she didn't fully complete the final rotation before entering the water. If she attempted the dive now, it would be all or nothing. A successful dive would mean gold, while a flawed entry would eliminate her from any medal.

Expecting her to go for it all, I was surprised when she chose a spectacular dive—though not the super-difficult dive—and landed it perfectly. The difficulty wasn't as great, so even with a perfect score she didn't win the gold. Later, being interviewed, the athlete said that of course she wanted the gold medal, but she didn't feel she could pull off her toughest dive that day. She had considered doing her old standby dive—one she knew she could land perfectly—but she wanted more than the bronze medal that dive would probably bring. With her chosen dive, she knew she could likely stick it and win the silver—but there was still a chance she could falter and be out of contention.

This diver was in a stressful situation, not unlike leaders in today's economy. Should she throw caution to the wind and go for gold but risk losing it all? Or should she take a risk more in line with her abilities and state-of-mind and go for silver or bronze? Like any seasoned leader, she understood the risks associated with all of her possible choices. Taking no risk—the easy dive—wasn't appealing because the reward wasn't representative of her potential. Standing on that concrete platform, the diver made a wise decision that balanced risk and achievement. She clearly understood the benefits and was willing to accept a level of uncertainty that came with the challenge.

Most of us have never competed in the high-stakes world of the Olympic Games. However, the corporate world can be just as challenging, particularly in a threatening economy. Despite the uncertainties, we must take careful risks to continue to succeed. Such risks, like the chosen dive, must be carefully measured to prevent major damage should the risk fail. These incremental risks will continue the growth of our companies (and ourselves) without jeopardizing our corporate goals and employees. As leaders, we need to continually weigh the chances of success versus failure when taking risks. And, remember that in trying times, silver medals can seem to be worth their weight in gold.

Now ask yourself...Am I a Leader?