Winter is upon us. Research tells me that some of you who will head to the snow to ski (or snowboard) are significantly more likely to go much faster on the slopes than others. Of course, you all have different risk appetites and different levels of snow-sport skill, but the predictor to which I am referring, is based on whether or not you will choose to wear a helmet.
If you do (wear a helmet) you are more likely to go faster than if you don’t. It’s the same phenomenon which underpins the fact that when people’s homes are uninsured against fire, they are more careful with stoves, heaters, and flames; and why lower rates of HIV in certain areas have resulted in lower rates of condom usage.
Risk compensation describes how people typically adjust their behaviour based on their perceptions of the risks they face, by taking bigger risks when they feel protected and by being more careful when they think greater risks are present. This tells us that your highly sought after ‘safe-to-fail’ innovation culture is likely to do exactly what you think you want it to: it will probably create an environment in which people will take bigger risks. But is that really what you want?
Risk-taking, whilst being an element which is important for innovation, is not itself, something which will drive innovation. Risk-taking can simply be recklessness or corner-cutting and it is often undisciplined. So how can you ensure that the risk-taking element is in place, but people are taking the ‘right’ types of risk?
First, when you enter the test and learn phase of your new product development (NPD) project or your innovation project (or any project or initiative!) ensure that the people doing the testing have appropriate knowledge of how to test leanly but effectively, maximising learning at every step. Lean start-up implementation is probably the area we see mucked up most in organisations. And the worst part is that often, ideas with great potential end up falling over because the test and learn phase was poorly executed. Get help if you need it!
Second, don’t make your environment safe-to-fail unreservedly. Make it safe to fail if the failure is a result of a properly designed and executed experiment which resulted in learning which can be used to make improvements, changes, or pivots to ideas. But if you allow people to fail (or even encourage it!) too broadly, the effect of risk compensation tells us that they will indeed take more risks, but they might not be the types of risks you are expecting. I’m certain you aren’t looking for increases in recklessness or corner-cutting!
If you would like to chat about high quality test and learn activities for your project or organisation, I’d love to hear from you: mark@orangesquid.com.au. If you’d like to talk safe-to-fail or anything else culture related, my organisational psychologist colleague, Astrid, will be more than happy to chat to you too! astrid@orangesquid.com.au.