Four tips to manage your approach to risk

nightWhen you stop to think about it, working for a charity is a really bold move. A charity is set up because there is an unmet and often urgent need for change to happen. Your role in that, whether you are a fundraiser, campaigner, administrator, trustee or deliver services directly, is to make that change happen. To do this individuals and organisations have to be bold, brave and take risks, yet in my decade of experience of working with charities across the world, as a sector, I think we are hugely risk averse.

On the face of it, this makes no sense. We should be daring, courageous, angry and fearless, but for the most part we tiptoe hesitantly over eggshells for fear of being criticised for wasting money or being the target of negative and damaging publicity.

I’m not saying we should set out to take unreasonable risks or that we should not be concerned about our reputations, but if we compromise or settle for anything less than relentlessly striving to find the most effective and fastest ways to solve the urgent problems that our organisations exist to solve, then we are not delivering on the important jobs that we have been entrusted with.

We typically consider risk as the possibility of something bad happening as a result of taking action. But what about the risk of not doing something, or continuing to do the same things? The risk of staying the same should not be underestimated. Perhaps the most poignant example of ‘do nothing risk’ is Kodak who filed for bankruptcy in 2012 because they didn’t respond to the decline of the film market and the growth digital photography. You can read my blog about it here. 

How do we adapt our approach to risk?

People are motivated by push, pull or a combination of both.

Push motivation is when you actively push yourself away from pain or the perception of anticipated pain. Generally the pain has to be pretty bad before you do something about it.

Pull motivation is your desire to achieve something; your end goal. Depending on the goal, pull motivation is longer term and a stronger motivating force than push motivation.

In simple terms the gain must be more than the pain. For people working in charities, the gain of achieving your organisations mission must be greater than the pain of not reaching it.

Framed like this, it is when organisations or individuals within organisations are not fully committed or connected that risk aversion becomes an issue. When everyone in an organisaiton is truly connected to its mission the perceived risk of trying something new in order to achieve it is lessened. So one tactic to encourage risk is to ensure that the whole organization is inspired by and committed to achieving its mission and most importantly the difference that achieving it will make to its beneficiaries.

A robust innovation process helps you manage risk

Following a robust process for innovation will also help you get a grip on risk. The basic principles are outlined below.

  • First be absolutely clear on why it is important you take action; what is the impact you want. What is the goal that is the compelling pull motivation for you and your employees?
  • Then understand your audience; what is their unmet need, what do they want? The more you know about your audience the more chance you have of developing something that meets their needs. Involve your audiences with your ideas where you can. This is called open innovation and it is gaining popularity. For example, in the corporate sector, Lego have used this method to turn their failing business around. They have their own ideas site where customers suggest the Lego kits they would like to see made. Once an idea for a kit has 10,000 likes Lego makes it. This approach combines market research with product development, reduces risk of failed products, speeds up the process and opens up new markets. The customers are not 8 year olds they are 30 something’s on a nostalgia trip seeking Ghostbusters and Back to the Future Lego kits!
  • Prototype, test and adapt; make your product from cardboard and sticky tape, draw it, if it is a service role play it; test that new telephone fundraising script with tins and string. You will uncover things by doing this that you would not spot on paper. Then make changes.
  • Pilot, this is making the product on the smallest scale you can to give meaningful results in a live environment. For example CRUK in the UK piloted contactless giving in charity shop windows in just four of their hundreds of shops. This reduces risk and gives you the option to stop something quickly if it is not working and spend the budget elsewhere.

From working with many teams over the years, the teams that embrace risk are the ones that are focused on the end goal, work in collaboration, have a process for innovation and importantly the individuals have a can-do attitude. They are more likely to seize opportunities than fear risk. It all starts with your mindset.

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