From risk aversion to experimentation: How to transform your company culture

Every organisation today wants to become more agile. However, many struggle to build an agile culture where innovation and experimentation is the norm; often this is because a culture of caution and an aversion to risk prevails. Dr Simon Hayward is CEO of leadership specialist Cirrus and author of The Agile Leader; he looks at how you can overcome an aversion to risk and transform your company culture

Why does agility matter?

When carrying out one-to-one interviews with business leaders for my latest book, The Agile Leader, every organisation I spoke to – no matter their industry, location or size – said that they were striving to become increasingly agile. There was widespread agreement that being agile helps you to achieve goals and to react to new opportunities more swiftly and decisively. Agility enables organisations to embrace opportunities they couldn’t have imagined in the past and to disrupt markets.

I have considered what I had gleaned from my own research alongside a wealth of research from leading global organisations – academic institutions, consultancies and professional associations.

Building a culture of agility

A risk-averse culture is the most fundamental barrier to agility. Culture is defined by the Cambridge English Dictionary as, ‘The way of life, especially the general customs and beliefs, of a particular group of people at a particular time.’ It describes the prevalent behaviours and norms of a social group and the symbols of meaning which are important to that group in defining their identity. In other words, it is, ‘How we do thing around here.’

A culture of caution can inhibit progress. Many of the organisations I spoke to highlight a risk-averse culture as the greatest barrier to agility. This can be a particular issue in heavily-regulated industries, where conformity can reduce the risk appetite of managers.

2016 Leadership Connections research from Cirrus and Ipsos MORI found that only 54% of people in the UK agree with the question, ‘Do people have the right to make a mistake in your company?’ This fear of failure – and its consequences – is a leadership issue. It inhibits experimentation and risk-taking and it slows down innovation and improvement. If we fear making mistakes, the only thing we will learn is how to avoid them.

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A culture of fear leads people to avoiding risks. Decision-making is slowed down when people seek higher approval to cover their backs. The lack of trust, and resulting lack of progress, can be frustrating for many.

Questions to ask yourself:

  • What is the way of life in your organisation like?

  • What are the customs and beliefs that shape how people behave day by day?

  • What are the constraints on people’s behaviour that stop them from being agile?

The six factors of an agile culture

Combining the following factors creates a culture which encourages people to move quickly and with confidence:

1. Leadership commitment: People need to feel they have the support of senior leaders in working in agile ways, which often challenge traditional methods and power relationships.

2. A shared sense of purpose and clarity of direction: When the mission is clear, and the priorities agreed, people are freed to act more quickly, safe in the knowledge that their actions are aligned with the organisation’s intended outcomes.

3. Authentic leadership: Leaders need to be role models for the organisation’s values and build trust around them. When we trust our leaders and, in turn, feel trusted by them, we have greater psychological safety and are more likely to take risks and act boldly.

4. Devolved decision-making: Decisions need to be made as close to the customer as possible. Whilst there are strategic decisions which should be made centrally, most decisions are better made by experts and by people closer to the customers.

5. Collaboration across teams, functions and specialisms: There is an emphasis that team work and working cross-functionally are part of company culture – that’s the way things get done around here.

6. A focus and encouragement of experimentation and constant feedback: Learning from customers and testing new prototypes is normal, valued highly and shared widely which, in turn, helps to differentiate the offer for customers.

Dr Simon Hayward is CEO of leadership specialist Cirrus and author of The Agile Leader. He welcomes your views on this article and can be contacted at [email protected] or on Twitter @SimonJHayward.

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