Should you encourage your employees to take risk to innovate?

General management’s injunction to employees to take more risks to innovate usually has no effect. This is because what blocks innovation is not lack of risk taking but counter-productive mental models.

Consider this manufacturing company. It has been very successful since its foundation and has established itself as one of the reference players in its market thanks to the high quality of its products and services. Yet, this concern for quality, fueled by a strong engineering culture, gradually evolved into a perfectionism that has become obsessive, to the point where it now represents a major factor in slowing down projects and increasing costs. Considerable energy is spent to solve minor technical problems; unprofitable customers are over-served. As a result, the company is now increasingly constrained in its ability to respond to a rapidly changing environment. Aware of this, the CEO has undertaken a transformation effort, notably by encouraging managers to take more risks, but without much success. Why? And what can be done? To answer means looking at two things: first, the source of the blockage, and second the objective pursued.

Formulating the source of the blockage: Taking the mental models into account

The source of blockage is the immunity to change generated by the organization’s deep mental models. The company mentioned above sees perfectionism as the key to its historical success. It has developed a mental model that can be summarized as follows: “We succeed because we don’t let any detail go by that would get our customers in trouble”. This is a deep collective belief, largely unconscious, but very strong among employees, and it profoundly influences day-to-day behavior. Like any mental model, it seems obvious, but it has its limits. As the CEO clearly understood, and as many employees readily admit, this perfectionism is also exhausting and costly. But for all that, encouraging risk-taking, even very officially, will not solve anything: everyone agrees on the need to go faster to be able to innovate, but the imperative to take risks is experienced as a challenge to perfectionism. And perfectionism is still seen as the key to success. The imperative to take risks therefore comes up against the wall of mental models: when they hear “Take more risks”, employees understand “Put at risk what has made us successful until now”, which is inconceivable. The organization feels under attack, and seeks to protect itself by generating an immune response; no one really takes risks, and perfectionism continues unabated. It should be noted that this is not so much a “resistance to change” as a rational response reflecting the imperative of protection that is primary for an organization.

It is therefore necessary to start by working on this mental model of “perfectionism” (if we choose to call it that) and to get employees to admit that concern for quality does not necessarily have to translate into perfectionism. In doing so, employees become aware that it is not necessarily giving up on quality if it decides not to pursue certain projects or clients. The employees are thus led to redefine their great belief in the notion of quality by giving it a new meaning, and above all new implications. The company can thus change while remaining itself. The immune reaction is not triggered because the deep identity has been respected.

I take risks so I am innovative! (Photo by Theo Savoy on

Innovation means controlled risk taking

One also needs to look at the objective pursued. Here, it is formulated by the imperative to take more risks to make the organization evolve. It displays a dominant mental model according to which innovation and entrepreneurship necessarily involve taking major risks. It is problematic for two reasons. First, it is easy for top management to encourage their employees to take more risks, knowing that these alone will suffer the consequences of any failures. If employees are to step out of the box and take risks, senior management must make a firm commitment to accept the consequences; for example, by guaranteeing that their careers will not suffer or even be promoted. Without this commitment, employees will not move, and they will be right; the imperative will remain a dead letter and everyone will be frustrated: the CEO will accuse his employees of resistance to change, and they in turn will accuse him of ignoring their reality.

Second, innovation does not necessarily mean reckless risk-taking. Effectuation, the logic of entrepreneurial action, has long shown that entrepreneurs can succeed by taking controlled risk: they aim small; if it works, they capitalize; if it doesn’t work, it’s not a big deal, because it was a small bet to begin with. In short, small can become big.

Working on the mental models of the organization in terms of the objectives of progress and the imperative of protection makes it possible to avoid a sterile opposition between the two. In our example here opposing “entrepreneurial” risk-taking and perfectionism results in a deadlock: perfectionism exhausts us, and risk-taking paralyzes us. It is possible to create a third way by which we can innovate in a risk-controlled way, not only by respecting the identity of the organization (say, a concern for quality), but even by using this identity as a support point.

Stop the counter-productive injunctions!

Breaking the deadlock is not a question of innovation methods, even if some can be useful. Nor can it be based on a voluntarist approach – “Take risks!”, displaying dramatic postures that ignore the reality of the organization and that of its employees (who will suffer the consequences of their risk-taking). It is based on an understanding of the organization’s identity, i.e., an exposure of its deep mental models that will identify the sticking point but also provide an entry point to change it.

➕Read more about effectuation here: ▶️Effectuation: How Entrepreneurs (Really) Think and Act. About mental models here: ▶️The Conflict of Mental Models: The Key to Organizational Transformation ▶️How Mental Models Prevent Organizational Change: The Tragedy of the Greenland Settlers.

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