No Risk = No Innovation, and the “Get out of Jail” card


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The global business strategists, Boston Consulting Group report that risk aversion is the number one barrier to innovation. Ray Kroc, the founder of McDonald’s Corporation was a bit more succinct in his thoughts on taking risks:

“If you’re not a risk taker, you should get the hell out of business.”

Risk is fundamental to innovation. Innovation will not be successful with only an innovation team or department in a business; innovation must be embraced by the entire entity to be effective and sustainable. For creativity to flourish, managers leading at any level must encourage risk taking, test innovation results and trust in your human capital.

  1. Encourage managed risks – Insist upon a plan to be presented first, to ensure understanding and buy-in across the affected organization. Know your tolerance for risk and failure in the pursuit of innovation. Failure is an option when taking risks. The key however, is to make failure a “learning experience”.
  2. Test your innovation results – True innovation requires thorough testing in pursuit of success. Testing, measurement, and an accounting of what’s been learned bring measurable outcomes from successes and failures alike.
  3. Trust in your people – Entrust those in your organization to pursue new ideas on behalf of your company. Strive to build a culture of trust in an individual’s pursuits but ensure safety measures are in place to safe guard against failure damaging the organization.

Can you imagine the risks that your company could take if it had a safety net in place for failure? That is exactly what Jim Donald, CEO of Extended Stay America offered his employees.

When Donald took over, the hotel chain was recovering from a recent bankruptcy. Leery employees were stricken with a severe case of risk aversion; some properties remained in disrepair and comp stays were not offered to unhappy guests as many employees feared losing their job if they cost the company money.

Donald had several thousand “Get Out of Jail, Free” cards printed and gradually handed them out to his 9,000 + employees. “All they had to do, he told them, was call in the card when they took a big risk on behalf of the company—no questions asked. ” One particular risk brought in $250,000 in Extended Stay America accommodations when an employee cold-called a film production company rumored to soon be filming in her city.

When an entire organization is encouraged to take managed risks, test its results and trust individuals with new ideas, innovation can experience growth or become sustainable. Companies must learn from failure and assess their tolerance for risk. Innovation momentum can be fueled with calculated risks. A strong foundation for each of Robert’s Rules can transform a managed risk into simply the next logical step in innovation.

You can learn more about the above points, by reading Robert’s Rules of Innovation. Robert Brands is the founder of and the author of “Robert’s Rules of Innovation“: A 10-Step Program for Corporate Survival, with Martin Kleinman, published by Wiley.

Republished with author's permission from original post.

Robert Brands
Innovation Coach and Author of "Robert's Rules of Innovation" Past CEO of Airspray the manufacturer that brought instant foaming dispensers like hand soap to market


  1. Robert: great that you posted this. When I first read about the Extended Stay story in The Wall Street Journal, it was like a whiff of fresh, corporate air. Too few companies champion risk-taking, and most fail to walk-the-walk by embedding the risk-taking ideals into their day-to-day operations. And all too often, management’s intentions morph into conflicted messages to employees. “Take risks, but we’re still going to kick you in the rear when you fail.” Translation: “play it safe, and you’re likelier to get a promotion.”

    Second, great as Jim Donald’s efforts are, they must be considered in context – his company has the capacity to handle the risk he is encouraging. That’s a consideration that has roots in the CFO’s office, because risk-taking of any type must be connected to a company’s financial strategy. Encourage indiscriminate risk taking when the company doesn’t have the capacity, and – well, you know the rest of the story.

    Companies can evaluate risk capacity according to several criteria, including cost of capital, liquidity, strategic objectives, etc. A related blog that I wrote might be of interest to your readers, Should We Allow Salespeople to Fail, or Just Keep Pummeling Them?


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