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Risk and Reward: Manager Profiles and Innovation Outcomes

Among the interesting challenges that managers face may be the tension between expectations of senior leaders that managers minimize risks for his or her organizations whilst motivating their direct reports to become more innovative. Locating a balance isn’t any easy task, as managers think about the impact of decision-making on their own status, employment, the outcome decisions may have on their own direct reports, and also the short- and lengthy-term impact of the decision-making on their own organization.

Think about the following management profiles and also the possible connection between these mindsets:

High-risk AVOIDER – This manager defaults towards the safest possible decision and encourages their direct reports to complete exactly the same. The manager will depend heavily on established procedures and policies and punish their employees who don’t carefully follow the following tips. This fosters a culture of risk avoidance within this unit. Employees which will thrive within this atmosphere are individuals that they like a foreseeable routine and therefore are reassured by the existence of obvious parameters for decision-making. This manager will probably push any risk in the chain of command instead of creating a tough call themself or herself.

High-risk TOLERATOR – This manager is extremely confident with risk and encourages their employees to check the limitations of procedures and policies whenever a possible benefit is visible for the organization. This manager expects that their employees will fail making mistakes and accepts this is actually the price of conducting business around the leading edge. The manager will encourage employees to test something totally new and step outdoors of the comfort zones, rewarding them once they effectively innovate but avoid punishments that may stifle future innovation. Employees which will thrive within this atmosphere are individuals that enjoy autonomy, are comfy with change, not to mention search for better and new methods for doing things. This manager will probably assume responsibility for decision-making and appear to upper management for that financial support and latitude to attain innovative outcomes.

MODERATE RISK MANAGER – This manager would like to consider calculated risks and recognizes that she or he may forego major innovations when the opportunity of success appears slim. She or he will probably encourage employees to have their eye out for possibilities and permit latitude for deviations from policy or process, but feel much more comfortable when the employees discuss anything beyond minor risks with her or him before continuing to move forward. This manager will probably forgive minor missteps because of innovative activities, but large-scale mistakes wouldn’t be expected or recognized without repercussions. Employees which will thrive within this atmosphere are individuals who understand the chance to become creative, but choose to defer to managers when greater risks are apparent. This manager will probably involve upper management before you take action on riskier decisions in the same manner she or he expects to engage in these decisions with their direct reports.

It’s important for managers to acknowledge that as our biological forebears approach risk within their business unit and also the value they put on innovation should be in alignment. A supervisor cannot be prepared to listen to it completely safe as well as generate large-scale innovations. How workers are rewarded (and punished) influences as our biological forebears approach problems as well as their readiness to test something totally new.

There’s no “right” way, as each approach features its own advantages and disadvantages. High-risk managers are most likely not perfect for managing nuclear power plants. High-risk avoiders are most likely not perfect for focusing on Wall Street. An average approach isn’t a silver bullet compromise either. Small incremental changes might be great inside a large paperwork, but equally dangerous when the next great innovation could be missed since it made an appearance too dangerous at first glance.

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