A BRW blog post by journalist Fiona Smith using quotes from me in an interview undertaken on 3 September 2012

1. 10/1/12 Way s to increase y our appetite f or risk and innov ation
Ways to increase your appetite for risk and innovation
PUBLISHED: 17 Sep 2012 13:09:00 | Fiona Smith
It is a painful lesson to learn. You are paid to take a risk, you give it
your best shot but it doesn’t quite hit the mark. Then you discover you are the fall guy.
One Sydney executive, in his early 40s, was ruing the day he put up his hand to take on a new project for the IT
company he worked for.
“I’m not going to get involved in something like that again because it damages your career,” he said to the director
of MBA programs at the University of Sydney School of Business, Nick Wailes.
When the project was first scoped out, financial targets were applied – as a percentage return on capital invested
– as if it was like any other part of the business.
“The project went well, but missed its financial targets,” Wailes says. “It illustrated to the business there was a
new way to go to market with new things and get a greater share of the wallet but, within a short six-month period,
it missed its financial targets and was killed off.”
Wailes says this was a classic case of an organisation not realising that you can’t automatically apply the same
standards to a new risky venture. Such a misunderstanding can discourage people from looking for new
opportunities.
Tough times are when companies need to start innovating out of trouble but the financial crisis has had a
depressing effect on risk-taking, he says.
“People are less prepared to try new things and they are now more inclined to go for stock-standard, cost-cutting
solutions. This is ironic; if ever you need a breakthrough solution to make the business more profitable, it is now.”
Wailes says risk has an image problem: “It is often a loaded term, because it has a pejorative aspect to it.”
The director of the University of Sydney’s innovation and enterprise program, Richard Seymour, says what is
called “risk” is often better described as uncertainty or opportunity.
“It is not risk that entrepreneurs embrace, it is uncertainty,” he says. “They feel they can manage risk better than
other people; they feel they can shape their future better.
Seymour says you can’t look at risk without understanding aversion to loss.
“If you are talking about losing your house and life savings, you will take a very different approach to risk than if
you were just going to lose a summer internship or some work.”
Corporate coach Peter Black says people taking on risk need to prepare themselves. Often they can’t afford to
take a risk with their careers because of their financial commitments. “They get trapped and they can’t afford to
downsize their lifestyles,” he says.
How to increase your risk appetite
| Fiona Smith
CULTURE: Companies need to be more accepting of one byproduct of risk – failure. The director of MBA
programs at the University of Sydney School of Business, Nick Wailes, says business culture in Silicon Valley is
different: “To have tried things and failed isn’t a black mark in your career.” Wailes recommends the aphorism: fail
early, fail often, fail cheap.
SHELTER: Leaders play a critical role in providing “air cover” for those who take risks. “Leaders have to be
prepared for some things not to work,” says Wailes. They also have to withstand pressure from risk-averse
shareholders and analysts. “They need to signal that part of the strategy is to look for new breakthrough solutions
to business problems – and stand up for what they believe.”
FORESIGHT: People need to take a longer view. Focusing too closely on the short-term wins and losses can be
distracting. In career terms, Black says people have to plan ahead: “You have to invest in your own learning. Take
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2. 10/1/12 Way s to increase y our appetite f or risk and innov ation
responsibility and treat yourself as a one-person business.”
LEARN: Risk-takers have to be aware of what is happening around the world. “People’s ability to take risk
depends on their breadth of vision and understanding of what is going on,” Wailes says. “I am often surprised that
people don’t have a broad understanding of the forces shaping their industry.” If their vision is restricted, they do
not understand what their options are. They just end up doing “the wrong things righter”.
PRACTICE: Leaders and managers should delegate more to give people some practice at thinking for themselves.
“They may not do it perfectly but it is an opportunity to learn and develop,” Wailes says.
PREPARE: Black says people need security to be good risk-takers. “Develop your financial independence while
you are earning the big bucks in your 20s and 30s,” he says. It also pays to shore up your career by networking.
He suggests having one coffee meeting or lunch with someone outside the company at least once a week, as well
as building online relationships through social media.
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