As Peter Thiel once told Mark Zuckerberg, “In a world that’s changing so quickly, the biggest risk you can take is not taking any risk.”

There have been hundreds, if not thousands, of articles written about innovation and risk-taking. They’ve been the topic du jour since 2020 as every industry navigates Covid-19, the Great Resignation, and the increasing political and cultural strife all around us. As an agency owner that specializes in the integration of brand and culture and who spends most of his time working with executive leaders, I’ve seen firsthand how core competencies of innovation and risk-taking sustain a competitive edge in this new post-pandemic reality.

As obvious and necessary as a culture of risk-taking is, the reality is that most company cultures are built to mitigate risk more than reward it. When the world speeds up and things feel unstable, our tendency is to protect what we have and play to “not lose” instead of play to win. We view risk-taking as a luxury more than a necessity and, in the process, hand our competitive edge and talent over to the competition.

2019 McKinsey study of 183 companies revealed a strong and positive correlation between employee innovation performance and financial performance. And yet, risk-taking behavior is not something people are naturally comfortable with. An earlier study from 2013 found that nearly 67% of American employees can name at least one dynamic that would prevent them from taking any kind of risk at work. Some believed failure at any level would result in termination, some didn’t know what risks should be taken or where to begin, and others said they didn’t have enough support from their management to take any risk. The study found that people naturally steer clear of risk and will do anything to mitigate potential loss, even when the projected benefits of a possible risk equal, or even exceed, the potential for loss.

Encouraging smart risks doesn’t mean tolerating foolish mistakes. It’s not mistakes that lead to success, it’s an energizing culture of high-capacity leaders playing to win that drives growth. Leaders define culture and set the tone, and if we want a culture of invested stakeholders taking acceptable risks, then we as leaders need to model that behavior and intentionally shape that culture.

Below are three ways to create a culture that mitigates risk-taking innovation.

1. ‘Let’s Wait’ Vs. ‘Let’s Go’

In times of crisis and change, our natural instinct is to hunker down and protect what we have. Even though we intellectually know that risk leads to innovation, phrases like “not now” or “let’s wait” quickly become our default answer. And after months of waiting, innovation (and maybe the innovator) all but disappears.

The key to success is playing offense and getting good at taking risks amid the crisis that always surrounds us. This requires intention, discipline and accountability because, frankly, we can always find a good argument to justify not taking a risk.

2. Diplomatic Decorum Vs. Radical Candor

Risk-taking cultures place greater priority on radical candor and critical feedback than on diplomacy and decorum. The awkward reality is that high-capacity stakeholders who want to give 100% to their work will introduce tension to your organization through how they communicate. A culture of radical candor is able to see beyond the presentation and quickly assess the substance of an idea or piece of feedback in today’s fast-moving economy of ideas. This is an important way to sustain your competitive edge. Choosing false harmony over cognitive diversity and critical feedback will bleed out your most invested and talented staff and result in mediocre outcomes at best.

While achieving this will look different for every organization, you might start by gathering feedback from the team on how you can create a more open and frank culture. Take time to understand what motivates each employee and what their career goals are. Schedule one-to-ones with your employees and make the focus about them, not you. Ultimately, you have to decide which approach is right for your organization, but the first step will be involving the team. That single action alone will begin to create a more open culture.

3. Vertical Authority Vs. Lateral Collaboration

In everyday practice, “stay in your lane” is a way of telling an employee to mind their own business and to focus on their job responsibilities instead of looking outside of their scope into other areas of the organization. This phrase and corresponding behavior shape a company culture that shuts down feedback and collaboration. Instead of letting “the best idea win,” we often let the org chart determine whose ideas drive the organization forward.

Typically, the best ideas come from team members who are most familiar or invested with your product or service but might not have a seat at the right table or formal authority to voice their opinions. As important as the vertical organizational structure is, even more important is creating lateral groups of cross-functional team members built independently of vertical authority structures. Only in these environments will you shape a culture of ideation with the freedom to surface and share new ideas.

Geoff Colvin, a notable author, said in a 2013 magazine article that, “our largest obstacles have become weak imaginations, threatened self-interests, and legacy culture. Innovation is the new essential competency. It will separate tomorrow’s winners from the losers.”

By avoiding these unhelpful management practices, your organization will be able to develop a more robust culture of proactive risk-taking that fuels innovation and growth.