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Encouraging Smart Risk Taking Doesn't Mean Tolerating Dumb Mistakes Your company needs to encourage a prudent approach to taking the risks necessary to maximize your potential.

By Gordon Tredgold

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


One of the hot topics in management is about creating safe environments where we are tolerant of mistakes and failure.

However, this isn't going to create the type of culture that we need to be successful, and that's because we're looking at this from the wrong angle. We don't want people to make more mistakes; we want them to achieve bigger and better results, and to do that they need to take more risks.

Risk taking is not something that people are comfortable with, in fact, most people are risk averse, and so we need to encourage them to take more risks and even bigger risks. Unfortunately, this can then lead to more mistakes and failures, and if we are intolerant of them, then this will kill our risk-taking initiative.

Related: Need a Business Idea? Here are 55

So "mistake tolerance" is a necessity for creating a risk-taking culture, not the actual goal itself. Our goal is to create a culture of Smart Risk-taking where people fully understand the risk they are about to take, they have worked to minimize failure. They know the impact of any potential failure and have a plan to deal with it or they know that the level of failure will be acceptable.

To create a culture of Smart Risk-taking, we need to ensure that we have a clear definition of what Smart Risks are. We need a framework with limits as to what is acceptable that people can safely work within. This also needs to clearly define Dumb Risks, those risks which, if taken, will severely test our tolerance for failure.

Related: 4 Ways to Motivate Your Staff to Take Big Risks

Since not everyone is comfortable taking risks, we need to identify those who are keenest or most able and encourage them, even mentor them, so they can act as role models for the rest of the organization. Get them to begin by taking small, calculated risks and working their way up to bigger Smart Risks.

Leadership defines culture. If we are reluctant to take risks ourselves then so will our teams. If we lead by example, others will follow. We should be open and communicate clearly our reasoning and thought processes to Smart Risk-taking as it will help our teams to learn more quickly and it will also encourage them to start taking Smart Risks.

Related: 3 Ways Companies Can Encourage Smart Risk Taking

As for failures, we shouldn't be tolerant of all failure, just Smart Failures. We can take this one stage further, to really show our commitment, by rewarding Smart Failure, nothing major, just a small token. Remember our goal is not to reward failure but to encourage Smart Risk-taking.

Gordon Tredgold

Entrepreneur Leadership Network® Contributor

Global Gurus Top 10 Leadership Expert, Speaker and Trainer

Gordon Tredgold is one of Global Guru's Top 10 Leadership Experts. He has worked in senior leadership positions, delivering $100 million projects and running $300 million departments. He now helps clients become leaders who are in demand, know how to succeed and get paid the big bucks.

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