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The Dangers of Playing It Safe

If you want to learn how to take risks, try visiting a playground in Britain.

After years of putting safety first, local communities in the U.K. are now starting to give their playgrounds a little more edge by adding fun-but-fraught equipment such as climbing poles and higher slides. The reason? It seems that all of those well-intentioned precautions have resulted in environments that are a little too safe. “Playgrounds are being toughened up because a generation of children is failing to learn how to handle risk,” according to a recent article.

Britain’s risk-averse culture isn’t just limited to its playgrounds, apparently. One U.K. nonprofit organization is so concerned about the country’s low tolerance for risk that it set up a commission to study the problem. “It is forgotten that risk can be a good thing,” the group writes in an overview of its mission. “People often make an active choice to take a risk because they see a potential opportunity to reap rewards. Risk is the essence of many creative projects and can be about daring to do something new or different, or taking a chance, in the hope of securing benefits.”

In other words, taking risks is essential to learning and growth. Yet all too often, organizations approach risk the same way as the British treat it on their playgrounds—as a factor to be minimized or removed, not deliberately courted. The effect is the same: stunted development.

Psychologists have long been fascinated with risk-taking behavior. As one psychology Website succinctly puts it, “the need for safety is fundamental, so are people who take huge risks therefore illogical or mentally ill?” It’s a valid question. In many ways, taking risks runs counter to human nature.

Yet just as deep as the urge to avoid risk is the urge to embrace it. Call it a clash of instincts—on one hand, our need for safety, and on the other, our need to test ourselves against our environment. Whether it’s jumping out of airplanes or launching a new business or product, the surest way to find out what you’re made of is to take a risk.

Risk brings out peak performance like nothing else in the world. Faced with danger, the senses are sharpened and the mind is focused. Just consider how the body reacts when faced with a risky situation: your heart begins beating up to three times faster, your system produces a massive surge of adrenaline, and your pupils dilate to allow you to more clearly see potential threats. And taking risks not only makes us feel more alive, it might actually help us live longer, according to a study that claims risk-averse behavior shortens lifespan.

Brian Drum, CEO of executive search firm Drum Associates, knows all about the importance of taking risks. Based in New York City, just one block from the World Trade Center, Drum’s company faced a daunting challenge after September 11. “After 9/11, I was faced with taking certain risks with many unknowns,” he says. “The company that I had built over the last 30 years was facing bankruptcy.”

Drum knew he faced steep odds and that the only way his company could survive was if he embraced a risky strategic decision. “I took a huge risk by reengineering the company and by changing the operating methodology and the company’s compensation program, all at the same time,” says Drum. “The plan was to withstand the poor economy and to keep my employees with me, so that when the economy did turn, we would be intact and positioned for success. There were times that we were on the brink, but in the end it worked. The company is now profitable again after two years of rebuilding.”

Summing up his philosophy toward taking risk, Drum puts it thusly: “If you can live with the outcome, even if it’s failure, go for it.” That’s an elegantly simple formula. A readiness to embrace failure is one of the most significant characteristics of a risk taker.

That tolerance for failure is an attribute to be encouraged, because even a risk that doesn’t pay off with immediate rewards can still deliver long-term benefits in terms of learning, which can often produce greater results. This article from Businessweek, for instance, describes how Corning, Inc. undertook a seemingly failed risk to develop a new business unit. Yet out of that failure came a new product with the potential to produce hundreds of millions of dollars of revenue growth.

Of course, not all risks are worth taking, especially when they’re not taken with a sober understanding of what’s at stake. A recent study found that powerful people, in particular, are more likely to take risks out of a deluded sense of their own invulnerability. While such optimism can be an asset, it can also lead to poor decisions.

What constitutes smart, deliberate risk taking? Eileen Shapiro, president of Cambridge, MA-based The Hillcrest Group and coauthor of Make Your Own Luck: 12 Practical Steps to Taking Smarter Risks in Business (Portfolio 2005) offers the following suggestions:

1. Acknowledge the uncertainty. Understanding that every planned action has some degree of uncertainty allows you to move agilely in response to the unexpected. Great football quarterbacks know this, from Unitas to Brady. Great leaders do too.

2. Manage the risk. A key task of leading is figuring out how to manage or displace inherent risk in your chosen strategy. Airlines invest in hedges on fuel costs, investment bankers syndicate their deals, lenders collateralize their loans, baseball teams sign back-up catchers, and smart managers put small side bets on competing technologies…just in case.

3. Plan from the goal back to the present. If you know where you want to end up, start your planning there and work backward to the major milestones you will need to hit on the way. Twenty years ago, Toyota decided they would be the biggest automotive company in the world, and planned backward from that goal. Today, they are almost there.

4. Be realistic about your starting point. There’s no greater risk than misunderstanding what you’re starting with, both the gems and the flaws. That was part of Bill Gates’s genius when he was starting Microsoft, and an important part of what IBM missed.

5. Check whether you will want what you’re wishing for. Some executives start price wars and then wonder how the heck they’ll get out of the mess they have precipitated. An essential task of taking smarter risks is making sure you’ll want the result you are gunning for—for corporate risks, and for personal ones too.