Can Transformational Change Overcome a Risk-Averse Culture?

Posted by Paula Alsher on Thu, Jun 26, 2014 @ 04:18 PM

A common barrier to success for organizations seeking transformation is that there is inherent risk-aversion which becomes a cultural barrier to transformational change.  If you are seeking to truly transform you just can’t do it if people are fearful of making decisions and taking some level of risk.  One of the most common pathologies we see in organizations today is that risk-aversion has slowed down decision-making and progress to a virtual crawl. 

When employees are so uncomfortable, even fearful, of taking basic actions it is difficult toRisk Averse Culture imagine that transformation can be accomplished in this same environment. Transformational change is complex and risky, and once you begin you can't go back!

Risk-aversion can be widespread and include leaders who are fearful of the level of transparency required for transformational change.  This transparency is an essential component of successful transformation.  Risk-aversion can be demonstrated by slow decision-making and the lack of prioritization. 

It just makes common sense that if your leadership is risk-averse, your employees will be as well.  

 

Overcoming A Risk-Averse Culture

How can a change management methodology support creating a "transformation" and overcome a pattern of risk-aversion. Remember the AIM change management principle that "every time you see a behavior, there either is or was a reward for that behavior."

People act the way they do because it works, or at least it did work at some point in the past. In other words, there has been some type of reinforcement for people to stay back and not put themselves out there.

So how do you begin to shift the culture and promote innovation and risk-taking?  To overcome a risk-averse culture, we first have to build trust between leaders and their direct reports.

 

1. Trust is built when what leaders say, do, and reinforce are all aligned.  Innovation is predicated on a culture of trust.

You can't have a culture of innovation and be risk-averse at the same time.  Employees must have trust that it is okay to fail.  It's not enought to say it is okay to fail-- leaders must model and reinforce this as well.  We know that what leaders reinforce is three times more powerful than what they say.  So words are important, but it is what is reinforced that really counts.  There are many ways to reinforce innovation and risk-taking.  As one example, Don Harrison, IMA President, tells the story of a client that actually rewarded failure as part of the formal performance management system.  

And by the way, when there is alignment around what leaders say, do, and reinforce you get speed. It's difficult to imagine slow innovation-- they are mutually exclusive!

So to create awareness and capability in your leaders you have to ensure there is alignment around these three key leadership behaviors (and IMA's Sponsorship Assessment Tool can assess strengths, weaknesses, and progress on an individual basis.)

In our change management consulting, we recommend holding Sponsor training sessions (we call them SponsorShops) to make sure that leaders are aware of their role in fostering innovation and transformation.

 

2.  People must be rewarded for making the attempt at innovation, not just the accomplishment.

One of the critical learnings from our Introduction to AIM program is that leaders must provide positive reinforcement to negative consequences on a 4:1 ratio.  In other words, people will put far greater weight on one negative consequence than on one positive reinforcement.  If you are trying to overcome a risk-averse culture, your leaders must look for every opportunity to reward the attempt, not just the accomplishment.

When people fail or make mistakes, and they definitely will if they are trying new things, you have to reward the attempt that flies in the face of the potential risk.  AIM-trained Change Agents can provide a menu of positive reinforcements that Sponsors can apply to help build the culture of innovation.  These reinforcements need to be in the "Frame of Reference" of the individual Targets in order to be meaningful.  

 

3.  Expect resistance-- and see it as a sign of innovation.  An innovative organization is resistance-laden, not resistance free.

In IMA's free eBook, "Re-Thinking Resistance to Change," we make the point that when leaders are looking to create an "engaged organization," they mean the organization will follow-along like "lemmings to the sea" with no overt resistance.  That does not describe an innovative organization!

If you are seeking to overcome a risk-averse culture, you must make it safe to openly express resistance.  Clearly it is not safe to express resistance in a risk-averse culture!

 

4.  Build innovation one project at a time, not as a general cultural ethos.

The best way to overcome a risk-averse culture and create a culture of innovation is to build the new culture one project at a time, and proliferate project-by-project.  Project Sponsors can provide psychological cues from the very beginning that they are looking to do things differently-- how the project gets launched; reinforcement for new ideas, and even failures at trying new things; how communications are handled; how Sponsors demonstrate risk-taking in their own behaviors-- all of these can help to promote innovation.

 

What isn't effective is to just talk about innovation and risk-taking.  Or to provide mass-training in becoming innovative.  Keep in mind, too, that no software tool, no matter how robust, will overcome a risk-averse culture without new reinforcements that drive the desired behaviors!

You can only expect to see people try new things when they are reinforced for doing so.  The motivation to change has to be greater than the motivation to stay the same. It's possible to overcome a risk-averse culture, but it takes a lot more than words to make it happen!

Free eBook:  How to Manage Resistance to Change  

Topics: Transformational Change, Culture, Barriers to Change