The people in most organizations span the spectrum of risk inclination. Talented leaders adapt their management methods based on an individual team member’s risk inclination and tolerance.

There is some interesting new research that gives insights into how to better motivate the people you lead who happen to be more risk inclined. The research was conducted in the small African country of Lesotho. The country suffers by a devastatingly high level of AIDS cases among its populace. The study focused on more risk inclined people on the premise that they would be more inclined to engage in risky behaviors that could lead to AIDS infection. Their risk inclination was determined based on how they approached games of chance that were orchestrated by the researchers.

The research showed that the risk-inclined participants were more likely to change their behavior when they were offered a chance to win a large reward as opposed to a smaller but certain reward.

One group was given a monetary reward if they met certain criteria. A second group was given a ticket in a drawing in which four people in their village would win twenty five times as much as the first group. Obviously, this meant that only four people in the second group received a reward and most did not.

What was the result? People in the second group that had only a chance at a reward were 21.4% more likely to adopt the desired behaviors than the people in the group who received a certain but smaller reward. That is powerful when you consider that most of the people in the second group received no reward.

So, what does this tell you about how to better motivate some of your team? Well, first identify the parts of your organization that are dominated by people who are more comfortable taking risks. To advance the idea, let’s assume your sales people fit this description. Sales professionals often have higher risk inclination than some people in other roles.

The research tells us that risk-takers are more responsive to a chance at a larger reward than a certainty of a smaller reward. So, let’s say you are structuring a sales contest. As with most such efforts, performance beyond a certain threshold yields a reward. Often the size of the reward increases as results increase.

Here is the insight from the research. In addition to the financial incentives you would usually offer add an opportunity for some of team members who exceed the performance threshold to be entered into a drawing for a significant prize, bonus or trip. The research suggests you will get significantly more performance. Why? Risk-takers like taking risks and appear to be excited by the opportunity to receive a larger though uncertain reward. It is a bit of the gambler’s mindset.

Please note that we are not suggesting that the drawing for a single reward be your only incentive. That could actually be demotivating with time. We are suggesting instead that the drawing opportunity be an additional incentive.

Give it us a try and let us know what results you get.

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More information on the research is available at: http://www.npr.org/sections/goatsandsoda/2015/05/12/406105602/what-might-make-young-people-practice-safe-sex-lottery-tickets

​In the previous post, we talked about people risking more if they have an increased sense of protection from the possible negative outcomes of their actions.

The significance of this in organizations is obvious and powerful. If the leaders in an organization genuinely support their people when risks do not yield the desired results, they will get more initiative and innovation.

In this setting, the “safety devices” are not automobile airbags or seat belts, but a culture and leadership team that values initiative even when the results may not be as intended. The important qualifier is that poor outcomes cannot be due to flawed execution. Clearly, that is not acceptable. But if the execution was sound yet the results were not as intended, it is vital that the person or team that took the initiative be praised and rewarded. Not doing so will send the clear message that only successful risks are acceptable and since risk-taking is inherently an uncertain process, initiative and innovation will be stifled.
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So, provide your people with “initiative & innovation airbags” and they will be much more inclined to drive assertively towards your organizations goals.

Let’s talk for a few minutes about risk homeostasis – a fascinating concept put forth by Gerald J. S. Wilde. The premise is that every person has a certain level of risk with which they are comfortable then use risk protection measures not to be safer, but to increase their risk taking so their level of acceptable risk stays the same.

An example would be driving a car with lots of safety features such as seat belts, front and side airbags, ABS brakes and sideview (blind spot) assist that lets you know a vehicle is next to you but hard to see with your peripheral vision or mirrors.

Now compare driving this car with driving a car from the late 1950s or early 1960s with none of these safety features. Risk homeostasis tells us that the same person would drive the car loaded with safety features in a riskier manner. The idea is that all the protection provided by the safety features allows for more risks to be taken yet the original level of risk tolerance is still maintained.

If risk homeostasis is valid, the same person would drive the older car without the safety features more cautiously and as a result achieve the same level of risk as driving the safety feature loaded car in a riskier manner.

The same idea would suggest that a motorcyclist wearing a helmet and protective leathers with carbon fiber armor plates would drive in a riskier manner than if the same person was on the same motorcycle in shorts, a T-shirt and no helmet.

I leave it to you to decide whether you think risk homeostasis is valid. Some researchers think it is not.

Here is one last data point as you consider the validity of risk homeostasis:

• When drivers see bicyclists wearing helmets, research shows that they take slightly less care with passing them than bicyclists without helmets. The results of a study published in Accident Analysis & Prevention in March 2007 tells us that drivers give a bicyclist not wearing a helmet on average 3.35 inches more room when passing them than if the bicyclist is wearing a helmet. Consider that this all happens spontaneously as the driver passes the bike without much time for the driver to contemplate their behavior in advance. They likely do it all rather intuitively.

So, do you think risk homeostasis is valid?
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I have had an article on my website for a many years called “Seeking Initiative and Innovation?  Reward Failure!”  The title is intentionally provocative and counter-intuitive.  The core message is that you will not unleash organizational courage unless you openly and genuinely accept negative outcomes along with the positive ones.

Well, I just saw a TV ad by Domino’s Pizza called “Failure is an Option.”  Yahoo!  Exactly.  They focus on their product development process and the need to accept failures in order to get the successes.
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Here are a few of the lines from the ad:

• “We know that not everything is going to work,” Andy Wetzel, Domino’s Product Innovation
• “If we gave up after every mistake, we would not come up with something new,” Tate Dillow, Domino’s Chicken Chef
• “In order to get better, in order to move ahead, you are going to make mistakes” and “We cannot be afraid to fail.  It sounds crazy, but it’s who we are,” Scott Hinshaw, Domino’s Executive Vice President Operations

​Yea Domino’s.  They get it.  And the ad suggests they are truly incorporating the “failure is an option” philosophy into their culture.  I predict that along with the occasional setbacks Domino’s will enjoy new successes and product innovations.

The ad can be viewed at:  https://www.youtube.com/watch?v=-NPqOOErP5I