CEOs need to be comfortable in taking enough risks to drive innovation, according to an expert in the field of elite human performance, who explained that an organisation’s risk profile will inevitably set the cultural bar for innovation in a business.
While many organisations are actively seeking greater innovation, organisational leaders are sometimes unwilling to genuinely take the risks required to realise true innovation, said Dr. Andy Walshe, head of high performance for Red Bull.
“From a CEO perspective, innovation starts with understanding the risk profile you are comfortable within your own organisation,” he said.
“So you can mitigate risk across the organisation by framing out elements or organisational structures, where some parts of your organisation accommodate higher levels of risk, with higher demand for innovation.
“And in other areas you need to say ‘This is business as usual, and we will stay the course.’ As a CEO, you don’t necessarily need to have a high-stakes, high-risk sort of tolerance for failure, because you can mitigate that across the portfolio of your organisation.”
This helps set the context for innovation in an organisation, with appropriate supporting structures, systems and processes to help drive innovation in the right parts of the business, explained Walshe, who supervises a Red Bull team of industry-leading scientists, engineers, physicians and technologists to develop and implement elite performance models.
“So the risk profile in R&D might be very different to what you would have in finance – you may not tolerate the same level of risk and innovation there, for example,” he said.
Without clarity of risk tolerance and the supporting structures, Walshe said people may be afraid to make a mistake or afraid to take a chance, which can inhibit the process of innovation.
“They’ll sit in the comfort zone of their performance, which means you’ll never get everything you want out of them anyway, because they’re always going to hedge their bets,” he said.
“And in doing so, you’ve just cut the legs out from under that part of the innovation programme.”
“In every business that we see, character trumps talent. You always select for character”
This happens in many organisations and there are a variety of models in the market that companies adopt to help manage risk versus innovation processes, according to Walshe, who was recently in Sydney to speak at the CEB (now Gartner) ReimagineHR conference.
One model is to assign the higher risk/innovation operations to a separate entity, and Walshe gave the example of Google and Alphabet, in which the function of search (and revenues associated with it) are protected under Google, while other entities under Alphabet are tasked with a stronger focus on innovation and allowed to take more risks.
“Then there’s the fact that everyone wants innovation, but are they prepared to resource it and support it and allow it to thrive, and understand that out of a thousand ideas, one or two may be worthwhile?
“It’s a hard path for some people to walk sometimes.”
The risk of being creative
Similarly, Walshe explained the importance of creativity in business and its link to innovation, and said Red Bull had done a lot of research into creativity as a fundamental element of human performance.
He subsequently found that creativity was in many cases under-represented in the preparation and training in the world of elite performance.
“Now, if you’re an artist, singer or musician, obviously creativity is seen as more important, but in organisations we saw that wasn’t always the case.”
Walshe said they examined the reasons behind this, and found that for individuals to put themselves out there with new ideas that may be considered innovative or edgy takes a great deal of courage.
“So we came up with this idea that creativity was equal to courage,” he said.
“Understanding how a person would manage themselves in their risk assessment of that situation was really critical.
“So if creativity and courage are very fundamental parts of the same conversation, how do we then train people to be more creative?
“Well, fundamentally we’ve got to teach them to challenge themselves and take on greater risk.”
Red Bull developed a training program to help develop this in individuals, and Walshe said that regardless of whether people were jumping off mountains or working in a creative studio, pushing risk boundaries was critical to being creative in any sense.
“We came up with this idea that creativity was equal to courage”
“So if an organisation doesn’t support a high-risk or high-stakes sort of conversation, then there’s no chance for people to get permission to put out ideas and risk themselves in the process,” said Walshe.
“You need to create that culture in which risk and failure are okay, so that people understand that it’s okay to put their more creative ideas out there.”
Character trumps talent
Walshe, who works as a high-performance consultant for Red Bull to a variety of military, sport and corporate organisations globally, also discussed the process of talent management and said that he looks for character rather than talent.
“In every business that we see, character trumps talent. You always select for character,” he said.
“Many psychometric tests and platforms just create a conversation starter for the person who’s in the position of hiring and selecting to open the door and explore different approximations of that individual.
“I think technology cannot do the job of a world-class recruiter, interviewer or selection committee.
“When you look at the really high-performing teams around the world, they’ve really figured out what they want to be.
“They are very clear on purpose – they know who they want to be and what that team is supposed to be there for.
“So their selection is rigorous. And they can have some fairly bland and straightforward measures, but if you don’t hit them, you’re just not in the game.”
These processes remove 80 to 90 per cent of candidates simply because “they just don’t measure up,” according to Walshe, who said psychometric evaluations and technologies can play a role in screening out those in the next category.
“These really inform the interviewer as to where they potentially could peel back here, because the person’s obviously desperate to make the team or desperate to be part of the organisation,” he said.
“And the natural tendency is to embellish a bit on the things you’re really good at and maybe steer clear of the things you’re not great at.”
“In every business that we see, character trumps talent. You always select for character”
From here, it is the role of the interviewer to understand what factors may hold the candidate back, what factors will make them successful (or whether they have the potential to be successful) in matching the profile of the ideal candidate.
“Thankfully machines can’t do that yet,” said Walshe.
“Ask any of the oold-schoolcoaches, where they sit across the table and look them in the eye, where they’re trying to assess character – which is really hard.”
Pushing leadership and technology boundaries
Walshe said there were a number of other trends coming out of the US, one of which was a strong focus on core values-based assessment and selection (in addition to character-based selection) and how individuals will be able to drive change in the future.
“So how do you prepare an organisation now, to almost be self-disruptive organisationally?
“The type of CEO that’s going be required in the future will need to be a consistent start-up mentality, with an organisation that’s continually reinventing and challenging itself and doing something that is very different to older models.
“Some of these ideas of these big, bold moves – essentially bets you could make within an organisation to try and stave off external disruption.
“So how do you prepare an individual for that, versus the traditional frameworks of fiscal and financial management across the board?”
Walshe also said there is increased interest in using technology to assess and improve brain performance, with a focus on understanding the process of neural decision-making.
Such technologies are “starting to impact the HR world profoundly”, said Walshe, who observed a trend in some organisations where staff were encouraged to used wearables.
“This is a good start from a health perspective, and I don’t think it’s far off to start to see how we support employees to do their job well, and know when they’re not doing so well so we can help them make better use of their time.”
Wearables had potentially more value from a safety perspective, according to Walshe, and he gave the example of employees on an oil rig, with helmets bearing sensors to monitor cognitive lobes and assess when people start to lose the ability to focus and pay attention.
“If they make a mistake then, they can not only hurt themselves but others as well – let alone the cost associated with injuries and fatalities.
“The type of CEO that’s going be required in the future will need to be a consistent start-up mentality”
“So I think then the idea of wearables and biometrics makes absolute sense.
“That’s exactly what you do in the world of professional sports; if someone’s fatigued and not performing you pull them out and put someone else in.”
However, he said this construct applied in the business world from an HR and development perspective will raise some issues and questions around privacy.
If done appropriately with full transparency, so that there is confidentiality and security for both the employer and the employee, Walshe said this could be a “very practical” exercise.
“It probably requires a small group to start doing it as a pilot, and then see how the lawyers feel about it,” he said.
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