When I first founded GoodData, one of our early investors shared his life motto with me: Always make new mistakes — with an emphasis on new. As we’ve grown, I’ve always come back to this idea, the kind of mindset that enables companies to become market disruptors.
It’s important to me to build a company with a culture that supports risk-taking and rewards employees for pursuing new ideas. Not only is it a personal philosophy but data supports the importance of risk-taking. The CEO Genome Project, a 10-year study of high-performing CEOs, found that CEOs who considered setbacks to be failures had a 50% smaller chance of thriving (registration required). The question is: How does a CEO who may not be comfortable taking risks start doing so?
It can be a challenge to adopt that mindset and convince both yourself and others that it’s necessary to take a risk — however calculated it may be — instead of playing it safe. In a recent Deloitte study, this skill is referred to as “emotional fortitude,” defined as the ability to "combine a sober assessment of potential risks and roadblocks with the fearlessness to pursue lofty visions." In the survey, it’s listed as one of the five key traits of CEOs who are "undisruptable." These CEOs excel at anticipating, responding to and adapting to today’s cycle of market disruption. Becoming an executive who accepts risk-taking and creates an environment that supports it is easier said than done. By its very nature, some risks will yield a substantial reward and some will not, and it’s that fear of failure that causes many executives to shut down any attempts to take a calculated risk.
As CEO of GoodData, I emphasize three values to foster the kind of environment where it’s okay to take risks: transparency, communication and allowing my employees to make new mistakes.
Transparency
Transparency is vitally important to an organization, but it seems to become less and less achievable as a company grows, more management levels are added and messages become distorted or watered down as they are transmitted. Full transparency keeps employees in the loop about what’s being done and what the company’s goals are for the future, but it also helps employees feel empowered. When no one is excluded or deemed too low-level to be privy to information, employees both understand why something is being done and realize how valuable they are to the team. At GoodData, I try to make things as transparent as possible so that we all have access to the same information.
Communication
Second, communication ensures that everyone is working towards the same common key performance indicators (KPIs) and company goals. After quarterly executive leadership meetings and board meetings, I share goals for the quarter based on conversations and decisions made during those sessions. Beyond these formal company-wide meetings or town halls, this need to communicate extends to informal meetings, casual conversations and even making an effort, as the CEO, to be a visible part of the company. This frequent communication reinforces the company’s goals and keeps executives, management and employees aligned. In addition, this level of interaction builds better relationships between employees and management, creating a culture where employees feel they can bring new ideas to the table instead of worrying that they won’t be heard.
However, a CEO needs to accept that transparency and open communication may sometimes reveal to employees that a full plan hasn’t yet been developed or that the plan is based on a hunch. That brings me to my third point.
Making It Okay To Make New Mistakes
As much as we claim to rely on data, sometimes you have to defer to a gut feeling. Every situation evolves differently, and the facts can change quickly — and sometimes that means dealing with incomplete information when trying to formulate a strategy. By the time all the information about the market and upcoming trends has been gathered, someone else may have already made their move and capitalized on being the first to market or the first to position themselves to meet a consumer need.
Being able to quickly respond to a changing landscape and make big decisions is an essential part of a CEO’s responsibility, but the emphasis here is on making a decision. In fact, I recently read a study in the Harvard Business Review that found that the more successful CEOs make decisions earlier — not that more successful CEOs make better decisions. Sometimes it’s better to make a decisive step in a certain direction rather than waiting to be absolutely certain that all possible outcomes have been weighed. It’s not necessarily a bad idea to be cautious, but being too cautious can be worse than being too rash. Most companies will never get to this point of being the first to pitch a groundbreaking new product or solution if the company does not have a culture in place that makes it okay to suggest new ideas, even if that suggestion turns out to be a mistake.
