Risk-taking

 

Risk-taking can be viewed as the decision which carries some probability for negative consequences, but the result could be very positive if the event happened as predicted. Usually, leaders go further of the established barriers, to do something different of what is doing currently, to see the problem and the solution in a different way. For doing that, they should transit an unexplored and unknown way; to transit for this way has risks, but the values, vision and skill of the leader will help him/her to overcome any vicissitude in the way. The reward could be huge, nothing or something in between. Hitler led his people with huge leadership skills, but conducted them to the apocalypse. M. L King led a sector of the US people with incredible skills, but he was killed. R. Lévesque led part of people in Québec, and he was partially successful doing it. W. Churchill led his people during the WW2 and he was very successful doing it. All of them had a vision emerged, impelled, promoted by certain situation, and they decided to take the risk trying to accomplish their vision. 

 

Recent studies suggest that a specific individual variable, such as self-regulatory competence, influences the degree of risk-taking propensity, with poor self-regulatory control argued to increase the likelihood of risk participation. Self-regulation can be broken down into the two sub-categories of emotion regulation and cognitive regulation. Emotion regulation relates to the control of affect, drive and motivation. Cognitive regulation, on the other hand, specifically relates to the control of thoughts and actions which are responsible for the planning and execution of behaviour (Magar, E., Phillips, L., and Hosie; 2008).

 

Thus, risk-taking decisions is considered as the result of complex internal and external interactions of several factors. Some of these factors are cognitive, reactive, impulsive, etc factors. Probably the most interesting are the cognitive factors because they involve the use of cognitive resources (e.g. memory processing, thinking), that they should match and or provide input for the values and vision from the person, in this case the leader. In fact we expect that a leader conduct a rational thinking before to take any decision. This rational decision should be based on the appreciation of the risk and their consequences. Many disciplines teach a procedure to disclose and systematically evaluate the risks and mitigation, but this always transit for relatively know way. This is more a managerial approach. For example what is happening right now in Japan on the nuclear crisis looks to be more related with a management risk and its complete sequence of mistakes following procedures than a leader risk-taking decisions.

 

For a leader perspective, the decision making process and risk evaluation go for a different way. Sometimes the leader could develop a rational decision approach but in many cases the decision is based on an intuitive approach. When the decision should be taken in a short period of time, the experience, solid background (e.g.: values, vision) become important and factors minimization of the risk. High risk-taking people made more rapid decisions and used less information in making their choices that did the low risk-taking people. According to studies, the decision accuracy was the same for both groups. Some researchers (e.g. S. Freud) allege that when this intuitive approach is not contaminated by rational approaches, the decision are based on the unconscious state, from somewhere within ourselves, our nature. These decision will complete agree with the values and philosophy of the leader. The mix of intuitive and rational decisions, and to know where to apply one or other, makes a strong difference of leadership.  For this rational decision making, open mind, creativity, brainstorming, etc, could strongly help to the process and try to find an optimal solution to the problem.  This solution is most of the time very complex and involves timing, people, money, future, etc.

 

It is interesting to know the effect of mood on neural activities. When we talk about risk –taking decision, it could represent a threat or an advantage for the leader to be influenced by this emotional effect in the rational process. The effect usually is negative. D. Eisenhower, a US leader during the WW2, took an extremely bad decision at the end of war based on emotion and political influence. This decision cost the life of thousands of people and the destruction of many cities. B. Montgomery, a British leader during the WW2, pressed Eisenhower for the provision of gasoline to him instead of G. Patton during the last allied advance over Germany; he wanted to be a hero and the first to enter in Germany. Patton was in a better tactical position, closer to Berlin, and because of the quick movement forward, both had problem with the supply of gasoline. Eisenhower sent gasoline first to Montgomery, the allies delayed around of three days more in to arrive to Germany due to this decision; this allowed to the German soldiers to destroy everything in their withdrawal to Berlin, killing people and seeding mines for everywhere. This emotional decision from strong leader, Eisenhower, cost the life of around 200,000 people plus razed villages (Yergin, D.; 1992). Other aspect of risk-taking is the personality. Numerous studies have been carried out which have looked at individual differences in personality and risk-taking propensity. In particular, high levels of extraversion and openness have been linked to greater risk-taking, whilst agreeableness and conscientiousness have been associated with lower levels of risk-taking. There has also been a large body of literature linking aspects of risk-taking with many variables falling under the umbrella term of disinhibition, such as sensation-seeking, impulsivity, deliberation, and constraint (Magar, E., et al.; 2008).

 

 

Creativity

 

Creativity for a leader and/or business has a relationship with the finding of new and different solution. Leaders should do face to several problems or concerns, and to resolve those problems is an essential part of the leadership.  When the leader should find a solution to a certain problem, creativeness is an enormous advantage; this creativity could come from both the leader and the followers who the leader correctly has empowered.  The creative person must go further the frontiers, the boundary conditions, and because this person has a prepared mind to cross the line, most of his actions seem strange, bizarre and at the extreme crazy; the mental map of this person cannot be represented in standard terms and then, his thoughts will agree with this different cognitive map. The self-control of the reasoning process will tip to the person over the fine line of being considered crazy. Many examples we have in our history such as Picasso and its brilliant brain to understand the cubism, but one of the most colourful was Vincent Van Gogh. He spent many years in an asylum, cut his ear for love to a prostitute who sent it, and during the two previous months before to commit suicide he signed around of 70 paintings, the most productive period in his life. After his death, Van Gogh was considered one of the most creative painters in the humanity history for the colors and emotional impact in his paintings. Today, these paintings reach exorbitant prices instead that he survived being in the ruin and thanks to his brother Theo.

 

But we need to take care with the creativity, I guess it was A. Nervo who wrote “The presumptuously desire of originality usually makes some talent men to say more foolishness than those that the fools say, mainly, saddest foolishness.”

 

 

Empowerment

 

Increased productivity, higher quality products and services, improved teamwork and customer service, increased speed and responsiveness has led to the eminence of empowerment.  Researches have demonstrated a positive relationship between team empowerment and team performance. But this is in a general average; I think the leader should decide to who empower and to who delegate tasks. Sometime, the leadership process could be in a serious risk in empowering without the enough control. This is other risk-taking process that the leader should analyze; not everyone could be empowered, some people feel better following direction and without to take the responsibility of take decision. The leader should understand the capacity and desire of everyone and act in consequence. For those people that they could be empowered, the leader should build and initiate a trusted relationship. To build and powerful empowerment, the leader should have a clear understanding of individual roles and responsibilities, open communication among team members, emphasize important issues when appropriate, comprehension of the followers/team aspiration.

 

In a business, building an empowered organization, the leader could lead more people than in traditional delegating hierarchies, and delegate more tasks and decisions to their followers. Most effective leaders are those who engage in both task and relationship behaviours, and both contribute to empowered people thought delegating decision, not only tasks. The most important factors that contribute to empowerment, engagement and satisfaction of employees are based on their relationship with the leader. This relationship should be built in trust and confidence. In this way the leader could contribute with the development of followers in a self-managed role to facilitate the development of self-controls so that team members can lead themselves. Finally, researchers have demonstrated positive links between team empowerment and customer service, and both psychological empowerment and empowerment climate enhance this relationship.

 

 

Gustavo

 

 

 

References

 

 

 

 

 

19/05/11