Risk Taking in Organizations Research Assignment (Essay Sample)

Risk Taking in Organizations
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The risk taking process involves the commitment of resources with the sole purpose of gaining high potential benefits on undertakings that have significant possibilities of failure (Llopis, 2013). Stone (2005) identifies risk taking in an organisation as a necessary factor that brings about change. An organisation that does not embrace change is likely to fall behind the competition. A responsible risk may lead to entry in a new profitable market or increase the share of one in which the organisation is already invested in. It may moderate the cost of production hence improving the profits generated by the organisation. There is also a possibility of the risk leading to better customer service or product quality (Stone, 2005).
Innovation in an organisation is used to give that organisation a competitive advantage. Hence, it is considered an important factor in improvement of the organisation’s performance. Innovation performance has been proven to have a direct relationship with risk taking. Encouraging innovation within an organisation will increase the risk taking ability of that organisation. Considering the relationship, increasing innovation can be used as a way of encouraging risk taking within an organisation (Amabile et al., 2005 & Llopis et al., 2013).
The perceived risk-taking environment at work will influence employees’ innovativeness. According to Zhou & George (2001), employees have an inherent fear of failure. They view innovation as a risky behaviour that may elicit negative reactions from the authorities in an organisation. Llopis (2013) argues that this impediment in an organisation can be overcome if employees perceive that the authority of that organisation supports risk-taking and innovation. Employees that are truly valued for their efforts and ideas, can take initiatives and improve things in their work without fear of negative consequences (Katzenbach J. R., 2000).
There are a number of ways used to develop an innovative culture in any organisation. One of them is recognizing efforts. This aims at motivating individuals to become high achievers in their respective fields. According to Katzenbach (2000), individual achievement should be recognised and rewarded directly in proportion to personal accomplishments. They should get paid based on those achievements and given the opportunity to work alongside talented co-workers in the field. Katzenbach (2000) further points out that the key to success in an organisation is attracting the best out of people.
Working in teams and collective accomplishments. Team work is key in an organisation. A lot of ideas are brought up during team discussions in comparison to individual efforts. Team work creates a conducive brainstorming environment that encourages innovation. In developing an innovative culture, encouraging team work should be adopted in an organisation. Team work can be achieved by encouraging frequent communications within a team in an organisation to create a bonding environment. Taking interest in the personal and business issues of team members will also help build closer relationship among the team members (Katzenbach, 2000).
To encourage innovation, an organisation must embrace risks. Organisations incur high costs when investing in ideas without certainty of success. According to Tellis (2012), estimates show the rate of failure for new ideas implemented by an organisation go as high as 90%. Llopis at al., (2013) points out that innovation requires investment of time, effort and resourc...