Risk in Change: Mitigation through Intelligent Failure
- Kerrie Smit
- Jan 3, 2024
- 3 min read
Updated: Sep 1
Have you ever been told to "take acceptable risks"? It sounds empowering, doesn't it? But what does it actually mean? Organisations that encourage risk-taking without providing clear guidelines are, in effect, setting people up to fail—a subtle form of organisational gaslighting. When staff are held accountable to an ambiguous policy, they're left questioning their judgement when a risk goes wrong.
This lack of clarity can cause projects to stall as people become too afraid to make a move. Yet, when leaders are confident with risk management and good at applying it, projects can proceed at full speed. So, how do we get there?
The Power of a Risk Register
It's tempting to jump into action when a problem arises—getting multiple people on a complex issue or running in circles trying to solve it in your head. But just as you wouldn't try to solve a complex maths problem without writing it down, you shouldn't manage risk without documenting it.
Documenting risk is a powerful exercise. It forces you to get the problem out of your head and onto the page. This externalises your thoughts, reduces cognitive load, and transforms what's "keeping you up at night" into a team effort. Once risks are documented with their threats, impacts, and severity, you can apply known strategies—controls, mitigations, and monitoring. This process provides crucial data points, allowing your organisation to improve its prediction and problem-solving over time.
Intelligent Failure: The Toyota Way
Many catastrophic failures aren't caused by a single, huge mistake, but a compounding chain of small problems. This is a common issue for organisations that don't allow for small-scale failure. But what if we could fail on purpose?
The Toyota Production System offers a brilliant example with their Andon Cord. Frontline employees are empowered to pull a cord to stop the production line whenever they spot a problem. The line doesn't always stop, but when it does, it's a critical moment for learning. Toyota understands that the small, incremental costs of stopping the line for minor issues are far outweighed by the long-term benefits of avoiding a major, costly failure.
They're not just tolerating failure; they're embracing intelligent failure.
The Unacceptable "Acceptable Risk"
Studies show that high-performing teams are those that feel safe reporting problems and failures. They don't necessarily have fewer errors, but they report them more accurately because they trust that self-reporting won't lead to punishment. They see information about problems and risks as a valuable asset, not a reason for blame.
This is why vague risk tolerance policies are so dangerous. They create an environment where staff fear an "uncertain reaction" when they report an issue, leading to a culture of hiding problems. The statement "take acceptable risks" becomes the very thing that discourages proactive reporting.
A documented risk tolerance and a clear, formal risk management practice can protect everyone. Instead of hindering agility, it enables it.
Mitigating Risk Through Intelligent Failure
Risk mitigation is all about diminishing the impact of a risk before it even eventuates; this is where intelligent failure comes in.
Don't launch a brand new product to the market to test it there—prototype and test it with market research first. Why risk a public failure that could damage your brand?
Don't load system changes directly to your live production system—test them in a cloned environment first. Why risk a catastrophic data problem or a major outage?
If your new product, system, or idea doesn't work in a controlled test environment, it's highly unlikely to work in the live environment. By failing intelligently, you anticipate and contain the failure, allowing you to record the results and make iterative changes until the idea works.
Failing intelligently means succeeding publicly.
Conclusion
A documented risk practice based on research protects your people and encourages higher performance. It moves your organisation away from ambiguous gaslighting and towards a culture of trust and genuine agility.
At Agencia Change, we're experts at foreseeing and navigating change risks, developing contingency plans, and managing resistance. For help with your business and change governance issues, we're here to help.
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