PDT 2020 — Session W105: The One Who Dares Wins — The Opportunity Costs of NOT Taking Risks 

By Mary Margaret Yodzis 

Retired Army Colonel and former budget director of the Department of Homeland Security (DHS) Chip Fulghum said the keys to risk-taking begin with leadership. In a presentation at AGA’s virtual Professional Development Training (PDT) on July 22, Fulghum identified ways to foster a work environment that encourages employees to take risks and allows for the possibility of failure in moving toward innovation.

Fulghum, now chief operating officer of Endeavors, Inc., an enterprise to help homeless veterans find and maintain housing, compared leadership to a three-legged stool supported by 1) a value system; 2) technical competence; 3) a philosophy of leadership. “A strong value system helps you remain within ethical boundaries,” he explained. “Just because you can do something doesn’t mean you should do it. The technical competence gives you credibility with your people, peers and bosses, and the philosophy is to know what kind of leader you want to be.”

As an exercise toward forming a leadership philosophy, Fulghum invited participants to call to mind the worst boss, then the best boss they ever had. He asked them to reflect on their performance with the worst boss and then with the best boss. Finally, he asked them to consider their relationships with each boss. At the end of the exercise, he said, “Now you can answer the question about what leaders should be like. People perform better when they like their boss. So, think long and hard about your leadership philosophy, because all three legs of the leadership stool must be strong if you want to encourage people to take risks.”

Fulghum said an environment conducive to risk-taking and innovation is built upon “taking care of your people; you have to know them and what makes them tick.” Fulghum offered an example from his early days as an Army officer when one of his subordinates was unable to complete his daily tasks, and Fulghum made him stay late to get his job done. “We kept going down this path, and it wasn't getting better. Finally, we sat down and had a conversation about what was going on. He told me he had some big issues at home, and his family needed him to be there more. By making him work longer, I had made the problem worse, because I didn't get to know him.”

Fulghum also stressed the importance of praising employees and celebrating success to encourage innovation. “Never ever miss an opportunity to brag about your people!” he noted. “That comes in all shapes, forms and sizes. One of the things that fascinated me at DHS was whenever I went to visit a place, they always want to show me a leaky roof or a road with potholes. One time a guy begged me to come down and see a server farm, which is just a cold room with machines in it. I had to stipulate for the record that I know what all that stuff looks like! What they really needed to do was take me around and introduce me to their people, brag about them, tell me what they had done for the organization.”

Also critical to good leadership, Fulghum noted, is simply saying thanks. For example, he said he adopted a practice of sending thank-you notes to employees who are celebrating birthdays. When he thanked a DHS employee for starting a valuable program, the employee responded in an email, “I've worked in this department for ten years, and that's one of the most important things I've ever gotten — a simple thank-you note.”

Leaders help their employees find out how they can be successful, Fulghum said, and never give up on them. “What you really have to do is help them find their way to success by giving them space to try new things that are out of the norm. If they don't succeed, it's okay. If you want people to take risks, you need relationships, which means you must get to know your people and build that trust.”

Fulghum explored reasons he thinks government employees tend to avoid risk. “It’s not our money, right? It is the taxpayers’ money, and we believe we have to get the most out of every dollar. And government is very compliance-based. It was designed to be based on compromise, not streamlined. It has lots of rules making sure we stay within the lines. Also, there are Monday morning quarterbacks, like the GAO, the Office of the Inspector General, the press. They are going to come in after something goes wrong and write it up, and you're going to spend a lot of time having to answer. So, it is a lot easier to just color inside the lines. If I take a risk and it goes wrong, I might not get promoted; it could be seen as poor performance.”

Risk aversion, Fulghum said, also derives from a lack of institutional trust. “Do you think your organization and the leadership in it has your back? Do you think they will leave you hanging when those Monday morning quarterbacks come? All of these factors keep us from taking risk,” he noted, “and because of that, we are not able to do the next big thing.”

COVID-19 created numerous opportunities for innovation, Fulghum said. “It's like 50 Hurricane Katrinas, because every state is declared a federal disaster. Unlike a natural disaster, this won't move on. Eventually, a hurricane will dissipate. This thing has been hanging around for months, and we're not sure how much longer is going to be around. We've never seen anything like it. But out of crisis, comes opportunity for risk-taking and change.”

Fulghum said positive results of the pandemic response include innovations, more effectiveness in certain areas and the success of remote work. “Amazingly enough, we've learned that if you just trust your employees, for the most part they are going to do the right thing.”

Effective risk-taking, added Fulghum, requires hiring “talented people who think differently” and building a plan for success. “Push innovation and think outside the box. You have to reward failure if you want people to stick their necks out, and then you’ve gotta stick with them. Things aren’t always going to go so well. The easy thing to do is fire people and just move on. But people learn from mistakes. You have to know what makes your people tick, who is risk-averse and who’s willing to do it. And you have to know how to encourage those who are risk-averse to take some risks. It takes a lot of time and trust. But it’s important to let them learn about it and just go try it.”