Friday Risk Reading: Fostering a healthy risk culture

Lately I’ve been thinking a lot about risk and corporate cultures.  Some cultures produce disasters, like the massive, concealed trading loss at UBS – the most recent in a long streak of debacles for the bank.  Other environments, however, seem consistently to produce good things – valued products and great experiences.  Apple of course comes to mind in this category; Starbucks, too.   Both have cultures that nurture and sustain healthy risk-taking, and I am offering two quick items about them for this week’s Risk Reading.

I’ve written before about Steve Jobs and his attitude toward risk.  Fortunately for us, Jobs was at work on a biography before his death, bringing in Walter Isaacson, a former Time and CNN executive to write it.  Isaacson wrote well regarded biographies of Henry Kissinger, Benjamin Franklin and Albert Einstein, and his biography of Jobs promises to shed new light on an intensely private man who, despite his acclaim, was a mystery.

In an essay this week by Isaacson, he hints at what he learned:

But I later realized that he had called me just before he was going to be operated on for cancer for the first time. As I watched him battle that disease, with an awesome intensity combined with an astonishing emotional romanticism, I came to find him deeply compelling, and I realized how much his personality was ingrained in the products he created. His passions, demons, desires, artistry, devilry and obsession for control were integrally connected to his approach to business, so I decided to try to write his tale as a case study in creativity.

It sounds like it will be a terrific book.

Apple and Starbucks share several traits.  They were founded by people with a passionate desire to find new ways of doing things (having coffee and using a computer).  Both founders left and later returned to revive their companies after they’d slipped into crisis.  And both Apple and Starbucks have cultures that encourage creative, constructive risk-taking that energizes their people and produces great results for customers and shareholders.

Starbucks CEO Howard Schultz reflected on the company’s culture in an interview with the Harvard Business School last summer.  He spoke candidly about facing the company’s problems head-on:

The past two years have been transformational for the company and, candidly, for me personally. When I returned, in January 2008, things were actually worse than I’d thought. The decisions we had to make were very difficult, but first there had to be a time when we stood up in front of the entire company as leaders and made almost a confession—that the leadership had failed the 180,000 Starbucks people and their families. And even though I wasn’t the CEO, I had been around as chairman; I should have known more. I am responsible. We had to admit to ourselves and to the people of this company that we owned the mistakes that were made. Once we did, it was a powerful turning point. It’s like when you have a secret and get it out: The burden is off your shoulders.

It seems the UBS board and its executives could learn a thing or two from Schultz.