The Innovation Sweet Spot: Why Most Leaders Get Risk Wrong
Romie Montpeirous • August 2, 2025
Let's talk about a culture of innovation, because there's a difference between risk and recklessness that most leaders don't understand.
If your team is afraid to fail, they'll never, ever innovate. But also, if they're running wild, you likely have a bigger problem on your hands. The key is finding that sweet spot where smart risks can flourish.
The Problem with Fear-Based Leadership
I've seen countless organizations where teams are paralyzed by the fear of making mistakes. Leaders create environments where any misstep is met with criticism, blame, or worse. The result? Teams that play it safe, stick to what's always been done, and never push boundaries.
This fear-based approach kills innovation before it even has a chance to breathe. When people are afraid to fail, they stop experimenting, stop questioning the status quo, and stop bringing forward the bold ideas that could transform your business.
But here's what's equally dangerous: the opposite extreme.
When "Innovation" Becomes Chaos
On the flip side, I've worked with leaders who think innovation means giving their teams complete freedom to do whatever they want. They throw around terms like "fail fast" and "move fast and break things" without providing any structure or boundaries.
This approach creates chaos. Resources get wasted on projects that were never viable. Teams pursue ideas that don't align with business objectives. And eventually, the organization swings back to the fear-based model because the "innovation" experiment failed spectacularly.
Neither extreme works. The magic happens in the middle.
Defining Your Innovation Guardrails
You as the leader need to define what I like to call the guardrails. These aren't restrictions on creativity—they're the framework that makes smart innovation possible.
First, what's the budget? Your teams need to know how much they can invest in experimental projects without needing approval for every expense. This isn't about being cheap; it's about being strategic with resources.
Second, what's the timeline? Innovation projects can't go on indefinitely. Set clear timeframes for experimentation, testing, and decision-making. This creates urgency and prevents projects from becoming pet projects that never deliver results.
Third, where is the no-go zone? What areas, values, or principles are non-negotiable? This might include legal compliance, brand standards, or core customer promises. Making these boundaries explicit prevents teams from innovating in ways that could damage the business.
Once you have these guardrails in place, here's what you tell your team: "Within those bounds, go for it."
The Power of Psychological Safety
But guardrails alone aren't enough. You need to create psychological safety—the kind of environment where people won't be punished for thinking differently.
This starts with you as the leader. You need to model vulnerability by admitting your own missteps. Say things like, "I don't know yet, but what do you think?" Show your team that not having all the answers is okay, and that learning is more valuable than being right.
Make feedback a regular part of your process, not something that happens once a quarter during performance reviews. Build it into your everyday flow with your team. But change how you ask for it. Instead of generic questions like "Any thoughts?" ask specific questions like "What is something I missed?"
Most importantly, reward people for having the courage to try new things, even when they don't work out. If you only celebrate successes, you're sending the message that failure is unacceptable. But if you celebrate smart risks—even when they don't pan out—you're building a culture where innovation can thrive.
Creating the Learning Loop
Here's where most leaders stop, and it's a mistake. Once you've created the framework and the psychological safety, you need to systematically capture the learning from every experiment.
Don't be afraid to debrief every risk, win or lose. Ask three simple questions:
What worked? What didn't work? What do we need to do differently next time?
This creates a learning loop that makes your organization smarter with every experiment. You're not just encouraging innovation; you're building institutional knowledge about what kinds of risks are worth taking and how to take them more effectively.
The Difference Between Swinging and Swinging Smart
Taking a swing is great, but taking a smart swing—that's what moves the needle forward.
A smart swing is calculated. It's bounded by your guardrails but bold enough to create real value. It's informed by past learning but not constrained by past failures. It's supported by psychological safety but driven by clear objectives.
When you get this balance right, amazing things happen. Your team becomes more creative, more confident, and more committed to the organization's success. They start bringing you problems with solutions, not just problems. They start taking ownership of outcomes, not just tasks.
The Bottom Line
Innovation isn't about removing all constraints or adding more rules. It's about creating the right framework for smart risk-taking to flourish.
Define your guardrails clearly. Create psychological safety intentionally. Build learning loops systematically. And remember that your job as a leader isn't to have all the answers—it's to create an environment where the best answers can emerge from your team.
Because when people feel safe to take smart risks, that's where the real growth always happens. And that's how you build a culture of innovation that drives sustainable results, not just temporary excitement.
The sweet spot isn't about finding the perfect balance once. It's about continuously calibrating your approach based on what you learn from each experiment. That's how you create lasting innovation that moves your organization forward.
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