Reward for risk. This is a great idea, right? I mean, tech giants like Google do this kind of thing all the time. They give people the latitude to try new things and reward them when it goes well; sometimes people are rewarded when it doesn't go so well - the bigger consideration is that when people fail (and put in their best efforts) they aren't punished for it.
I've seen many organizations try to replicate this. They like the idea of innovation and of gaining critical competitive edges against their opponents and let's be honest, who wouldn't? Yet, when put into practice this often seems to fall apart, and from my experience, it comes down to a single flaw in leadership.
If you want to implement this kind of program you need to not only communicate to your team that they will be rewarded for taking risks, but you need to mean it. That last part, that is the critical flaw. Most people don't like to fail, leaders included, so when they tell people to take risks, somewhere, deep down, they aren't willing to accept the consequences. Your team will figure that out very quickly, and while you may be preaching that they need to be innovative and take more risks, if you won't back them on it, no one will stick their neck out.
This phenomenon happens not only with risk and reward but with many aspects of leadership. If you talk the talk, make sure you walk the walk, and who knows, you might be rewarded for that risk.
-Alexander Cook MEng, MBA, PEngg, PMP
Photo Credit: http://1000lifelessons.com/risk-vs-reward/