As innovation becomes a more consistent requirement rather than an occasional exercise, it must align to strategic goals and become part of the planning and execution cycle in more aligned ways.
An increased focus on innovation as a consistent discipline requires significant reflection on what needs changing, what impact this change will have and how do we proceed to implement it. This requires senior management attention because of the significant organisational impact.
The leadership within an organisation provide the linkage into the strategy, provide the framework and set this in the context of the vision and goals needed to be achieved. You, as the innovator, seek out the synergies between strategy and innovation, between innovation and capabilities, between culture, the environment, the process, structure and routines and how it all should be governed.
The compelling value is in having an integrated innovation framework
All too often strategy is not influencing the behaviours and outcomes around innovation, it is simply allowing them to be left to chance.
Innovation is being ‘pushed down’ the organisation for others to interpret and offer their answers. They execute to their own understanding and often the innovations end up as not strategically aligned.
That is plainly wrong, not knowing the strategic objectives it is one of the principle causes of innovation failure and requires fixing.
This poor strategic understanding creates a lack of alignment and directing innovation. If an organisation lacks top leadership engagement it becomes, for many, the reason why they seem to just simply ‘limp’ along in their innovation activity, delivering ‘simply’ incremental outcomes. The more radical innovations can never emerge if these do not have the close alignment to the Corporate vision or objectives and leadership engagement..
I believe we need a new way to manage risk within our innovation activities. It needs to be treated differently from the general ‘risk management’ criteria applied within our business organizations.
In a three-part series, part one outlined the implicit need to align innovation to the corporate strategy and through this we can determine ‘acceptable risk’. In part two I offered up numerous reasons why we should recognize and treat innovation risk differently, so as to allow it to perform closer to its promise of driving growth and achieving real advantage.
This post here is the third and last part, part three, where I lay out different mechanisms and framing of risk and innovation. These need to be evolved to fit your own risk appetite, not one size fits all. I hope it helps.
Risks are certainly shifting. In a recent piece of work by Deliottes called “Risk sensing:the (evolving) state of the art, the risks of most concern are changing each year. Interestingly, the pace of innovation stands among the top three risks in 2015 and tops along with regulatory risk, the list foreseen in 2018. With technology disruption, business model disruption and growing competition, social and customer engagement challenges the ability to manage innovation is growing as a concern and in risk management. We need to formulate a more robust risk innovation framework. Risk management for innovation needs to evolve to keep pace with the changing demands and pace of change we are undergoing in business challenges. Risk is becoming an evolving capability.
We need to open up our thinking about risk and innovation management. We should aim for a really healthy construct that does help all involved or associated with innovation and managing risk, that gives a better chance of pushing beyond the incremental innovation that avoids most risk and disappoints those seeking real growth.
In this post two, within a three part series, I build the argument on why we need to treat innovation differently within any risk assessment. Part one focused on linking risk into an innovation strategy that needed to align to the corporate one.
Each organization finds its own level of risk appetite. Regretfully innovation, often by default, gets swept up in this generalization of “risk management” that is corporately driven and the serious message of “risk” dampens exploration. There is a real need to make a clear argument that innovation should be treated differently. It can still come under the broad risk umbrella but judging innovation risk is utterly different from organizational strategic risk.
I want to bring together some thoughts on risk and innovation. This is the opening part and sets the scene. I feel we spend less time on the management of risk within our innovation initiatives. We so often simply measure risk on established risk / return lines of known existing business criteria, treating it as part of our existing ongoing business and that is plainly wrong.
Risk assessment within our innovation activities need a different, far more distinct framing that reflects the nature of the unknowns we are working with, in my opinion.
Our organizations need to relate to the differences far more, to allow this ‘innovation risk assessment’ to play an increasing role in ‘advancing’ innovation and its understanding, at boardroom level to relate too and take a different risk-related profile position that many take today.
We cannot get away from the reality that in most of our organizations we have a disconnect going on around innovation.
Research shows a lack of engagement around innovation by non-managers, also there are claims through studies that 7 out of 10 of employees do not understand how they can make a worthwhile contribution.
The cynicism around innovation has turned it into nothing more than a buzzword for many, not taken with the seriousness that it really deserves for sustaining growth within organizations and achieving broader engagement to make this happen.
Innovation is treated as more the opportunity taken when it fits and works, often toned down when it does not. There is often a total lack of sustaining strategic commitment to innovation.It is just not integrated into the core of the organization.
This is the third and final part of this series on the rethinking within the management of the innovation system.
Part three– Technology will drive innovation change.
We are in need of a different sustaining capacity, one build around innovation as its continuous core; constantly evolving, adapting, learning and adjusting, in perpetual motion.
We are heading for transformational change
Digital technology and the cloud are offering us a radically different conduit to achieve a new engagement process within our organizations. Innovation is going to be very much caught up in this transformational change.
Technology and data will be innovation’s catalyst for change.