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.
In business the future narrative is becoming vital. We all should care about the future and it becomes so important for us all to identify or not, as this gives us our identification.
I have found that narratives are becoming increasingly important to explain ‘things’. I’m re-learning this ‘art’ to tell a compelling story.
Our stories can combine much, communities can identify or reject, we can begin to explain complex stories by presenting a well-designed narrative that presents the arguments. It can explain the connections and outline the issues, both in terms of risk and opportunity. I think business narratives will become essential for our organizations to use to explain where they are and what they see as their future.
A good business narrative should fill a real knowledge gap
Recognizing its dual force
Scholars tell us that there are two natural complementary, yet contradictory forces at work within our universe. The Chinese call these ‘Yin Yang’. Yin is regarded as more passive, receptive, more outside-in, whereas Yang is more active, creative and inside-out. These are seemingly opposing forces but interconnected and interdependent, one gives rise to the other, they actually reinforce each other. Yin & yang seemingly have the following characteristics: they are opposing, yet equally rooted together; they have the power to transform each other and eventually are balanced out.
Yin Yang in Idea Management
As a good example of these opposite forces we often are required to both generate a large number of different ideas, and apply the countervailing need of selecting from among those that best can meet the organizations objectives. It is critically important to have this ‘flow and balance’ and allow it to constantly evolve. Continue reading