Herman Kahn – futurist, author, and inspiration for Stanley Kubrick’s “Dr Strangelove” – once described risk taking as “the essence of innovation”. It’s a fair assessment. Afterall, innovation often means abandoning an old, well-established practice in favour of something potentially greater, but less predictable. Business leaders are thus faced with a challenge – discovering a way to achieve disruptive innovation whilst minimizing potential dangers to their investment. By understanding how to manage innovation risk, companies can help strike this fine balance.
Of course, fearless innovation doesn’t mean reckless innovation. To minimize risk, it’s critical to ensure that all new innovative ventures are supported by well-formulated strategies that incorporate both internal and external feedback. However when specifically when it comes to embedding a culture of controlled risk taking within an organization, it’s crucial to take a careful look at your Learning and Development (L&D) strategy.
If you don’t already have a dedicated L&D practice within your business, a great resource to learn more is the 2019 US L&D report from findcourses.com. The report illustrates how important professional training can be when it comes to managing innovation risk successfully. This includes:
1. Cultivating innovation ‘safe spaces’ where employees feel comfortable to innovate
2. Conducting “post-mortems” that analyze the results of previous innovation efforts to see where future improvements can be made
3. Working with external organizations to gain best practices for minimizing innovation risk and amplifying growth
When combined, these three strategic approaches represent a comprehensive safety net to protect your company from the risks associated with new innovation ventures. Let’s take a closer look at each.
1. Help Great Ideas Flourish: Engaging and Empowering Your Employees
Tiffany Poppa – Director of Employee Experience at Walmart’s e-commerce driven apparel subsidiary ‘Bonobos’ – has observed that a strength-based training approach is ideal for creating a workplace culture where bold new ideas can thrive. “Focusing on strengths creates trust,” said Poppa. “It creates a safe space to try something and possibly fail, have a conversation about it, and move forward.”
According to a study by international consultancy firm HayGroup, 58% of high performing companies encourage global employee innovation leadership with development programs. 38% of employees at high performing companies stated that managers encouraged them to experiment with new ideas.
By founding a creative environment – where employees are encouraged to contribute suggestions without fear of judgement – your enterprise can shift towards reducing risk and uncertainty, while simultaneously supporting idea experimentation. Encouraging peer-to-peer communication through training can help everyone in your organization align their goals with the company’s overall strategy. Open dialogue that accounts for individual strengths will enable greater communication and collaboration to take place around new ideas, as well as reveal new and effective ways to reduce the risks around them.
2. Conduct Innovation “Post-Mortems”: Gleaning Risk-Reducing Insights from Past Mistakes
For Karen Bicking – the Head of US Learning & Talent Development at pharmaceutical giant Bayer – conducting innovation “post-mortems” is an effective way to inform innovation strategy in a manner that mitigates risk. Having piloted an action learning programme for Bayer in 2018, Bicking explained: “We took some leaders and they delivered work on some projects that were outside of their normal space. They gained experience beyond their regular role, as well as exposure to senior leaders. We’ve seen a great outcome from that, with a number of projects being promoted already, even though the program has just concluded.”
By assessing the metrics of previous innovation campaigns – ROI achieved, number of employee involved, etc. – you can gain a clearer perspective of how future innovation projects can be improved. The Qmarkets platform has an array of analytical tools that can be leveraged for just this purpose.
Despite its success, Bicking also explained that Bayer constantly monitors and evaluates the results of their training initiatives to make improvements and continue driving innovation forward.
With all your ducks in a row, putting trainees out of their comfort zone in the learning environment can spark change on an organisational level, and help employees apply their skills to other areas of operation. The 2019 US L&D report revealed that 41% of market challengers are predicting an increase in their L&D budgets. It’s fair to imagine that they’re making use of every internal and external tool they can manage to maximize the potential of their growing training strategies.
3. Gain Outsider Perspectives: Harness External Expertise to Minimize Risk
Experimentation with innovation might sound exciting, but it’s not always simple. You can’t just pour money and resources into a new idea, and hope for the best. No matter how much planning you do, it’s impossible to know for sure how a new innovation will perform when faced with the incalculable variables of real-world application. Even the most prestigious companies haven’t unlocked the secret to failure proof innovation. In 2014 when apple released their iPhone 6 plus handset, it received acclaim for it’s large thin screen. However customers gradually realised that the phone was susceptible to bending when placed in the back pocket. As such, Apple was forced to enforce a policy of free replacements for customers who encountered this issue.
Apple’s “Bendgate” saga force the company to establish a refund policy for iPhone 6 plus customers
In order to manage these kinds of risks, it’s important to look outside of your organization, for help from any third party that can provide insight on the challenges you’re facing. One of the most important audiences to involve, is your customers themselves. By launching an open innovation crowdsourcing platform, you can gain invaluable feedback on consumer needs and pain points. This will in turn help you ensure your new innovation efforts are customer-centric – minimizing the risk of loss.
Another effective way to harness external sources to improve the success rate of innovation is via M&A scouting. For example, as a result of your “post-mortem” analysis of a previous endeavour, you may find that a lack of technological capabilities or specific expert input impeded ROI. By exploiting M&A opportunities with the relevant startups, you could prevent these deficiencies from reoccurring.
Taking advantage of the expertise of external partners can help you increase the impact of your ideas, minimize innovation risk, and make the entire process a sustainable one.
The Key Takeaway: Collective Intelligence is Pivotal for Eliminating Uncertainty
When it comes to understanding how to manage innovation risk in a way that will optimally benefit your organization, it’s important to gather insights from as many sources as possible. In this respect, a dedicated innovation management platform is indispensable, as it will allow you to:
✔ Create a secure environment in which employees from multiple departments can share their thoughts on the risks associated with new projects
✔ Use advanced metrics and reporting features to analyze previous innovation projects and see where improvements can be made
✔ Systematize the process of acquiring and analyzing customer insights – which will enable some of the ‘real-world’ variables connected with new innovations to be taken into account
✔ Pinpoint M&A and other partnership opportunities – allowing you to enhance your innovation venture with capabilities your company may not possess
✔ Gather and codify the knowledge needed to create new company best-practices (which will support your L&D strategy)
Qmarkets’ software affords each of these benefits, offering business decision makers a powerful strategic perspective on how innovation practices can be refined to maximize ROI.
By combining the risk-reducing approaches covered in this article, you can proceed with bringing your new ideas to life with greater peace of mind – secure in the knowledge that every weapon in your innovation arsenal was used for maximum impact.
To discover how Qmarkets can help you innovate in a way that minimizes risk and maximizes ROI, don’t hesitate to contact us today!
About the Author
Max Maccarone is a content editor for the Higher Education Portal educations.com and Professional Development Search Engine findcourses.com. Originally from Canada, Max relocated to Stockholm after graduating from York University in Toronto. An avid traveller, Max is dedicated to creating diverse and engaging learning and development content for a wide-range of publications.