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How does your business manage innovation risk?
Does your business pay people to succeed, or does it pay them to not fail? Do you know the difference?
Have you ever done something that didn’t work and said to yourself: “well, I won’t do that again”. How does this feeling compare to the moment when you realise a big project or task isn't going to work and you will have to take responsibility?
In the first instance, did you ever stop to ask yourself why you even decided to do it that way in the first place?
If you stop to think about it, you’d realise that you probably had a hunch, or theory, about how to solve the original problem. What did you do immediately after you said “I won’t do that again”? There’s a good chance you came up with another hunch to solve the problem that may or may not have worked. Either way, you probably kept doing this until the issue was resolved.
This process is probably very different to the approach you use on big projects and tasks, where you have project schedules and "if this, then that" risk management plans.
But should it be?
One of the risks of innovation is the time it takes; another is the resources we consume while doing it. Another is miscalculating the market or making assumptions that prove to be false.
While it would be great if there were a way to cut straight to the end point where we worked out how to innovate without failing, realistically this is almost never going to happen, and even if it did, the solution will probably not represent the best possible outcome anyway.
These ‘failures’ are an integral part of the innovation process because they show us something we didn’t previously know. It might be a consumer insight, knowledge of how people use processes we create, or an awareness of system and technology limitations that prevent it being used as designed. Regardless of the ‘failure’, its usefulness cannot be underestimated, and designing overly conservative risk management plan can prevent this knowledge ever emerging.
What makes failure acceptable is its context. Previously we discussed determining experiments to test if an idea will work. These ‘tests’ are like the hunches we use for simple tasks and are a better way to manage innovation risk than using “if this, then that” risk management plans. Experimentation is the key to science, and integral to how we live our lives; innovation is no different.
Does your company use risk management plans? Do they help or hinder the innovation process? Could they be done a better way? For a more detailed look at some of the problems risk management plans create, check out the Paradox of Innovation & Risk Management blog.