Managing risk in innovation practices
Our CEO Jeneanne Rae led a virtual panel on revolutionary versus evolutionary innovation today. Held in association with HighTable, the discussion–which included former Coca Cola and GE Energy execs Danny Strickland and Ramesh Rangarajan–seemed to center largely around implementing innovation.
Risk is one of the largest detractors in the case for innovation. A company’s risk threshold can be very low, especially if its business model has historically proven very successful. But people are realizing that companies must innovate in order to keep up and remain relevant in their respective industries. Those that cannot adapt will not survive.
So how to mitigate that risk? Primarily, companies must foster a culture of innovation–that is, one that does not punish unsuccessful ventures. Rather, companies should manage expectations and even encourage failing fast and often–after all, early-stage failures cost less, as Mr. Strickland noted. “Failure is the first step to success,” Mr. Rangarajan added. “Every time we fail, we learn.”
The idea of a “customer as an innovator” is another concept used in diminishing risk. Mr. Strickland and Jeneanne chimed in on the importance of involving the customer in the beginning stages of innovation projects. A deep understanding of consumer needs is an invaluable contribution to a company’s innovation process, and customers can provide early insights and feedback that can save a company time and money during the design of a product or service.
These statements attest to the beauty of the rapid prototyping and testing process in design thinking: in quickly generating and testing ideas, teams can learn what works what doesn’t, and waste less resources developing potential solutions that were doomed from the start, however unknowingly.
Of course, large firms and small firms must manage innovation risk differently. Large companies tend to move slowly and are often entrenched in organizational politics that can hinder revolutionary innovation; in this case, Mr. Strickland and Mr. Rangarajan emphasized that they should leverage existing capabilities across organizational divisions to incorporate innovative practices into their businesses.
Smaller firms, typically more agile, are more able to indulge in revolutionary innovation, but often don’t have the means to do so. For smaller businesses, encouraging rapid prototyping is particularly important in order to minimize the risk of losing capital, which large companies are generally able to better absorb.
With so much white noise surrounding the world of business innovation today, the panel discussion was a welcome respite that offered clear-cut roadmapping and a valuable Q+A session for people looking to improve innovation within their organizations. Our thanks to the HighTable team for coordinating the event, and to Danny Strickland and Ramesh Rangarajan for their thoughtful inputs.
About Joy Thomas
Joy is a strategist for Motiv and spearheads business development and marketing efforts in addition to supporting client engagements.
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