Innovators Know: Risk is Good
09 Apr 2004|Darrel Rhea
No Guts — No Glory
Cheskin has provided me a front row seat to observe businesses attempt to innovate products and brands for 25 years. The industry swings over time, and now I am seeing greater interest in innovation emerge once again. Not surprisingly, we have seen a lull recently. The dot bomb exuberance made risk-taking appear idiotic. Sarbanes-Oxley has riveted senior management’s attention on providing steady-handed corporate governance. And the poor economy has punished many companies for attempting innovation initiatives.
Now the economy is picking up, and the time for retrenchment and tail-covering is over. Customers and consumers are demanding innovation and the market will reward those capable of the gumption for delivering it
This time around, however, managers are most interested in big innovation without risk. Can’t we engineer a process to deliver transformative change and be smart enough to eliminate risk? While Cheskin’s approach certainly substantially reduces risk and provides focus and efficiency, real innovation fundamentally does involve risk. Unless you embrace that risk, you are very likely to fail.
Consider this analogy: you are trying to learn to ski on steep downhill runs. If you lean forward and embrace the risk you gain control. There is still risk and you are aware of it, but it does not impede you. If you resist the risk and attempt to gain control by being tentative and going slow, not only do you expend more effort, you are more likely to fall.
Learning to be a successful innovator is just like this. Corporate groups are encouraged to break the rules and stretch out and explore new territory. This means developing entirely new capabilities and coordination of new actions. (Learning to ski fast downhill, a risky venture.) Meanwhile, management expects the ROI on their activities to be as assured as those associated with incremental product improvement activities. They manage innovation expecting highly predictable and profitable short term results, with a linear process with lots of gates and reviews. (Skiing tentatively. Doah!)
I am not suggesting that risk be ignored in business innovation. I am arguing that it be factored in as a variable to be managed. Risk is a good thing. If it wasn’t risky, your competition would have already done it. Trust the Force, Luke, lean down hill. Ski fast. How?
1) Build a portfolio approach to innovation with a mix of close-in improvements of existing products along with some very aggressive product goals requiring real invention. Clarify with management why you need that mix and how the success criteria should differ for each.
2) Build an innovation process that allows for risk taking. Secure management’s support and participation.
3) Realize that not everyone is comfortable with risk taking. Don’t expect risk-adverse people to lead innovation programs. Don’t expect them to be contributors on a team either. Screen them out, period.
4) Don’t succumb to using traditional validation research methods. Common pitfall: insisting on market validation before the concept is fully baked.
5) I know everyone says this, but really, reward risk-taking and failure. (All rhetoric aside, I have yet to see a company really do this well.)prev next