19 Dec 2011

One often hears that innovation requires risk taking. This leads to recommendations such as, “We need to encourage risk taking to build an innovative future.” I disagree. Here’s why. When I interview people who are innovators, rarely does anyone say, “I was a risk taker.” 

Instead they say, “It was the best option,” or “It made sense to do it in a new way.” If they don’t see themselves as taking risks, what is the value of promoting risk taking?

I confess that my understanding of risk is perhaps naive. Yet I see how similar the concepts of risk management and innovation are. Many core principles are identical. Both try to identify future possibilities. A simplistic perspective is:
•        The innovator wants to create possibilities for success
•        The risk manager wants to identify possibilities for failure

The innovator wants to minimize the possibilities for failure as well. Good risk management leads to greater success by noticing the shadows, those areas or events that could create failure. In challenging times, we want insight from both disciplines to make the best decisions.

Both risk management and innovation share these common elements:
•        They depend on recognizing patterns to see what is there and what is missing
•        The deal with uncertainty
•        They require a systematic process to succeed

Both also share common pitfalls:
•        Poor processes that limit success
•        Organisational issues that block initiatives
•        Efforts are not strategically aligned
 
At an individual level, we can hone our skills by using a common framework to shape ideas if we view the challenge of innovation as an equal partner to the challenge of managing risk and failure.  If done collaboratively, the tools and perspectives help to:

1.    Identify problems or potential events that need attention. Hence, you have an opportunity to create a solution to something that could lead to a failure. 
2.    Identify the weaknesses in the current solution. By doing so, you have an opportunity to create a better solution.

We start with strategies to create success. These strategies cascade to tactical plans and then someone’s To Do List. Well conceived strategies make it easy for people to see how their day-to-day work contributes to the goals of the organisation.  In other words, good strategy is a roadmap that guides people toward success.

The risk perspective focuses on challenges that can create failure.  What could cause your project or strategy to fail fastest?  This becomes a To Fail List.  This is not cynical thinking. If well conceived, your to-fail list of perhaps 3 to 5 threats makes it easy to see the consequences if they are not managed or avoided.
Putting these concepts together, your strategies contribute to your success by leading you to innovative results while your risk help you avoid failure. As such, if you avoid what can lead you to failure, you can succeed by default!
 
Written by Ed Bernacki, The Idea Factory,  info@wowgreatidea.com