In order to reduce risk due to innovation organizations have to take more risks

When talking about innovation there’s many things people objectively agree. Objectively only, become for some it’s still hard to put into action what they understand. Some say it’s because of fear, intertia, resistance to change…but wouldn’t it be because they misunderstand the very reasons that make innovation compulsory ?

First of all, let’s list the points nearly everybody agree about.

– Innovation is (and will be more and more) key in performance and will help building a sustainable competitive advantage. Pace and quantity have to be continuously improved.
– Innovation is not only about products : it’s also about the way things are done, the way people work, the way people are managed.

– Innovation can be a real new thing or a small improvement with big consequences.

– Innovation is not a few expert’s job who are thought being able to innovate : it’s a distributed activity.

– Innovation needs the information’s metabolism to be speeded up.

But the facts remain : there are few organizaton that put all these things at work. Because of an obvious reason : innovation is vert risky. Truth or received idea ?
Innovation is risky because it needs ressources : those who’ll innovate and those who’ll,  if an  idea is worth, to make it become reality,  making a prototype, a pilot. Mobilizing ressources has a cost.  Since innovation bring change and needs people to adapt, it has a cost. Let’s also recognize the effects can’t be fully measured until …it’s  tried out and that, out of all the projects, only a few will be successful.  Saying that, it’s obvious  that doing nothing is the safer attitude, unless you’re sure it will work.

Furthermore the possible turbulences caused by innovation, the financial impact can’t be neglected. Mobilizing ressources for an uncertain result doesn’t look like a ROI-driven strategy.

Nothing but logic. Or the exact opposite…
Risk control is the consequence of the will not to engage ressources without a demonstrated ROI, that’s to say, at the end to the shareholers’ will to yield a profit. Their binds, spread from the top to the bottom brings to innovation restriction. Let’s precise they dont ban innovation, they just ask for ROI.

Let’s have a look on the way investment professionals try to maximize their ROI. Do they invest in one only company or in a large portfolio ? Obviously, the answer is the second option. At an extreme end, venture capitalists which are known for being the most demanding, invest in a lot of companies, knowing only very few of them will really be a jackpot. The best way, for them, to control risk is not to downsize the whole investment but to diversify. Investing in one company is risky, investing in 100 isn’t.

Oddly, companies exactly do the opposite.

Despite of considering innovation globally, projects are often taken independantly : mathematically the unitary risk is so high that it’s worth not trying. In order to yield profit from all the ressources involved in innovation, and at a larger scale in every change project, it’s essential to consider them as a global portfolio and not as a sum of independant projects.

Head of Employee and Client Experience @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler
Head of Employee and Client Experience @Emakina / Former consulting director / Crossroads of people, business and technology / Speaker / Compulsive traveler

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