5 min read

The Risk Of Not Innovating

Jun 17, 2016 6:30:00 AM

Today we’re sharing insight from guest blogger Gregg Fraley, CEO of Gregg Fraley Innovation. We hope you enjoy Gregg's wisdom and perspective.

Innovation_250.jpgThis is an article about innovation and risk. Specifically, it’s about taking enough risk to insure survival and growth of a company. Let me explain.

Everybody wants innovation, at least in theory. Doing innovation is another matter because it requires focus and resourcing. Once ideas are on the table it also confronts leaders with tough decisions. These decisions can be gut-wrenching precisely because the bigger the innovation idea -- the more risk it requires. It feels prudent to say no to a new idea especially when it’s a “bet the business” innovation. For example, an innovative new product might cannibalize on markets where you are currently doing well. Will the new revenue stream exceed the old one? Implementing a big new idea might require new hires, equipment, and other expenses.

Sometimes saying no is the right decision.

And yet, not taking enough risk is the biggest risk of all. Taking enough risk on innovation is strategic. Your company’s future growth depends on it. History shows us that those who don’t anticipate change will suffer from it.

In other words, if it ain’t broke – break it!

Let’s Look At Innovation Through The Lens Of Risk Management

For established organizations, innovation is a form of risk management.

Look at the dead carcasses of Kodak, Blockbuster, and Radio Shack to see the danger in standing pat with existing technologies and business models. Calculated risks must be taken.

For leadership, the questions shouldn’t be if or why to do innovation, it should be how, and when.

How Do Organizations Mitigate The Risk Of Innovating?

The one-word answer is ‘projects.’

Continuous projects are the key to mitigating the risk of innovation.

Those projects, and the team running them, should have strong leadership and mandated management support. Depending on the size of the company, innovation might have its own dedicated team. For smaller businesses, it’s a function led by owners or principals in collaboration with the brightest employees. Innovation teams, whether they’re dedicated or ad hoc, should be diverse and dynamic.

Innovation is a discipline, and even in resource-constrained organizations, consistent innovation efforts can happen if it’s planned. Innovation can and should be integrated into standard operations because innovation is a standard business operation.

Some innovation projects will target low-hanging fruit, others will seek breakthroughs – and those types of projects have different levels of risk. Innovation has many forms, Doblin’s work sheds light on this, it’s not just about new products. A modified sales process, a new distribution strategy, shifts in marketing approaches – these can all be innovation. The smart company will mix it up and explore innovation in all its many forms. This diversification of innovation project types is a risk management strategy.

Innovation Projects Start With A Good Question

Innovation team leaders need to keep a dynamic list of opportunities where your business might improve. These questions are innovation project starting points. For example, a manufacturer might ask themselves: How might we grow beyond car parts?

An innovation team explores the focused challenge question and they’ll pick one as the focus for a project. The next step is to think up ideas that answer the question. But the question is key -- coming up with an intriguing focused challenge question is the key to brainstorming that works. This is another way to manage risk – doing the careful thinking work necessary to have a focused innovation project.

How many innovation projects a year? It depends. But at least two and as many as eight. Your cycle speed is a measure of how well you’re doing innovation. The more projects you do, and the different types of projects you do, will diversify your innovation pipeline.

Fail Fast

Don’t let the expense of the back end stop you from doing a lot at the front end. You need to continuously feed that pipeline. The early stages of innovation are relatively cheap and low risk. The front end of innovation (FEI) is mostly about identifying challenges (questions) and exploring ideas and solutions. Coming up with ideas requires focus, and lots of thinking work, but it doesn’t cost much. Doing a good job of FEI, the thinking part of innovation, is a great strategy for minimizing risk.

As you progress towards implementation be sure to market check and creatively (cheaply) test your ideas in the real world. You might use prototypes, write-ups, or actual test products. Will the customers buy it? Ask them. Will the team use the new process? Test it. How can we adjust the idea to make it work? This “lean” strategy of creatively testing and then failing bad ideas -- before you spend big money -- minimizes risk.

Don’t Wait Until You Hit Bottom

Sadly, most organizations wait until there is an emergency to tackle innovation. It’s a bit like a drunk who needs to hit bottom in order to realize there is a problem. Be aware of the risks before you hit bottom and take proactive measures -- projects!

Innovation takes practice and a consistent effort – try to get ahead of emergency innovation.

When is the best time to start an innovation program? Now.

Get Training

If you don’t know how to manage innovation projects, get training.

Structured Creative Problem Solving and Innovation Cycle Training are investments that pay off -- they are growth accelerants. Trained people mean your innovation project efforts will have a higher probability of success.

What’s The Risk?

The risk is not taking enough risk. If you’re a business leader looking to manage risk you’d be well advised to start and sustain a continuous innovation program. Programs consist of projects, and through projects you’ll change your culture. If you don’t know how to get innovation projects started -- get training and assistance. Your innovation projects are insurance policies on the future of your company – so make sure you’re taking enough risk.

 

This content was written and shared by guest blogger, Gregg Fraley.

gregg_fraley.jpgGregg Fraley is a writer, trainer, and innovation consultant. He’s the founder of Michiana-based Gregg Fraley Innovation (GFI) and KILN Ideas Ltd, a London based innovation products company. KILN provides innovation stimulus in its IdeaKeg subscription service.

Gregg is the author of “Jack’s Notebook” -- a well-reviewed business novel about creative problem solving. Jack’s Notebook is used by many business schools, including: UCal Berkeley, St. John’s, Notre Dame, and Cambridge in the UK. Gregg has guest lectured at U Cal Berkeley, Cambridge, and Notre Dame. He’s on the faculty of the Pfeil Innovation Center in South Bend, Indiana.

Gregg is an experienced facilitator and trainer, working with companies in many business sectors as a consultant, as well as his own start-ups in his 20 year career in the software and entertainment industries.

Connect with Gregg on Twitter, LinkedIn, and via his website.

 

Topics: Executive
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Gibson is a team of risk management and employee benefits professionals with a passion for helping leaders look beyond what others see and get to the proactive side of insurance. As an employee-owned company, Gibson is driven by close relationships with their clients, employees, and the communities they serve. The first Gibson office opened in 1933 in Northern Indiana, and as the company’s reach grew, so did their team. Today, Gibson serves clients across the country from offices in Arizona, Illinois, Indiana, Michigan, and Utah.