The future brings a lot of uncertainty and, with it, risk. It is an inevitable part of our everyday lives and doing business. Risk-taker or not, it goes without saying that you will consider risk factors when making business decisions. You can choose to ignore it, exploit the opportunity, or contain it and try to eliminate it. Either way, when running a business you must make well-informed choices and calculate the trade-offs.
When it comes to the relationship between innovations and risk, these two seem to go hand in hand. Every innovation faces a lot of risk throughout the whole innovations process. The time factor plays a big role since risk can directly be related to the length of the innovation process/project. The more time passes between the idea, its development, and the final launch, the more risk elements may emerge and more things can go wrong. Looking at this innovation-risk relationship, we can approach it from two different aspects:
1. Risk of failure
Of course, the risk of failure is obvious. Innovation without success doesn’t benefit your business, now does it? First things first, make sure that your innovations are in line with your business vision and mission as well as with your business strategy. Next, define your innovation strategy and scan for all risk factors. Let’s make one thing clear, it is impossible to take all of the risk factors into consideration, but at least try and list the main ones, and keep track of them. Types of risk that can impact the success of your innovation are market risk, credit risk, operational risk, strategic risk, liquidity risk, regulatory risk, reputational risk, political risk... They can be internal, external, you name it. Risk is everywhere. But even if you have an aversion towards risk, and a low tolerance level, keep in mind that there are two sides to risk, not just the negative one. With it, risk also brings a chance for success. The Chinese character for risk perhaps best illustrates its true meaning. It is combined with two characters, one to symbolize danger and the other an opportunity.
More time - more risk
As already mentioned, time plays a big role. The longer the innovation process, the higher the risk associated with it. Being always on the lookout for red flags is a must. Do not fear abandoning your ideas, because sometimes the right decision for your whole business might just be to stop or postpone the innovation project you are working on. This will save you a lot of time and money and give you a chance to shift your focus to more important projects.
Fast and small iterations for more success
Instead of waiting for the end-product to hit the market and then see the success of your innovation, try incorporating small and quick iterations throughout the whole innovation process. This will help you navigate and hit a home run with your innovation with more success. These small changes will provide you with fast and accurate feedback about your innovation, and whether you are going the right way or not. The feedback can provide you with valuable data on crucial aspects of your innovation that you might have not considered, and hence help you avoid the risk of failure.
Do you have the right infrastructure to support your innovation?
Sometimes overlooked, the lack of infrastructure can be a big deal-breaker and a huge risk factor. Not only do you have to make sure that your innovation is on track and monitor for all other risk factors, but you also have to make sure that, once your product or service is ready to hit the market, it has the right infrastructure to support it. If that is not the case, you have to consider if you can create the right infrastructure yourself, or improve the existing one? These are all risk factors that are quite often overlooked and the reason why some innovations fail.
2. Innovations as a way to reduce risk
Now the other aspect in the innovation-risk relationship is the impact innovations have on reducing risk. Even if you are expecting the unexpected, at some point you will still get caught off-guard. But a business that supports and nourishes a rich innovation culture is more agile and more capable of responding to risk. No matter your industry, risk can come from all sides, at any time. This is where innovative solutions step in and turn a disaster into success.
The innovation portfolio
The more you innovate successfully, the more relevant you are. The more diverse innovations you have in your portfolio, the more secure your business is. Here you must wisely manage your innovation portfolio and make sure that you have a steady flow of fresh innovations, all in different stages of the innovation process. This will make sure that your cash-flow and ROI are constantly in motion and that even in case one innovation fails, the others will cover the damage.
Predicting the future
Even with the newest tech, we cannot predict the future. But what innovative technologies have given us are some pretty awesome tools we can use. Thanks to them, key indicators can be tracked, and huge amounts of data could be analyzed to lower the risk as much as possible. Big Data allows you to bring well-educated decisions and manage your innovation process more efficiently. Again, it is almost impossible to take all risk factors into consideration and analyze all outcomes but, to a certain extent, innovative technologies can help you make sure that you are on the right track.
Innovation Cloud and risk management
Innovation Cloud lowers the risk of failure and supports the launch of successful innovations. How can we help your business in risk management? The Innovation Cloud software solution is designed in such a way to help you lower the risk of making wrong decisions throughout the entire innovation process. We make sure that only the best ideas are chosen for further development. Thanks to Machine Learning and Big Data, Innovation Cloud further boosts your innovation process and gives you the possibility to improve your decision-making process even more. Next, our Phase-Gate approach ensures the successful development of your ideas and makes sure they hit the market successfully and on time. Keeping track of your key indicators and progress as you move forward through phases and having checkpoints will ensure that you make the right decisions and take adequate action at any given moment.
Since innovating is an ongoing process and the job is not done with a successful launch, we further help your business track the progress of every innovation when it hits the market. Innovation Cloud can be integrated with your existing business software, importing all necessary data for detailed analyses. Collected data can be further used not only to track the progress of your innovations but also as valuable information and lessons well-learned for your next innovation cycle. Innovation Cloud is more than an innovation software solution, it is your number one partner in business.