Is Low Risk Innovation even Possible?
At the start of the twenty first century the innovation buzz has become deafening. It commands the attention of everything – from the popular media to scientific journals. Innovation is claimed to be the driver of economies and the competitive edge of companies. With innovation being the core of many new management styles, one question still remains for the enthusiastic manager; what are the concrete tools for my employees to build our revolutionary innovations?
At the core of any innovation management technique is a risk management philosophy to lower risks along the development and implementation chain. Whether it is focused on minimizing waste via Lean Thinking, correctly addressing consumer needs via Design Led-Thinking or hedging bets via Equity Style Management, the focus is always on how do we reduce the risk inherent in being innovative? Risk and innovation are inseparable. You cannot have one without the other.
The best you can do is to minimize your risk for a given innovation and innovation is an extremely risky business. Around 4% of innovation initiatives achieve their internally defined success criteria. Even worse, only 12% of research and development projects even return their capital cost!
As with many things, we are lucky we live in the twenty first century. Apart from being blessed with the innovation buzzword, we are also blessed with numerous tools to address risks and reduce them to manageable levels. To nail the execution. These tools are being used by the most successful startups around the world, the best management teams running Fortune 500 companies as well as by people geared for success.
What I am talking about is not each of the different parts of a given management style such as Lean Management. The different T abbreviations are well known, TQM, TFM, TPM, TSM, etc and the ways to implement them are also well understood. But a question I hear from many executives is, when I implement a given technique, what catalysts exist to make my specific implementation successful? What tools can I use to take the risk out of my personal innovation problem?
The tools to achieve these goals nowadays are focused around a few enabling principles. They are mostly about connecting the right people to the right problems. And doing this in the simplest and most frictionless way possible. We are seeing this with Crowdsourcing, Crowdfunding, Open Innovation (both ingoing and outgoing), Open Access, Open Source, and many more.
These are some of the tools I tell people to use to solve their problems. But as many know, the devil is in the details. Launching a successful Crowdfunding campaign can sometimes be more expensive than simply using the campaign costs to fund your innovation. Open Innovation has led to many high-profile failures with companies from Chevrolet to BP receiving the dreaded “Crowdslap”.
These tools may solve many problems but not all. There exist other problems which involve a solution focused on a different business model which cannot be solved so easily by the crowd. For example, innovative business models which break down once expensive services and products and deliver the services and products in a more affordable form. It is these business model “tools” such as Hackerspaces, X-as-a-Service offerings, Uber style companies and many more, which are solving the concrete problem of simply having access to expensive capital to test ideas. These businesses are leveling the playing field for access to enabling technologies. Small startups can now launch products to cater for the entire world on a shoestring budget.
Again the successful implementation of these tools has become challenging for many. However this needn’t be the case. What has made their usage so much easier, is that these tools are tried and tested. You can learn from the best. How a mastermind crowdfunded their idea. How someone prototyped their Minimum Viable Product at a hackerspace. Like searching on Google how to unblock your drain, it is now possible to easily find others’ success stories and emulate their best practices.
For many companies the low lying fruit has already been picked. This means that innovations are becoming more complex. Finding the right combination of the aforementioned tools has also become a challenge. But when done successfully it can see an idea skyrocket on the back of very little. A few cheap tools and some help from the crowd. Done correctly, this is a major innovation in its own right.
This is a topic which fundamentally interests me and which I see as being a major stumbling block for anyone who wishes to implement a Lean or Bootleg strategies to start a company, or launch a major new innovation initiative within a mature firm.
We all know the principles but what are the tools? This incessant question has bothered me so much that I decided to write down the best tools available to companies and individuals and put them together in a book which will be forthcoming soon.
As innovation speeds up, we all want to keep up. The new tricks used by others to keep up their pace are now hidden in broad daylight, it is a matter of recognizing them and knowing how to use them. You no longer need to bet the bank to win big with innovation. As with all styles of innovation management, you just need to manage your risk properly.
image credit: Dollar Photo Club
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Evan Shellshear is a technology and software expert working as the Point Cloud Manager at the Fraunhofer-Chalmers Centre in Sweden. His work focuses on turning cutting-edge research into successful industrial solutions across numerous industries. Connect with him @eshellshear