Delicate Balancing Act of Innovation Risk Management

Delicate Balancing Act of Innovation Risk Management

Jan 16th, 2014

Delicate Balancing Act of Innovation Risk Management

Riskope thanks Eve Pearce for this contribution.

Running a business is a bit of a tightrope walk at times. Running a successful business, doubly so. It’s very difficult to make a decision to try something different – something truly innovative – without rocking the boat too much and putting your financial future on the line. Or, in worst case scenarios, spelling the end of the business altogether. As we’ve discussed at length in the past, the fear of failure can cripple a business’s forwards progress, which is why it’s so important to find a way to balance risk and innovation. With that in mind, let’s take a few moments to explore how a business can navigate the innovation tightrope… and why it’s so delicate in the first place.

Innovation can be a hard sell

Many companies claim that innovation is their number one priority, but then fail to deliver the goods. Have you ever considered why this is? Well, one of the most common causes of this issue is pressure from investors, sponsors, and anyone else that has a financial stake in the company. Many of these interested parties will use established tools to evaluate how an opportunity will fare from a financial point of view, but fail to properly account for upwards and downwards risks. A classic financial tool is the  NPV (Net Present Value) model which, unfortunately is obsolete and flawed. Innovation or divergence from this common practice approach could be seen as problematic by investors, threatening the financial stability of the company. Using better methodologies is the key to overcome part of the resistance from  behind the scenes.

Innovation in established industries

Of course, innovation isn’t always the main objective for every business – and some, in fact, should actively try not to innovate. Take healthcare, for example. It’s an industry which is rife with regulation and established best practice, making innovation a very difficult subject to broach, without first creating the foundation for a paradigm shift. But an offshoot of healthcare is education of the topic – and finding new ways to educate the public on health risks should be encouraged. For example, letting people know about the various problems that sharing needles can cause. If the healthcare industry chose instead to keep this information to itself, healthcare problems would be widespread, but by finding innovative new ways to disperse and communicate valuable information about the risk of hepatitis and AIDS from needle-sharing, it can in fact innovate (albeit by degrees).

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Category: Risk management

One response to “Delicate Balancing Act of Innovation Risk Management”

  1. gorge profonde brutale pute says:

    Je terminerai de voir ça plus tard

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