We often hear that while risk taking is valued in innovation, it’s difficult to actually change people’s behaviors to embrace risk taking. We recently hosted an event for leaders in London (in collaboration with our partners, Innovation Leader) on this very topic and share the key discussion points below.
We consider innovation as a journey of change over time and like any change, it’s important to bring people along the journey. Consider that this journey has three parts: gain trust, demonstrate change and sustain change.
Create Proof Points: One of the biggest reasons for risk avoidance is uncertainty. You can help employees see past uncertainty by creating a series of proof points. Keep these first proof points time limited and focused on a specific business outcome. This makes it easy to share lessons learned. For example, create a first prototype, engage employees in crowd sourcing, or co-create a concept with a single customer. Making innovation visible and tangible removes the unknown and therefore the perception of too much risk.
Communicate Regularly: Communication is often overlooked, yet critical to successful innovation capability development. As you create proof points, broadly share what you are doing, why it’s important to company growth and what you hope to learn. These communications should come from someone in a leadership capacity at your organization, as a way to ‘give everyone permission’ to think differently.
De-risk Portfolio and Process: Diversify your portfolio of innovation efforts so there are a variety of risk profiles. This demonstrates that people can immerse themselves in a variety of approaches and move employees along at an appropriate pace. Similarly, well-disciplined innovation processes are key to shining a light on the unknown to gain organizational trust.
Openly Evaluate the Reality of Risk: In industries where security of data, safety concerns or underwriting risks exist, it’s desired to maximize the reduction of risk. This mindset has a strong place in an overall approach to the business. However, it hinders disruptive thinking and team collaboration. Seeing a leader demonstrate the desired behaviors is an impactful step forward.
As the leader, influence daily work by gently but firmly challenging the validity of risk averse thinking within the context of innovation. As a team, set a focused goal to break at least one risk averse position as a ‘poster child’ example.If your team has been recognized and rewarded for years on the ability to mitigate risk, it will take time and practice for the team to change behaviors.
Adopt Rapid Prototyping: Nothing changes risk averse thinking more quickly than a prototype and the associated feedback gathered. A quick focus group with customers or customer facing employees around a specific, prototyped product or service changes the conversation. We see teams move from whether a company should or shouldn’t take on a concept to how to make the innovative concept on the table more successful. Giving everyone an opportunity to weigh in on an innovation increases buy-in and your company’s chances for success.
Share an External, Competitive View: Learning about the risks already being embraced by others in similar companies, markets and industries can also lessen the perception of risk. Encourage employees to research and share innovation trends, innovation with external partners, new industry business models and new start-ups within the industry. As employees learn more about these trends, their perspective will broaden to include new possibilities.
Adopt Innovation Learning vs. ROI: As a leader, help your team understand the proper role of the questions around ROI. A simple way to do this is to use a ubiquitous innovation such as the iPod. Ask the question, in 1999, could anyone have told Steve Jobs the ROI on the iPod? (iPod was introduced in 2001). Of course not, as no one even knew they needed an iPod at this point. Yet we still see risk averse teams driving incremental innovation rather than transformative innovation, due to discussions like this. A better approach is to keep the team focused on the next data point we need to uncover to assure a successful launch. For example, with a clickable prototype, we can get early customer feedback on whether or not they’d pay for a new product and how it could be made better prior to launch. Each of these learning steps will ultimately inform ROI estimates. The closer to a product launch, the closer these estimates become.
Champion the Strategic Implications of Bolder Innovation: Illustrate and create awareness of the transformational innovations in your industry. Highlight what the competitors are able to develop and launch with the same risks and rewards the market has to offer. Share and encourage consideration of trends the competition hasn’t yet exploited as a way to increase market share.
Risk is inherent in every industry. By encouraging your employees to look at things with a fresh perspective, and continuing to challenge risk avoidance, your team can learn to smartly address risk through innovation. While it will take time and effort, we believe the risk is worth the reward.