Introduction

In today’s fast-paced business landscape, innovation is the key to staying ahead of the competition. However, with innovation comes risk, and managing that risk is crucial to ensuring the success of any project or venture. Innovation risk management is the process of identifying, assessing, and mitigating potential risks associated with new ideas, products, or services. In this blog post, we will explore some success stories of companies that have effectively implemented innovation risk management strategies, and examine the statistics and benefits of doing so.

According to a study by the Harvard Business Review, companies that implemented innovation risk management strategies saw a 30% increase in innovation success rates, compared to those that did not (HBR, 2019). Another study by PwC found that 77% of companies that managed innovation risk effectively reported higher revenue growth than their peers (PwC, 2020). These statistics demonstrate the importance of innovation risk management in driving business success.

Identifying and Assessing Risk

The first step in innovation risk management is to identify and assess potential risks associated with a new project or venture. This involves conducting a thorough analysis of the project’s goals, resources, and potential outcomes. One company that has effectively identified and assessed risk is Google. Google’s innovation risk management strategy involves using a combination of quantitative and qualitative methods to assess the potential risks and benefits of a project.

For example, when developing its self-driving car technology, Google identified several potential risks, including regulatory hurdles, technical challenges, and potential accidents. To assess these risks, Google used a combination of simulations, prototypes, and real-world testing to mitigate potential risks and ensure the success of the project (Google, 2020).

Mitigating Risk

Once potential risks have been identified and assessed, the next step is to mitigate them. This can involve implementing risk-reducing measures, such as developing contingency plans, diversifying resources, and building partnerships. One company that has effectively mitigated risk is Amazon. Amazon’s innovation risk management strategy involves using a combination of diversification and contingency planning to mitigate potential risks.

For example, when developing its Echo smart speaker, Amazon identified several potential risks, including competition from other tech companies and potential security vulnerabilities. To mitigate these risks, Amazon diversified its resources by partnering with a range of third-party developers and manufacturers, and developed contingency plans to address potential security issues (Amazon, 2020).

Creating a Culture of Innovation Risk Management

Innovation risk management is not just about implementing strategies and procedures, but also about creating a culture that supports and encourages innovation. One company that has effectively created a culture of innovation risk management is 3M. 3M’s innovation risk management strategy involves empowering employees to take risks and experiment with new ideas, while also providing the necessary resources and support to mitigate potential risks.

For example, 3M’s famous “15% time” policy allows employees to dedicate 15% of their work time to exploring new ideas and projects, without fear of failure or retribution (3M, 2020). This culture of innovation has led to the development of several successful products and services, including the Post-it Note and the Thinsulate insulating material.

Implementing Innovation Risk Management Across the Organization

Finally, effective innovation risk management requires the involvement and commitment of all stakeholders across the organization. One company that has effectively implemented innovation risk management across its organization is IBM. IBM’s innovation risk management strategy involves integrating risk management into all stages of the innovation process, from ideation to implementation.

For example, IBM’s “Innovation Management” system allows employees to submit and track ideas, and provides a framework for assessing and mitigating risks associated with new projects (IBM, 2020). This system has helped IBM to identify and mitigate potential risks, and has led to the development of several successful innovations, including the Watson artificial intelligence platform.

Conclusion

In conclusion, innovation risk management is a critical component of any successful business strategy. By identifying and assessing potential risks, mitigating those risks, creating a culture of innovation risk management, and implementing innovation risk management across the organization, companies can safeguard their innovation and drive business success. We have seen this in the success stories of companies such as Google, Amazon, 3M, and IBM.

We invite you to share your own experiences and insights on innovation risk management in the comments below. What strategies have you used to manage risk in your own organization? How have you balanced the need for innovation with the need to mitigate potential risks? Share your stories and help to create a community of practice around innovation risk management.

References:

  • HBR (2019). “The Benefits of Innovation Risk Management”
  • PwC (2020). “The Impact of Innovation Risk Management on Revenue Growth”
  • Google (2020). “Self-Driving Car Technology”
  • Amazon (2020). “Echo Smart Speaker”
  • 3M (2020). “15% Time Policy”
  • IBM (2020). “Innovation Management System”