Innovation is a buzzword in the corporate world today. If you aren’t on board with collaborating to form ground-breaking ideas, you won’t stay ahead in the fast-paced digital age.
Successful innovation management derives from a mindset that welcomes new ideas and allows for a certain amount of risk. How much risk will depend on what your company is able to accept at any given time.
Accepting the lower risk choices that provide the same return as higher risk options is called risk aversion. Risk aversion can get in the way of forming the right innovation strategy when companies pass up lucrative opportunities in favor of those that are safe. Established companies are navigating away from risks like corporate accelerators when collaborating with younger companies because accelerators are time- and commitment- intensive.
Corporate accelerators are programs requiring young organizations to apply their own technologies to collaborations with the established company. Only 60% of innovation leaders reported plans to use them, illustrating yet more signs of risk aversion.
How will organizations innovate in a risk-aversion corporate culture? Here are five ways to help your staff take smarter risks and increase innovation management.
1. Cultivate an Innovative Culture
The right words will encourage the right culture. What you say will create a mindset employees will use to determine what is and isn’t acceptable. Terminology such as “scouting” and “experiment” are centered around a more open attitude regarding risk. Avoid words like “successful” and “unsuccessful” which can be interpreted as self-fulfilling.
2. Keep the Experiments Small
Keeping your experiments small invokes a more innovative mindset with a higher tolerance to risk. The same is true for creating smaller teams. This keeps the experiments centered around the business and leaves more room for idea-sharing.
3. Establish Clear Criteria when Funding Projects
Projects are funded in phases. Some are expensive while others are less costly. Each is risky in its own way, but the larger ones will carry more risk.
Clearly define phases when funding projects. Each phase can serve as a milestone. If a project passes a phase, you can fund it for the next.
4. Strengthen Your Own Innovations
Once you’ve developed a new idea into a viable product, continue developing it. Failing to do so because of risk aversion can result in other companies getting ahead via your own advances.
Knowing the risks of risk aversion can help you avoid past mistakes of other companies. For example, when Kodak developed digital technology but did not take advantage of its own innovations when developing future products, the company lost its stronghold on the industry. Companies like Canon and Sony have since filled the niche.
5. Capitalize on Available Resources
When choosing collaborators, know their resources. For instance, before you begin swapping ideas, you need to know if the organization that will work with you has the resources such as time and money to support your company during the collaboration.
Open innovation relies on risks. An aversion to taking chances can result in a lack of forward movement. Taking the right risks can lead to innovation management that will keep you ahead of the competition.
Getting Started with Innovation
Following these five steps will help you to move your risk-averse organization into a culture wherein healthy risk assessment couples with innovation to drive business growth. Are you ready to get started? Get the Innovation Starter Kit today!