Risk aversion can make innovation difficult.
How do you get around your company’s aversion to risk? There’s only a limited appetite for risk in any company, of course, but where some will enthusiastically embrace it, others hate risk so much even the whiff of it drives them away. So, how do you drive innovation in a risk-averse environment?
The best way to deal with risk aversion is to limit risk. Often the problem with companies demanding strategies be “proven” is that it’s impossible to prove the strategy. That creates an endless spiral where innovation is sent packing because it hasn’t been “proven” and there are no tools to prove it. This can be a tough pattern to break, especially if it’s embedded in the corporate culture.
If you’re faced with this spiral, start small, with a test case or an example that will serve as a proof of concept. Perhaps there’s an enthusiastic client, or your test case dovetails with a strategy that the company is going to take anyway. That limits risk and allows you to demonstrate the benefits of innovation in a way with which everyone is comfortable.
Narrow The Gap
Risk-averse companies tend to be overly focused on their own practices, instead of the industry’s wider perspective and trends. Risk aversion tends to entrench a paradigm of “We Have A Way Of Doing Things” that can be difficult to crack. Put your innovation into the context of your overall industry to “narrow the gap,” as it were. Draw comparisons between what other companies are doing, make it clear why they’re doing it, and refer to their success and what they’ve learned from it. What may look like a huge jump for your company will look like a small step if you put it into the proper context, especially if your executive team respects competitors who have made the bigger jumps themselves. After all, “industry standard” is a standard we all want to meet.
How much risk is too much?
Set Clear Expectations
There’s nothing that will kill an innovation faster at a risk-averse company than overhyping the benefits or having only a vague sense of what you expect to achieve. Be concrete and clear. Lay out exactly what you want to do, what specific effects it will have, and why you expect to see those effects. Think ahead to potential objections and roll them into your pitch. Be ready to answer skepticism and to acknowledge potential drawbacks. Risk aversion grows out of a fear of the unknown, so bring as much as you can into the realm of the known. If an innovation hits or exceeds reasonable benchmarks, that could begin to crack the risk aversion barriers.
Don’t Forget The Personal
Finally, it’s important to remember a simple fact we often forget. Innovation means change. People tend to be scared of change. They might think they’ll be innovated right out of a job, that an innovation will leave them behind, or that it might push over a domino that will start a larger chain reaction. Not everyone will admit this to your face, but it’s important to keep in mind. Look at those who have a stake in what you’re innovating and make your case clear how your proposal benefits them.
Innovation is challenging, but it’s worth it, even in the most risk-averse of environments. To get started, contact us.