Innovation And Risk-Taking
A very warm welcome to innovation and risk taking here on the innovation-creativity web site. Good leaders need to be focused on innovation so as to keep ahead of the game but also they need to be able to weigh up any risks associated with introducing the innovation.
We’re all aware of the risks associated with innovation. The financial crisis between 2006 and 2011 was predominantly blamed on excessive innovation.
Product recalls of Toyota’s innovative Prius car during 2010 received lots of press attention.
An easy option is to shy away from innovation and risk taking. Innovation is however inherently risky. And to not do it at all is not a great stance for a leader to take.
Organisations want leaders who are willing to take the big steps and dare to implement the changes that make a difference. It’s just important that when you do make the changes you consider the risks that could hit you.
It is ok to fail once in a while. In fact most innovations come about as a result of learning from past failures. The trick is to not make wild, irresponsible gambles. Don’t play it too safe but weigh up your risks and take planned, positive, calculated steps forward.
FAILURE MODE AND EFFECT ANALYSIS
One of the tools that I like to use to analyse the risks associated with an innovation is Failure Mode and Effect Analysis or FMEA for short.
With an FMEA you basically review most of the components, assemblies and subsystems for failure modes and their causes and effects. These are recorded usually in a spreadsheet as a form of qualitative analysis.
It’s a great tool for planning ahead in terms of what could fail, what are the consequences of the failure and how likely it is to fail. This is a great starting point to first try and design something that avoids these failure modes completely or to at least enable you to prepare in advance what you can do to mitigate the failure.
BEST CASE, WORST CASE
If you are going to take a big, bold step with an element of risk then document best case and worst case scenarios. What’s the very worst thing that can happen? And, conversely what’s the very best thing that could happen. You need to be prepared to be able to accept either outcome.
If you are prepared to accept the best case and worst case outcomes then make the decision but also document your justifications for making that move.
With any innovation you need to evaluate if it’s the right thing for your organisation. Is it compatible with your organizations values? Does it align with your organizations strategy? Don’t make this evaluation on your own. Discuss it with your best people.
When deciding what to focus your efforts on… What your next innovation is going to be… Again work with your best people. Put a SWOT analysis together and then organize a brainstorming session. Ask people to throw ideas into the pot without worrying at all about any risks. What would they do if they were fearless of the outcomes? Invite people outside of your core team for a fresh perspective.