Managing the Risk of Innovation.

Innovation is a tricky beast. It's not always clear that the risks outweigh the rewards. For those of you in for-purpose organisations, getting the business case right to fund innovation is critical; uncertainty can be a roadblock, but it doesn't have to be.

There is a lot of passion in the for-purpose sector, it is a sector of "people loving people". As a result, the weight of mistakes is often felt heavily when combined with the perceived impact the mistake may, or may not, have on mission delivery. When an organisation's social mission is central to its identity this can result in rampant risk aversion.

We all acknowledge that innovation and staying ahead of the pack is critical to competitive advantage and organisational growth, as a for-purpose leader you need to ask the question:

How should you manage the risk of innovation?

1. Be clear about the risks and rewards of innovation:

It's important to be clear about what you're getting into before you start. Having a good understanding of the risks and rewards will help you make a more informed decision.

Generally speaking, the risks of innovation are those that are unknown. There is always a level of uncertainty associated with any new venture. With innovation, there is also the risk of being wrong. You may put time and energy into something that doesn't work out in the end.

On the other hand, the rewards of innovation can be great. If you're successful, you may see a significant increase in your organisation's ability to deliver impact and future growth. You may also see a jump in revenue. Innovation can also lead to new products or services that can help your organisation stand out from the crowd.

2. Take small steps:

Innovation can be scary, but it doesn't have to be. Taking small steps can help ease you into it and reduce the risk.

You don't have to go big or go home with innovation. Starting small can be a good way to reduce the risk. You can test the waters and see how things go before you make a bigger commitment.

Starting small also allows you to make changes along the way if needed. If something isn't working, you can adapt and change course.

Taking small steps doesn't mean you have to aim for small results. You can still go for big goals, but break them down into smaller pieces. This will make the overall process less daunting and help you manage the risk better.

3. Get others on board:

Having a team of people who are on board with your innovation program can help reduce the risk.

It's important to have a team of people who are supportive of your innovation program. This can help reduce the risk because you'll have others to bounce ideas off of and get feedback from. It can also help with implementation and execution. Having an engaged team can make it easier to get things done and make sure everyone is on the same page.

Getting buy-in from others can also help you get the resources you need to make your innovation a reality.

4. Plan ahead:

Having a plan helps reduce the risk by ensuring that you're taking all of the necessary precautions.

A good plan will help you anticipate potential problems and have a strategy for dealing with them. It can also help you stay on track and focused on your goals.

Having a plan doesn't mean that everything will go perfectly, but it can help reduce the risk. If something does go wrong, you'll be better prepared to deal with it.

5. Stay open-minded:

The best way to manage is to stay open-minded and be willing to change.

The world is constantly changing and so are the risks. What may have been a risk yesterday may not be today. And what's a risk today may not be tomorrow.

That's why it's important to stay open-minded and be willing to change. The best way to manage the risk of innovation is to be flexible and adapt as needed.

The nature of innovation is that it has risks and rewards. It's not always clear which will be greater, but there are ways to manage the risk. For for-purpose CEOs and Boards getting the business case right to fund innovation is critical. The uncertainty of innovation can be a roadblock, but it doesn't have to be.

By taking small steps, getting others on board, and planning ahead, you can reduce the risk of innovation. And by staying open-minded and being willing to change, you can adapt as needed. Managing the risk of innovation is possible. It may not be easy, but it's worth it.

Risk aversion in for-purpose organisations.

Risk aversion is particularly heightened when an organisation's social mission is central to its identity.

One way we can manage our risk and continue to innovate is by identifying potential risks before taking on new projects and creating contingencies for them. In other words, plan for what might go wrong and have a backup plan.

A second way is to be clear about the level of risk you are prepared to take on as an organisation – what's acceptable? And then define this in a policy. If something risky comes up that doesn't fit within your defined parameters, it can help tremendously with deciding whether or not to pursue it.

A third way is to have a culture of learning from mistakes. This means that when something goes wrong (and it will), we don't just sweep it under the rug, we learn from it and apply those lessons in future endeavors.

A fourth way, which should be underpinning all of the above, is to have an open culture where people are encouraged and expected to voice their opinions. If teams feel safe in voicing potential concerns or mistakes that might happen along the way then these risks can be addressed head-on rather than being swept under the rug after they've happened.

When it comes to innovation, we can't let our fear of making a mistake stand in the way of progress. By managing the risk and being open to learning from our mistakes, we can continue to make a difference in the world.

Innovation is a risk, but it doesn't have to be a roadblock. By being clear about the risks and rewards, taking small steps, and getting others on board, you can manage the risk and still make a difference. Stay open-minded, be willing to change, and learn from your mistakes. And don't let your fear of making a mistake stand in the way of progress. Managing the risk of innovation is possible. It may not be easy, but it's worth it.