Innovation and risk go hand in hand. In fact, most innovation projects involve so much uncertainty that they're bound to fail—or at least diverge from their original purpose. So implementing solid risk management is crucial for anticipating obstacles and attaining your project goals.
The following strategies can be followed to increase chances of success when chasing bright ideas.
The biggest risk in innovation projects is not identifying the right set of risks.
An organization's risk appetite is based on sought reward or benefit. To manage that appetite, take an enterprise approach.
Consult with an enterprise risk management (ERM) officer to ensure that whatever risks are being taken will be aligned with the organization's appetite and risk thresholds (the threshold is usually higher than appetite). If taking high risks is not tolerated by the organization, you might need to revisit the innovation project selection criteria or take mitigation measures to bring it back within the risk appetite.
Managing the innovation risk in the context of enterprise risk appetite helps define risk tolerance and determine when you should flag an issue to the project sponsor and steering committee. The ERM system defines a scale for each level of risk, which minimizes the subjectivity that might be introduced by stakeholders with opposing viewpoints. Identifying this helps alleviate potential conflicts when some stakeholders are more hungry than others for risk.
LEARN RIGHT FROM WRONG
The biggest risk in innovation projects is not identifying the right set of risks. Focusing on the wrong risks might undermine the project—and the ultimate product.
Get a 360-degree view of the project risks by soliciting inputs from different stakeholders, even those who might hold contradictory views. A single risk that isn't identified in a timely manner can jeopardize the project. Once you have correctly managed the right risks, you will be moving from unconscious risk-taking (a “let's-throw-it-against-the-wall-and-see-if-it-sticks” style) to calculated risk-taking (consciously deciding how much you can put at stake against how much reward your innovation can provide).
FACTOR IN FAILURE
Former IBM President Thomas Watson Sr. said, “The fastest way to succeed is to double your failure rate.” That's still true. Failing fast is critical for identifying and mitigating the right risks so the same mistakes aren't repeated. Failure must be factored in the innovation project plan and should be a known unknown by the innovation team.
For example, British inventor James Dyson created 5,126 versions of his prominent dual cyclone vacuum cleaner over 15 years before he finally succeeded. Although it pays to be persistent to make the innovation project a success, you also will need to devise an exit strategy should all your endeavors fail. PM
| Kareem Shaker, PMI-RMP, PMP, is a senior manager, projects and enterprise risk at Dubai World, Dubai, United Arab Emirates. Follow him on Twitter at @ kareemshaker. |