INNOVATION AND RISK MANAGEMENT: THE REALITY OF IMPLEMENTATION
Innovation is now well recognised as a driver of company growth and integral to strategy; its financial value for public corporations has been quantified, with innovation driving an increase in stock value of 18-73 percent. Risk is assumed as a component of innovation. Incorporating appropriate risk management into the innovation process is now seen to facilitate and even accelerate innovation as opposed to hindering or curtailing it.
So how can the philosophy, processes and tools of risk management can be successfully implemented as part of innovation? This article focuses on real world execution: creating an innovation portfolio, aligning risk with innovation and assigning responsibilities.
The key steps to creating and implementing an innovation plan that includes risk management encompasses the following steps: (i) creating the appropriate innovation strategy and portfolio; (ii) determining your risk profile and tolerance; (iii) aligning your innovation strategy to your risk profile; and (iv) implementing the plan.
Creating the appropriate innovation strategy and portfolio for your company
Innovation was initially the hallmark of scientific companies and then embraced by technology firms; technology innovators include Google, Apple, Salesforce.com, Dropbox, and Zipdial. Today, recognised innovators cross industries from consumer products (Nike, Estee Lauder, Procter & Gamble) to pharmaceutical (Alexion Pharmaceuticals, Ecolab) to food & beverage (Starbucks, Diageo) to industrial (GE, Rockwell Automation) to services (Tata Consultancy, ADP). Innovation can be sustaining or disruptive, or in-between.
Oct-Dec 2014 Issue