Agile Innovation: The Revolutionary Approach to Accelerate Success, Inspire Engagement, and Ignite Creativity

6 Reducing Innovation Risk

It concerns us that, in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies.

—Laurence Fink, chair and CEO, BlackRock¹

The most common reason that companies fail to innovate is because they're afraid of the risks. But what they do not take into account is the risk inherent in not innovating.

This view is nicely expressed by Facebook CEO Mark Zuckerberg: “The biggest risk is not taking any risk. In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”² In far too many cases, the lack of innovation puts companies into a downward spiral, and they ultimately succumb to their own incapacity.

But it is a learned incapacity, not an inborn one, a limitation that comes about largely because of how firms are managed, because of choices that their leaders make. Hence, it can be overcome, unlearned with the proper combination of a new mind-set and a different approach.

The approach, however, has to de-risk the overall innovation effort while enabling investment in projects that are indeed inherently high in risk. This is a neat trick for sure, but it is one that can be accomplished; it is our topic in this chapter.

A System for Innovation

The mind-set part, from the perspective of senior leadership, is straightforward. Innovation is essential ...