Managing Innovation, 6th Edition

CHAPTER 8 Decision Making Under Uncertainty

“The thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death.”

– Keynes, J.M., The General Theory of Employment, Interest and Money. 2007, Basingstoke: Palgrave

Triggers for innovation – as we saw in Chapter 5 – can be found all over the place. The world is full of interesting and challenging possibilities for change – the trouble is that even the wealthiest organization doesn’t have deep enough pockets to face them all. Sooner or later, it has to confront this issue of “out of all the things we could do, what are we going to do?” This isn’t easy; making decisions is about resource commitment and so choosing to go in one direction closes off opportunities elsewhere. Organizations cannot afford to innovate at random – they need some kind of framework that articulates how they think innovation can help them survive and grow, and they need to be able to allocate scarce resources to a portfolio of innovation projects based on this view. This underlines the importance of developing an innovation strategy – a theme we explored in Chapter 4.

But in a complex and uncertain world, it is nonsense to think that we can make detailed plans ahead of the game and then follow them through in systematic fashion. Life – and certainly ...