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Innovation and Risk

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Boeing’s troubles with the new 787 Dreamliner provide a painful reminder of the risks often associated with ambitious game-changing innovation. Unfortunately, the lesson many companies will walk away with is that real innovation is too risky and “dangerous.” Better to play it “safe” and stick with incremental advances to existing products and technologies.

As successful companies know, however, innovation is essential to survival. Incremental updates can buy a business time temporarily. But over the long run, they eventually lead to certain death. Kodak, Palm and Lucent are all classic examples of the fate that awaits companies who fail to innovate.

So what’s the solution? If innovation is vital, how do you eliminate the risk? Some degree of risk is inherent and must be accepted as part of the equation. Experienced innovators recognize this reality and factor it into their plans and budgets. Smart innovators also know how to stack the deck in their favor by implementing a process that creates the conditions for success and minimizes risk.

Several elements are critical for an effective innovation process. The accompanying article In Innovation, Less Is More discusses the importance of having a streamlined dedicated team. In addition, two elements which may seem obvious but are often overlooked are a strong commitment and the financial resources to see development through to the end – which means when the product is fully tested, proven and truly ready for release.

Finally, a successful innovation process must accommodate failure along the road to success. Occasional failure is almost unavoidable. If the path were clear, someone else would have already taken it. So wiser to allow for failure, acknowledge it and correct course than to expect positive outcomes at every turn.

At Nottingham Spirk, we aim to keep our failures minimal by backing up our designs with solid research and sound engineering. When results aren’t what we expect, though, we don’t try to deny reality or look for a scapegoat. Instead, we quickly accept the situation and identify a better solution. We know the issue won’t magically disappear or reverse itself. And we realize that every failure builds our knowledge and increases our chance of success in the end.

We also mitigate risk by including a “soft launch” in our process. When a new innovation appears ready for launch, we release a short production run in a few regional markets. This limited release enables us to test pricing and positioning and identify any potential functional issues that may not have surfaced previously. Once we’ve completed this soft launch and made any final corrections, we can head into the full national, or international, product launch with confidence.

Yes, innovation and risk go hand in hand. But it is risk that can be managed. At the end of the day, the greatest risk is not to innovate.

View more stories in the Winter 2013 Newsletter

Topics: Boeing Dreamliner, innovation process, innovation risk, Newsletter, soft launch, research, engineering

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