With the right innovation appetite, attitude, and aptitude, the organization is on the right track of developing innovation as a business-wide unique competency.
Digital is the age of innovation, Innovation is always a tough journey, not a flat road. Digital innovation is coming at seemingly much faster paces, and there are more potential disruptions, with a broader scope, scale, and impact on the business’s long term surviving and thriving. Companies have to be prepared to lose some to gain more for the longer term. They need to make an objective assessment of their innovation appetite, attitude, and aptitude, and manage an innovation portfolio strategically and systematically to achieve great business results for the long term.
The innovation appetite: There are always risks involved in managing innovation. The innovation appetite of the business directly impact on how aggressively the company can manage innovation and the time-frame they focus on. Breakthrough innovation has greater ROI but with much bigger risks and often takes longer time to achieve. The variety of research identifies innovation initiatives that ultimately break new ground frequently are fraught with uncertain on many dimensions such as technical, market, resource, and organizational uncertainties abound. Innovation is risky because money and resource spent on R&D is not necessarily a good indicator of future innovation performance. Therefore, innovation leaders with the right dose of innovation appetite can manage a healthy innovation portfolio with the right mix of incremental innovation and breakthrough innovation, to reap the short-term gain and long-term innovation benefits. The shareholders who highly value innovation would value organizations with bigger innovation appetite and devote more resources towards future breakthrough innovation more than those that only manage short-term incremental innovation.
The innovation attitude: Innovation is high-risky because more often you are doing something that hasn't been done before. Innovation risk would broadly need to consider both endogenous and exogenous drivers. It is the common knowledge that innovation management requires the highest risk taking at a strategic value chain, including organization, investments, and assets. From a financial management perspective, consider what capital you are prepared to risk in making the innovation- never let this be too much that losing it will cripple your business. The differentiation between a good innovation and bad innovation is the innovation leader’s attitude toward risk. The job of innovation management is to help when a failure happens to turn it around as a team. The good innovation leaders have excellent attitude toward innovation, demonstrate rational risk management skills and are able to shift from “risk-avoidance” to “risk-intelligence” mentality. The great attitude towards innovation is about taking calculated risks to inspire good innovation initiatives for capturing growth opportunities, being cautious about obstacles or pitfalls, staying focused, weighing risks and rewards, taking prudent risks and discovering better ways to mitigate risks rather than eliminate it. De-risk the introduction of innovations into the market, protecting existing operations and brands and establishing clear proof-of-concept before making investments to launch and scale.
The innovation aptitude: The good or bad innovation would depend on the business’s aptitude to manage innovation. And the innovation aptitude is based on the overall business competency to manage innovation with a set of tools, structures, and talent. Highly innovative organizations are better equipped to manage innovation by allocating time and resources to the people in charge. Innovation fails because many organizations lack a cohesive strategy or a systematic approach to manage both opportunities and risks in a structural way. Innovation success depends on many factors. From budget management perspective, since part of innovation is not knowing how and for what you will use the budget; and some innovation needs to be fed with resources while others get better by starving them. It’s important to design a flexible strategy as a compass to help innovation management adapt quickly and cost effectively to unpredictable changes in the environment, with the goal to manage a healthy innovation portfolio and build innovation competency to reap higher-than-expected business benefits.
With the right innovation appetite, attitude, and aptitude, the organization is on the right track of developing innovation as a business-wide unique competency. A leading digital organization with innovation competency can handle innovation streams for different goals and different time frames and manage a balanced portfolio including both radical innovation and incremental innovation, hard innovation and soft innovation seamlessly.
When a company embarks on a growth strategy, the risk curve will always be greater than a business as usual approaches.
We live in an era, full of uncertainty, velocity, complexity, and ambiguity. The result is higher risks of conflict and inertia. Thus, organizations must have solid risk management disciplines, make objective assessments, develop a high-effective management framework, provide backup options, and make the transition from risk mitigation to risk intelligence - the accumulation of enough resources to thrive by capturing opportunities in it and adapting to the uncertainty and changes smoothly.
Make an objective risk/opportunity assessment: The major source of limitation in any risk management is because of the risk of the unknown. The age-proven SWOT analysis (Strengths Weaknesses, Opportunities, Treats) is a very common process to help determine where the risks and opportunities are, and where value can be created in the organization rather than just protecting it. It’s a great tool that helps managers ask the right questions, answer them systematically, and understand them in context. In practice, try to identify all possible risks, the organization perhaps ends up in a huge list that may not be practical to assess. What is done is then some low risks are ignored by accepting them. The other pitfall is that the risk management system is detached from the real management of the business. Embed risk identification and assessment in operational processes and multiple management disciplines. It’s important to look at Trust in Humans, Trust in Processes. Trust in Technology. Besides identifying risks, spotting opportunities as well. There is possibly different scenario in which the identification of negative risks unearths an opportunity. This is all a matter of perspective. It requires the stakeholders to open their perspectives or framing on what they are observing. Every opportunity has risks in it, and every risk perhaps also has opportunities in it.
Develop an effective risk management model: In business, every day is a risk, but when a company embarks on a growth strategy, the risk curve will always be greater than a business as usual approaches. As long as risks have been identified and agreed with stakeholders as per business needs, then you can take place a risk models which effectively predict, optimize, and consider a continual and sustainable approach with multi-faceted perspectives, and specific threshold for justifying opportunities and business outcome. Too few business enterprises have appropriately aligned or devoted sufficient resources to their risk management efforts, and they should be or need to be appropriately integrated, with decent reporting structuring and streamlined processes. Assuming that in any risk management program, all the known and potential risks would have been covered and managed, and over a period of time, the enterprise risk management would be making continuous improvement based on the feedback from the risk management process and what would be left is what is unknown. Therefore, it’s important to develop an effective risk management model for integrating all crucial elements such as processes, technologies, tools, talent, communication, culture, etc. to model, manage, and measure risks, and manage opportunities systematically as well.
From risk control to risk intelligence: Statistically, more than three fourths of today's business value is based on their ability to embrace complexity, understand the future, opportunities, decide which one to go after and which one they will not go. Thus, the risk management needs to lift up from risk control to risk intelligence which can identify the potential business growth opportunities. Often, risk and reward are proportional from innovation management perspective. The revenue leaders cross-industrial sectors are the best practitioner for risk intelligence. Breakthrough innovation usually has much higher ROI but with much greater risk. Thus, as part of implementing an enterprise risk management system, companies should put in place a risk appetite system that goes beyond high level statements. Once the risks have been prioritized, you can then look to mitigate the most important risks to bring them within appetite. The enterprise risk management has to be expanded into enterprise opportunity management. GRC practices need to be converged into cohesive management disciplines, and well integrated into the key components of business strategy.
High mature digital organizations establish a set of well defined GRC principles, develop an effective risk management framework, have intelligence-led risk management mechanism embedded into both mindsets and process, harness a risk-awareness culture and a healthy risk appetite, and take a holistic approach to manage risks and opportunities, for improving both top-line business growth and bottom line compliance, to reach the next level of organizational maturity.
Digital is the age of innovation, Innovation is always a tough journey, not a flat road. Digital innovation is coming at seemingly much faster paces, and there are more potential disruptions, with a broader scope, scale, and impact on the business’s long term surviving and thriving. Companies have to be prepared to lose some to gain more for the longer term. They need to make an objective assessment of their innovation appetite, attitude, and aptitude, and manage an innovation portfolio strategically and systematically to achieve great business results for the long term. 
