Wouldn’t it be nice if every time you tried something new it went perfectly on your first attempt? Since this is rarely the case, risk management is a key element to incorporate in your innovation process and an excellent skill for any project manager. Here are my five tips to managing innovation risk:
- Recognize risk as an opportunity
Although we often avoid taking risks, they can be beneficial and lead to new or more creative ways of solving problems. Taking a risk could also provide the solution to a problem never thought of before. Trying something that doesn’t work can provide useful input into alternative strategies. Many significant breakthroughs were achieved accidentally by people who took risks and applied their learnings to create novel solutions to problems not originally intended. Notable examples include Viagra, Penicillin and X-rays.
- Assess your risks and risk acceptance levels early
Assess your risks as early as possible. Use a collaborative approach since there are many different kinds of risks (technical, business, safety, legal, etc.). Get input from people both inside and outside of your project team, especially if they have different backgrounds and expertise. It is also important to determine the risk acceptance level of your stakeholders. Some people enjoy shooting for the moon and understand that taking big risks can lead to big rewards. Others are not as comfortable with taking risks and would prefer to take a more conservative approach. Make sure you understand the risk tolerance of your stakeholders so you can make intelligent decisions on how and when to proceed with risky aspects of your innovation.
- Eliminate or mitigate your biggest risks first
This is the most important suggestion I have because it is often overlooked. Eliminate or mitigate the significant risks first to ensure they don’t completely derail the project later on. This is often called “fail fast, fail often”. An abundance of enthusiasm at the beginning of a project can lead to working on features that have low risk and a high chance of success first. This should be avoided as it could result in a complete waste of time and resources. Resolve the biggest risks before investing in detailed design to avoid wasted effort.
- Realize that small risks can accumulate and even snowball
It is important to consider both the size and number of risks in your project on an ongoing basis. When you get to a point where you have eliminated or mitigated the most significant risks and are ready for the next step, recognize that all of the remaining small risks can add up and become significant. In addition to the cumulative effect of these small risks, there can also be a compounding or “snowball” effect. The consequences of one risk could negatively impact other risks and potentially make their effects much worse. Assess the total quantity of risks and identify any that could be related.
- Never assume risk management will end
Innovation progress and success requires continuous risk management. Although it may seem like you have resolved all of you risks, it is always better to be proactive and manage risk on an ongoing basis to prevent running into a brick wall you hadn’t thought of before. It is impossible to predict every negative outcome that could arise but assessing risk pre-emptively will reduce the chances of surprise roadblocks. Remember, taking risks can be beneficial when properly managed and this requires continuous vigilance.
Getting things right the first time would be nice but is rarely possible or achievable. Trying new things can expand your understanding of a problem and potential solutions. Hitting a dead end can help confirm a more viable option. Assess your risk and risk tolerance as early as possible. Resolve the biggest risks or challenges first. Never underestimate the impact of a large quantity of small risks and continue to manage risks on an ongoing basis.
Taking risks was never something I enjoyed but I realize that taking risks is essential to a creative and innovative process. The key is to understand the techniques required to manage risks to foster novel solutions to existing problems. Hoping for the best is not a risk management strategy. I would encourage you to try the strategies listed above to help manage your innovation risk. I would be interested in any feedback or suggestions you have.
Dustin Demontigny is a Technical Project Manager at StarFish Medical. He uses his innovation risk management tips on a variety of medical device projects.