Knowing when to gamble

Even horse-racing enthusiasts don't count solely on inspiration when making bets. So how can businesses, who must consider the emotional and financial costs for a multitude of stakeholders, afford not to understand and quantify risk?

Innovation requires risk-taking and faith. However, it also requires savvy. Taking risks without evaluating consequences and likelihoods is the mark of immature innovation programs, while more careful, considered business strategies of innovation have various ways of measuring, discussing and analyzing risks and their consequences.

CIO's top 100 innovating companies were interviewed by Christopher Koch, and the result was a blog entry entitled, "Make gloom part of your strategy," (Aug 22, 2006: Available: http://blogs.cio.com/node/420). What Koch is getting at is that somebody's got to be the analyst who warns, cautions and tells horror stories. Being innovative doesn't mean jumping without a net; contingency planning is as important as the innovation process itself (Koch, 2006). Innovation is a hopeful enterprise, but understanding and readying for the possible negative effects can vastly increase overall innovation. That way, if a single innovation project crashes and burns, someone's got a fire extinguisher and can put out the flames before they devour the organization.

Being committed to and excited about innovation must be matched with contingency planning. One potential tool is simply a red, yellow or green tag that correlates to the assessed level of risk for a particular idea, innovation or process (Koch, 2006).

Koch, C. "Make gloom part of your strategy," CIO Aug 12, web exclusive. Available:
http://blogs.cio.com/node/420

[Summary by: Caroline]