In a three-part series, part one outlined the implicit need to align innovation to the corporate strategy, and through this we can determine ‘acceptable risk’.

In part two I offered numerous reasons why we should recognize and treat innovation risk differently to allow it to perform closer to its promise of driving growth and achieving real advantage.

This post here is the third and last part, part three, where I lay out different mechanisms and framing of risk and innovation. These need to be evolved to fit your own risk appetite, not one size fits all. I hope it helps.

Risks are certainly shifting. In a recent piece of work by Deliottes called “Risk sensing:the (evolving) state of the art, the risks of most concern are changing each year. Interestingly, the pace of innovation stands among the top three risks in 2015 and tops along with regulatory risk, the list was foreseen in 2018. With technology disruption, business model disruption and growing competition, social and customer engagement challenge the ability to manage innovation is growing as a concern and in risk management.

We need to formulate a more robust risk innovation framework.

Risk management for innovation needs to evolve to keep pace with the changing demands and pace of change we are undergoing in business challenges. Risk is becoming an evolving capability.

Mark Johnson of Innosight wrote a great article some time back that still holds true today, in its observations, on how poorly the relationship between risk management and innovation is understood. To quote the specific parts

1. Risk management isn’t the antithesis of innovation; it’s the essence.

How an organization conceives of risk management will in large part decide how effectively innovation is pursued.

2. Risk management isn’t the brake on innovation; it’s the accelerator.

Risk management, treated as a learning process, not only propels innovation forward but can also speed it up.

3. Real discipline in innovation risk management means a more relaxed approach to the financials.

In genuinely new-business innovation projects, it is critical to release the leaders of the effort from the norms and metrics of the core business.

Mark made some clear observations and statements on viewing risk management as a core competency.

As Clark G.Gilbert and Mark’s colleague Matthew J.Eyring argued in Harvard Business Review, the core competency of the most effective and successful innovators is risk management. To repeat: Risk management is their core competency. For these innovators, whether in new ventures or in a corporate setting, the ability to identify, prioritize, and systematically eliminate risks is what drives innovation forward.

They approach risk management not as a safety procedure but as a learning process. They know that no new-business model is perfect from its inception. So they test its various components and their combinations—its customer value proposition, profit formula, key resources, and key processes—in controlled experiments in tightly circumscribed markets, learning as they go and making adjustments.

It is (clearly) more prudent and ultimately more productive to get the value proposition right and judge it in terms of how fast it converts assumptions to certain knowledge. While experimentation speeds the time to viable business innovation, it does not necessarily lead immediately to the kind of large-scale growth or increased market share that are usually the barometers of performance in the core business.

The relevant financial measure during this stage is whether the new business can be made profitable in its foothold market. Profitability confirms the strength of your fundamentals, allowing you the patience to scale up in a measured way. That is the real financial discipline in innovation risk management: the unswerving ability to resist applying the wrong kind of financial metrics at the wrong time and so unwittingly choke off growth potential before it can reach full fruition.

He concludes ” one of the biggest risks in innovation is to see risk management as a framework to be superimposed on new-business creation rather than as an inseparable part of the process itself.

Lets look at the mechanics of risk management for innovation.

There is no reason it cannot relate to existing risk frameworks. We can adapt to the accepted practices of risk management but innovation risk needs to have its own risk management framework

For this I went in search of a broad discussion in understanding risk and its management. I found a series of articles written by Peadar Duiffy, as founder and chairman of Risk Management International (RMI) on risks in relationship to insurance and this series can be found through http://insurancethoughtleadership.com/risk-and-strategy-how-to-find-the-links. These I found to be especially useful to ‘translate’ into the make up of a risk management framework.

I’ve adapted these on how they might work or be used as a guiding group to build risk management and innovation in some depth. I think it works but you might advance these from your own perspectives.

Firstly lets establish some observations:

1. Directors and senior managers need a globally accepted guide on the attributes of an effective risk appetite framework to manage innovation, independent of their corporate risk guidelines but they dovetail into them..
2. Emphasis is shifting globally from risk management to building resilience and as we learn and explore about managing risk in innovation and each innovation can have different variances we need to ensure the risk optimization is achieved when risk and strategy are aligned with corporate objectives. Achieving this comes through the use of the three horizons framework for aligning where innovation fits and its (risk) horizon and place, pushing to encourage a greater scope of innovation, of building a validation, proofing and testing mentality.
3. “Strategic risks” are those that are most consequential within the innovation activities that have a potential impact to the organization’s ability to execute its strategies and achieve its business objectives. Having a clarity of strategic risk, those must be material to have impact on the organization. These are the risk exposures that can ultimately affect shareholder value or the viability of the organization growth. Strategic risk management is focused on those most consequential and significant risks to shareholder value, an area that requires  the time and attention of executive management and the board of directors. More radical innovations, disrupting positions or new business models would form part of this risk assessment.

Then we need to strengthening the strategic planning process

1. Increasing rigor, formality and consistency in the strategic planning office which derives its authority from the board and  the CEO’s office, needs engagement within the risk management of innovation. It at least needs ongoing awareness of the direction and impact any more radical innovation might have, to evaluate its impact.
2. Aligning strategy, risk and audit board subcommittees (through cross-representation) in a manner that largely feeds into the board risk oversight, reporting and monitoring on innovation that might have material impact.

Embedding risk management and innovation competence within the structures developed.

1. Explicitly articulating corporate and organizational objectives in relationship to innovations contribution and need.
2. Testing the alignment of group, corporate and organizational objectives through development and review of risk appetite statements that bring the innovation efforts together. Who is responsible for what.
3. Establishing an effective risk appetite framework, which includes:
4. Statement of purpose and values of the organization towards innovation’s position of value and growth contribution
5. Explicitly stated board risk assurance requirements; factors to consider and these would include:

• Mapping objectives to a risk appetite continuum, articulated and discussed
• Qualitatively expressed risk appetite statements to help in reassurance (reputation etc),
• Quantitatively expressed risk criteria related to both risk tolerance and risk limits
• Acknowledging these evolve but in a measured process that is dynamic and evolving from learning.

Understanding and improve progressively the organizational level of risk maturity

RMI had developed a five-level Risk Maturity Index, which provides a road map to risk optimization,  it has merit for innovation to also follow. The index scores risk maturity capability requirements, etc. In summary, it describes:

• Level 5: “Value-Driven” — Optimizing value through aligning risk and strategy with corporate objectives,
• Level 4: “Clearly Managed” — Gaining value through aligning risk and strategy in pursuit of corporate objectives,
• Level 3: “Providing Insight” — Gaining insights into how to better align risk and strategy in pursuit of corporate objectives that evolve as innovators and the board gain growing confidence they are on a similar track,
• Level 2: “Gaining Awareness” — Developing awareness  into how to align risk and strategy in pursuit of corporate objectives relating to innovation and its development
• Level 1: “Basic Learning” — Seeking awareness of the links of risk and strategy in pursuit of corporate objectives relating to innovation.

Establishing clear governance, setting policy and monitoring performance: In the context of the relationship between risk and strategy,good governance means accounting for the type of risk culture that encourages and manages innovation.

• “Risk culture” is a term describing the values, belief, knowledge and understanding about risk shared by a group of people within a common innovation purpose, in particular the employees of an organization or of teams or groups within an organization to relate too
• Risk culture, as an aspect of culture, can be practically described thus:
  • Culture: The way we do things around here!
  • Risk culture: The freedom we have to challenge around here!
  • Risk culture is capable of being demonstrably and credibly evidenced and discussed.

First we need to explore: do boards express clearly and comprehensively the extent of their willingness to take risk to meet their strategic and business objectives in encouraging the innovation activities?  Second, do they explicitly articulate risks that have the potential to threaten their operations, business model and reputation?

How are risk appetite, risk tolerance and risk limits related to one another? 

The RMI Risk Maturity Index correlates and again, serves well for innovation and risk:

1. Level of alignment of risks to strategy, objectives and execution of the innovation portfolio,
2. Risk role affirmations at each maturity level (shown above),
3. Risk culture affirmations (practices confirmed by internal and external attestors), who periodically check
4. Risk defense affirmations (practices confirmed by internal and external attestors), in discussions
5. Board and organizational processes that bring innovation continuously into the boardroom, in clear line of sight.
6. Value realized at three levels: a) the customer, b) the organization and c) stakeholders.

As a particular Risk Assessment Strategy (RAS) is devolved down through an organization, its content will change based on the intended recipients as well as their relationship to innovation For example, a RAS at:

• Group executive level will be high level and inclined toward expressing appetite for risks to objectives that deliver value and increase performance, that show potential and promise. The RAS will clarify the innovation objectives, risks tolerance levels, escalation procedures, expected returns across a broader range of measures and how the  control(s) to manage risk and innovation apply, looking for:
• Middle management level will articulate levels of tolerance that, if breached, will require escalation and “circuit breaking” reports, with priority given to immediate interventions and a review of internal controls but having a dynamic process of knowledge, learning, risks and opportunities to convey these to the board, if necessary or in a regular reporting format
• Business unit level and the team within these responsible for innovation, will have a more detailed and expanded RAS explanation, inclined toward expressing risk limits and internal controls that enable greater innovation understanding, spelling out risk tolerance, appetite and linking this into the articulated innovation strategy

The various components among the numerous risk maturity models tend to overlap considerably. Here’s one generic set of attributes of maturity:

• Risk is managed to specifically defined appetite and tolerances that relate to innovation need and strategy.
• There is management support for the defined risk culture and direct ties to the corporate culture
• A disciplined risk process is aligned with other functional areas to integrate innovation
• There is a process for uncovering the unknown or poorly understood risks of innovation and an evolving path to clarify, test, explore so a continued learning process is in place to build innovation capabilities & capacity.
• Risk is effectively analyzed and measured both quantitatively and qualitatively, both in hard terms and the softer potential seen at that point of time, to be determined and validated for improving quantification.
• There is collaboration on a resilient and sustainable enterprise, building on the knowledge and learning gained, shared and ‘factored into’ the risk management framework to keep it dynamic and evolving.

In summary

Innovation has many unknowns, but it is the learning and evolving that can give growing confidence. Constructing a risk innovation framework that grows as confidence is ‘found’ and a process to alert and inform gives the ability to constantly quantify these unknowns, constantly searching to find ways to measure and provide returns.

We need to relate risk and innovation in clearer ways, to give a greater confidence and encouragement to pushing for the new.

***Again, I certainly have to acknowledge, that I found the series of articles written by Peadar Duiffy, as founder and chairman of Risk Management International (RMI) on risks in relationship to insurance. as really valuable in framing innovation and risk as outlined here.

The post Developing a new framework for risk and innovation. first appeared on Building Your Innovation & Ecosystem Intelligence.

We should aim for a really healthy construct that does help all involved or associated with innovation and managing risk, that gives a better chance of pushing beyond the incremental innovation that avoids most risk and disappoints those seeking real growth.

In this post two, within a three-part series, I build the argument on why we need to treat innovation differently within any risk assessment. Part one focused on linking risk into an innovation strategy that needed to align with the corporate one.

Each organization finds its own level of risk appetite. Regretfully innovation, often by default, gets swept up in this generalization of “risk management” that is corporately driven and the serious message of “risk” dampens exploration. There is a real need to make a clear argument that innovation should be treated differently. It can still come under the broad risk umbrella but judging innovation risk is utterly different from organizational strategic risk.

Innovation is a learning process not to be confused with a safety procedure, both can be effectively managed and different in their treatment. No new business model or innovation new to the market, or even service enhancement, is perfect from its inception, it improves with learning on what is valuable and needed, what can be ‘dampened’ down, switched off or reduced through market exposure.

Equally, we have learnt innovation evolves due to this learning process and how ‘it’ interacts with customer needs. We make an effort to get it as right as possible, as close to the launch, but there are often so many unknowns that only through exposure to the market and the customers do we learn to adapt, adjust, modify and improve the offering. This ‘adaptive’ process scares the board as it has implications on reputation, on the brand and on its abilities to get innovation right. This iterative process is felt should be left only inside the organization as some feel it conveys vulnerability and failing. How wrong this is.

So we tend to go to default. Risk mitigation kicks in. We strive to minimize the risks, reduce the learning and opt for a more incremental approach.

As Accenture in one of the few reports discussing risk and innovation, “The art of managing innovation risk” state:

“Few decision makers want to take responsibility for a failed experiment, so extreme caution usually prevails when new ideas are assessed. Opportunities tend to be defined narrowly.

Moreover, the tools commonly used to support the process exacerbate the problem. Based on retrospective analytics—Net Present Value (NPV) models, for instance, are built on market projections that are calculated using past trends—they tend to skew innovation decisions toward optimizing existing product lines rather than pursuing new ones.

As a result, promising ideas are often smothered. And while many of the innovation initiatives that do gain approval are low risk, they offer only low returns—incremental improvements that usually do little more than maintain market share”.

They go on to suggest with product lifecycles across industries shortening, successful innovation often hinges on speed. And that, in turn, requires a risk management process that can shorten learning cycles, recognize failures early and make timely course corrections—a process that facilitates a company wide dialogue around which risks are acceptable and how much risk is appropriate, based on potential returns”

They are quiet rightly suggesting “with risks well-managed, companies can then use rapid experimentation and the techniques of agile development—an iterative process closely linked to customers and markets—to boost their chances of coming up with a truly profitable innovation portfolio.”

Yet tell me how many our organizations have a clear, robust risk management framework for innovation? Is innovation even fully aligned into the corporate strategy?

Our obsession begins and ends with the search for numbers.

Clayton Christensen has argued that organisations’ agenda begins and ends with the “search for numbers”. Organizations have been focused for far too long around the importance of financial capital. It determines and drives organizations’ destinies. We are caught in a constant focus upon our achieving a return on our (financial) capital as our measuring criteria and innovation gets totally caught up in this mistaken measurement, it stifles ‘great’ innovation to emerge and provide truly differentiating advantage. Why do organisations stay locked into far too much “me too” innovation?

At a time when capital is not scarce, it is abundant and cheap, we still see a lack of bolder investment in game-changing innovation. Organizations are hoarding capital or passing it back to the shareholder. Both admirable but they don’t build the future, they only keep you in the present. When financial capital is the final arbitrator it totally fails to tell us in numbers alone where and what creates the value, it simply reports the end result, it is always backward looking, never conveying the future unless capital investment is being made.

Today our balance sheets hides or can’t report the loss of opportunity value, if only innovation had been treated differently. We are caught in a time that most of our business organizations are in a period of risk-aversion where the innovation ‘bets’ are more incremental, more short-term pushing for greater utilization of existing assets. The longer-term health of organizations seems to be kicked down the road for later generations to tackle, if they are still in existence!

We need to that prompt more on risk and innovation, reflecting why and how it should be treated in different ways and this might encourage a greater top management engagement. We need to encourage a shift and seek out the dimensions, criteria and thinking that can be applied to encourage more risk-taking, more radical and breakthrough innovation.

Can we walk a different innovation risk path?

The understanding of risk will always have associated with some fear, discomfort and resistance and for many can be an uncomfortable place to go. The whole ‘act’ of letting go is never easy. It is the ability to manage risk that reduces the fear. It is through experimentation we gain our best learning, we actually are forward learning as we are accelerating our knowledge.

Surely the more we attempt something different, proving or disproving it, does make for exciting work? We move towards a leading edge perspective, we evolve more towards a pioneer, an experimenter and this can be contained and managed within a radically different risk management framework. We all can be encouraged to raise our risk appetite with establishing clear guidelines and parameters, so we all become more motivated and engaged, excited about a different future, curious to explore, wanting and  encouraging an environment to experiment but this ‘signal’ and risk appetite guidelines must come from the top. If it is left unsaid, radical innovation will never naturally happen, what a pity.

We need to recognize that allowing greater risk and investigation encourages us to see change differently, to offset the growing disruptive aspects swirling around us. Recognizing we are mostly operating  in markets with slower growth, higher volatility and potential for disruption needs pushing risk in innovation. Risk needs to be proactive not reactive.

Equally the sentiment reinforced by this demand for clear, demonstrative ROI measurements from innovation tends to send the clear message that we cannot disrupt our core, yet others are working purposefully at doing this, knowing your weakness is not taking risk and wanting to disturb the present equilibrium..Risk comes from not knowing and experimenting outside the core. When you are not restless, someone else certainly will be, seeing opportunity.

Achieving a growing certainty of return needs to be paramount in our minds as innovators.

We need to manage the ‘certainty of return’ by making the knowledge that comes from many incremental steps, of experiment to validate an idea, that eventually builds into a new innovation, that needs managing differently. That can come from steady ‘readiness-based decisions’ that prototypes or pilots that are put into the hands of the consumer or customer to explore around, will advance our knowledge, each time clarify the potential value and ‘seen’ worth of this concept over the existing ones in the market place or require us to re-evaluate our assumptions.

We need to develop those risk-mitigation steps to constantly increase confidence. We need to find a real space for uncertainty, for a risk-tolerance so as to allow the shaping ideas, exploring and learning in taking controlled risks, encouraging experimentation, providing tolerance (of failure or expecting stronger debate), exploring the unknowns, all should be an integral part of innovation in any new risk management framework.

Stage-gates is also not the innovation panacea to manage innovation.

I would argue we should stop regarding the Stage-Gate as the panacea for managing all of the innovation needs. Stage-Gate handles the incremental product cycle fairly well, but when you are on a more open innovation platform collaboration or more radical design, it struggles to be flexible, agile and fit the different challenges presented by the collaborating parties. We need something significantly different to handle the other types of innovation, those more radical, distinctive and breakthrough.

True innovation goes through much of an iterative process

We need to adopt a more flexible and adaptive process, one where learning, looping back, iterating constantly, that promotes and encourages an experimenting environment for innovation that is more new to the world. As we iterate, we learn, as we learn we can improve our understanding of its growing value.

This needs to be in a more dynamic ‘management of the portfolio’ concept, from concept to commercialization process.

A place where risk-mitigation needs to be built-in all the way, to search for and then build new knowledge as it ‘reveals’ itself. In innovation, it is never apparent, you have to ‘tease ‘ it out on its value and contribution, in providing concepts, pilots and prototypes. Everything simply cannot be available when you often just don’t know, you take small steps often to feel your way and build that knowledge up. This comes from engaging with your customers, in the market place not your own premises.

How about approving some pilot projects and providing resources to have unfettered six-month periods with no rules and no reviews? At the end of this agreed period ‘something’ that shows promising value and clear advancement on the past position that has been seen and tested with customers gives confidence, reduces the risk fear. Then you embed the learning and further scale it, if it shows the promise and shows a ‘interesting business case’ for more investment.

It encourages increasing the risk of spending funds, dedicating resources that lock up assets but by setting these in clear time frames and with a definitive result that the outcomes not just advances knowledge but it can show that the concept does takes you closer to its future value.

Progressive in building risk management for innovation

Over time progressively learning increases our risk-tolerances, we become progressively more creative in this risk-taking orientation to seek out and push for more innovation.

Equally allow those who are willing to take risk, as their more natural position that head room to explore, to push boundaries that often reveals different innovation. By sitting down and outlining the risk acceptable within evolving guidelines, those that are not ‘well-set in stone’ but will evolve and loosen as we learn. We should expect them to be broken on a few occasions but work with this if it was an informed risk, learn on why, talk with those that overstepped the limits, to see what was right and what everyone can learn from this.

Equally, leaders need to stay totally engaged and constantly talking about what innovators are doing where-ever you can, through face-to-face discussions, dedicated meetings where risk assessments being clearly known to be up there on the agenda, to be evaluated and determined for the next steps. Also being prepared to step back to bring the risks that seem uncomfortable back into alignment with the risk tolerance levels, allowing the engaging in the ‘healthy debate on why this innovation might be different and needs different criteria. Innovation needs to be a dialogue and risk management can become its friend not its inhibitor.

Through this more enlightened approach to risk and innovation we do allow-in that greater desire for the capacity to be innovating and how we all want things we are working on to improve, to give us a greater meaning within our lives. More purpose, more satisfaction, greater identification. More value, greater growth and impact.

Fostering risk tolerance designed specifically for innovation does need treating differently, to grow and thrive. You can push innovation beyond the ordinary, back into the extraordinary and that enables innovation to deliver far more on its true purpose. There is a strong case to be explicit on the risk profile for innovation to be different.

Part three of this series looks more at the mechanics for improving risk maturity for innovation.

The post Treating Innovation Risk Differently, Dealing with Uncertainty first appeared on Building Your Innovation & Ecosystem Intelligence.

I feel we spend less time on managing risk within our innovation initiatives.

We so often simply measure risk on established risk/return lines of known existing business criteria, treating it as part of our existing ongoing business, and that is plainly wrong.

Risk assessment within our innovation activities needs a different, far more distinct framing that reflects the nature of the unknowns we are working with, in my opinion.

Our organizations need to relate to the differences far more, to allow this ‘innovation risk assessment’ to play an increasing role in ‘advancing’ innovation and its understanding at the boardroom level to relate to and take a different risk-related profile position that many take today.

So in a three-part series, I want to set risk in a better strategic and operational framework but to begin with, until we address the alignment issue between a firm’s strategy and the linkage of the innovation activities, innovation fails to make the essential boardroom connections and risks always surface, as they have no referencing framework to revert too.

To start this series, I decided to quote Gary Pisano, someone I have admired in his work and thinking for many years. The part I have extracted here sets the frame for having an innovation strategy aligned to the strategic objectives, it is then through this we can focus more specifically on where risk needs to be, the focus of this series of posts. I just didn’t feel the need to add more here, I absolutely identify with his thoughts, so let him deliver the right words.

You Need an Innovation Strategy for it to really be seen as a critical resource of an organization.

Gary Pisano had an excellent article, “You Need an Innovation Strategy” on HBR. He comments:

“I have found that firms rarely articulate strategies to align their innovation efforts with their business strategies”.

The post The Pressing Need to Link Risk into an Innovation Strategy- part one first appeared on Building Your Innovation & Ecosystem Intelligence.

The question poised is “Innovation isn’t working! Is it time we innovate how we innovate”. The facilitator is Graham Hill (@GrahamHill) who will attempt to moderate this session that is simply a flood of thoughts of 140 characters by anyone who wants to participate.

Everyone ploughs in, offering thoughts or exchanges and for one hour parts of the question get ripped up and tossed around, other parts, the less tasty ones, are just left on the table. It is a twitter ‘feeding frenzy’ for people who are involved (or simply interested) in innovation matters. Fun, relevant and topical.

Graham chose to provide within his briefing paper (www.innochat.com) a reference to Dave Snowden’s work. In this case from his Cognitive Edge Blog “Moving from Robustness to Resilience” http://bit.ly/kvDN5Y  which initially surprised me, and then I really began to understand one important aspect that I thought I’d share here. Thanks Graham!

Innovation is in need of a step change in approach.
Anyone following this blog will see I have been arguing that innovation needed a better common framework. In a collaboration with Jeffrey Phillips and his http://innovateonpurpose.blogspot.com/ where we have been putting forward the case over the past few weeks. You can view this at http://bit.ly/mggPt4.

I strongly relate to Grahams argument that “Innovation has a long and inglorious history of failure. According to common wisdom, over 80% of products fail on introduction into the market (some even claim 95%). And 60% of them fail again on re-introduction. But the problem isn’t the products; it’s the way we innovate.

There has to be a better way. Our current innovation models were created for simple and complicated markets. Where understanding what customers need and plugging that into a linear innovation model was enough to drive winning innovation.

Today’s markets are different. They are complex and increasingly, chaotic. The linear innovation model is no longer fit for purpose. We need to innovate how we innovate”.

The new learning from this for me is shifting to Resilience

Where Graham (well, actually Dave Snowden) has opened my eyes is with the move from the need to stop building ‘robust’ innovation models but shift this over into ‘resilient’ ones. If you have ever listened to one of Dave Snowden’s presentations, it can be scary.

He has an amazing way to present and in every step of the way he builds an argument there lays a depth of knowledge. In this blog of his it is so ‘matter of fact’ it is worrying for us mere mortals.

He is so annoying in the best possible way, as he is doing this all the time, shifting my thinking in the work that he and others do at www.cognitive-edge.com.

Some people that know David well, say he is just constantly challenging and people love to engage with him but you have to go well prepared. Oh I nearly forgot, if you are Welsh it can be easier. He does make you think.

Shifting my thinking

In his ‘Risk to Resilient’ presentation I heard a set of important things that shift my thinking and advance it. We should refocus on building in more resilience into our approaches. In his case here, resilient systems.

1. Robust systems try to avoid or prevent failure and can often become crippled in the event of the failure.
2. Resilient systems accept that failure is inevitable. If you move from focusing on prevention to 1) early detection 2) fast recovery and 3) the opportunity, early exploitation (think Silicon Valley)

Dave Snowden highlights the strategic importance for organisations to refocus on the creation of resilient systems. This has real importance for innovation.

Failure is inevitable

He goes into a Probable > Possible > Plausible for event failure and the triggering of anticipatory awareness and this presentation is very valuable to listen through a couple of times.

Why does this shift my thinking?
Well in a number of ways. I certainly need to down play the robustness and build up the aspects of resilience more to encourage more risk and creativity in innovation design.

Robustness

• Firstly I have always ‘pushed’ for robust systems of innovation and this presentation causes me to reflect on this approach. To some degree you underline ‘fear’ to reduce failure so you consistently set about reducing this risk. Ideas that started with a real flash of insight come out the other end no more than a ‘damp squib’ that is more incremental and not as ‘disruptive’ as initially intended. They need to be ‘robust’ to survive or just more resilient?
• Secondly, robust systems fit well with financial people, with the ‘counters and controllers’ of this world. It give them a better sense of identity that innovation can be ‘well’ managed.
• Thirdly , robustness works with Six Sigma, with process efficiency experts and the more you can manage the  system’s characteristic behaviour the less uncertainty you can have.
• Fourthly, robustness is often associated with being strong and healthy, hardy and vigorous, with the opposite as seen as weak and feeble
• Lastly, robustness is often associated with accountability, keeping everyone responsive but due to the often ‘rigidness’ built into the system, we do suffer sometimes spectacular failures. As Dave Snowden says “we become crippled in the event of it”.

Resilience

• I do think we are all looking more and more at building into our systems, into our own personalities a greater resilience. We have to absorb more; in complexity, in events, in our personal energy
• We do need to recover more from failure, as failure is inevitable, to adjust to a misfortune or sudden change. We need to deal with difficult changing market conditions more than ever, to cope with adversity.
• This coping may result in the individual or the organizations ability in “bouncing back” to a previous state of normal functioning, or using the experience of exposure to adversity to produce a “steeling effect” and function better than expected, to learn from the failure.
• Some different research shows that resilience is the result of individuals interacting with their environments and the processes that either promote well-being or protect them against the overwhelming influence of risk factors. (Wikipedia quote).

Building in resilience into innovation systems
We need to enhance resilience for innovation management. Closely linked to resilience is adaptive capacity, our ability as humans to deal with change in their environment by observation, learning and altering their interactions in response to changing (market) conditions. It is harder to adapt a robust system.

So resilience leads to responsiveness, listening to the market and customer needs, adapting what we have learnt and being ‘resilient’ in altering what we do to deliver the specific need.

Being ‘adaptive’ is critical to innovation
Dave Snowden  finishes with this in this presentation of the differences between robust and resilient:

“The future belongs to companies, and to organizations and to governments who recognize the need for strategic agility and with that comes an approach based on resilience rather than robustness.”

The post Triggering Robust to Resilient for Innovation Thinking first appeared on Building Your Innovation & Ecosystem Intelligence.