I’m going back old-school on this post. Okay, maybe December 2007 isn’t technically old school, but it’s also not hot off the press. In HBR, George Day wrote an article ‘Is It Real? Can We Win? Is It Worth Doing?: Managing Risk and Reward in an Innovation Portfolio’ that proposes that minor innovations simply can’t create or sustain the growth companies are looking for in new products. Furthermore, most companies fill their release calendars with minor enhancements rather than going for broke with big crazy ideas.
So, what’s an innovator to do? Be bold and take a systematic look at the portfolio of innovations you’re trying to take on…while managing risk – come on, I’m not that crazy. Day recommended two risk assessments companies should consider. I love a good picture, so prefer the risk map: a visual indicator of risk across the portfolio. You can create your own visual risk map by using standard graph chart (x and y axes) to map to the likelihood of a project’s probability of success or failure. You’ll consider both your comfortability and your market’s readiness for the concept. For both x and y axes, a higher value indicates more risk. Wild idea for your company, but something consumers seem interested in (Web-based friend tracker)? Let’s call it a 9,2. How about a Mobile Dog Monitor – clearly that’s a 4,5. And finally, an At-home Prometheus Kit- not in your companies sweet spot, but obviously something the masses are clamoring for. That’s a 3,8. Now, you’ve got two numbers and a beautiful way of framing both sides of risk to the company.
Day’s other risk assessment is based on the concepts identified in the article’s title. Is the product idea based on a real need in the market? This question is central to innovation and is something I touch on often in my posts. Second, is it possible for the product to be real? Is this something that can be built and released? It’s important to be realistic here about how difficult it would be to bring the product to market; you need a clear concept map so engineers and value-chain analysts can identify whether it’s cost-effective. Finally, will this product provide more value to consumers than comparable ones -- is it winnable? If not, it’s not going to be sustainable and you should kill it quick or adjust the idea so you can create and sustain a competitive advantage.
Be bold and come up with wild ideas, but make sure the companies portfolio has a reasonable balance of risk. Then, hope you get assigned to the big ideas and take the competition by storm.