Innovation Risk Management Needs to be Innovative as well.
Innovation is a systematic way of applying creativity in the real life and it takes disciplines to manage both opportunities and risks but what are the characteristics of an innovation risk management framework?
The innovation risk management framework would need to be flexible and applicable to a dynamic situation: Digital strategies are changing frequently and innovation in its basic nature is a high-risk area; more often you are doing something that hasn't been done before. It follows that the primary focus of the risk management process would be to identify and control those risks that can be addressed; financing, market understanding, competitor analysis, identifying the space of opportunity, defining the scalability of the product, what timescale to allow before making a go/no-go decision
Innovation risk management framework needs to provide focus and level of details and tailored solutions for managing risks, the fact that innovation is defined across areas: There is claimed to be innovation in music, innovation in language, innovation in thought ... everyone everywhere is innovating. Therefore an innovation risk management strategy and framework must have focus, level of detail and meet the needs of the specific user of any such strategy towards the applicable innovation process he/she seeks to manage risk within, products, services, processes, and even in non-conventional areas outside of Product and Technology (P&T).
Innovation risk management is always looking for next practice, not ‘best practice’ Innovation Risk Management means stepping away from the accepted "best practice" and asking whether a fundamentally different approach would provide more flexibility, more sensitivity, and more responsiveness. Companies compete on innovation. And depending on the company's position in the marketplace, regardless of how long they have been in business; they may be forced to take risks that others would not take to meet shareholder expectations. It is inherently difficult to convince a company to adopt a defensive stance or adhere to newly codified precautions, in an offensive facet of their business.
ERM for Innovation would be a trimmed down version of the status quo that focuses on the essentials. Innovation risk will be a critical but not necessarily the only driver. Innovation risk would also broadly need to consider both endogenous and exogenous drivers, and may not necessarily be best addressed by a lot of the formal ERM-Enterprise Risk Management standards, because innovation can be destructive, empowering, or even systemic, etc. in addition to its dynamic nature, etc. That said, innovation risk management needs to be innovative as well.