The Best Tools to Derisk Innovation

    At the start of the twenty first century the innovation buzz has become deafening. It commands the attention of everything - from the popular media to scientific journals. Innovation is claimed to be the driver of economies and the competitive edge of companies. With innovation being the core of many new management styles, one question still remains for the enthusiastic manager; what are the concrete tools for my employees to build our revolutionary innovations?

At the core of any innovation management technique is a risk management philosophy to lower risks along the development and implementation chain. Whether it is focused on minimizing waste via Lean Thinking, correctly addressing consumer needs via Design Led-Thinking or hedging bets via Equity Style Management, the focus is always on how do we reduce the risk inherent in being innovative? Risk and innovation are inseparable. You cannot have one without the other.

“4% of innovation initiatives achieve their internally defined success criteria.”

The tools to achieve these goals nowadays are focused around a few enabling principles. They are mostly about connecting the right people to the right problems. And doing this in the simplest and most frictionless way possible. We are seeing this with Crowdsourcing, Crowdfunding, Open Innovation (both ingoing and outgoing), Open Access, Open Source, and many more.

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How to Do Business Model Innovation for the Established Firm

This article provides a systematic framework for helping executives of large, established organizations identify opportunities for business model innovation and organize themselves to pursue these opportunities. While also applicable to start-ups, this article focuses primarily on how to define, challenge, and revamp the business model of an existing business or organization.

In nearly every industry tried and tested business models are coming under attack at an unprecedented rate:Pharmaceutical companies are searching for alternatives to the blockbuster model. Banks are looking for innovative ideas to make up for lost fees and revenues due to new regulations. A drop in advertising revenues and circulation pushes newspapers towards new sources of income. Traditional brick and mortar bookstores are losing out to online competitors that are not encumbered by pricey real estate. Software providers are being threatened by cloud computing. The common root cause at the heart of the problem:a once successful business models.

“Changing a business model of an established organization is difficult – the gravitational pull of the existing business is hard to overcome.”

What is a business model, anyway?

A business model describes the logic behind how an organization communicates, creates, and captures value. Henry Chesbrough in his book “Open Innovation” suggests that a business model has six functions:

• Articulate the value proposition – the value created for users by the offering based on the technology.
• Identify a market segment – the users to whom the technology is useful and the purpose for which it will be used.

For more about How to Do Business Model Innovation for the Established Firm visit Innovation Management.

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