Every company in the world is taking huge risks right now. Every day in business is full of risks. But who can afford to operate this way? Can't we just avoid risk altogether? Isn't that what research data is for?
There was a time when the risks weren't so obvious, or so painful. Sadly, those days are gone. That's why it's important to understand and embrace risk, even use it to your advantage. (Part 1 of a series)
Risk, risk, everywhere
Many companies fear the word 'risk' because by definition it echoes the unknowns, and therefore, the greatest fears of business life.
Does a company like Toyota have enough money or power to avoid risk? Of course not.
No matter how much data is analyzed or research is done, nobody can predict what might occur - from natural disasters, to competition, product recalls and customer disinterest.
And that's just the beginning...
The volume of risk a business of any size assumes in a day is monumental given economies, globalization, fragmentation of markets, etc.
The sword of data
Market research as a discipline has grown in lockstep with our technological ability to collect data - and for good reason.
In business, well-researched data is like a sword - a tool with immense power. It is crucial to the life of a company or product.
Sound, researched data will do much of the heavy lifting when it comes to making decisions about markets, prices, etc. Good data acts as a compass and strategically steers the ship away from risk in many important business decisions.
Some conclude that the data harvested from the sword of research is a cure-all. Since many companies believe that they 'can't have too much of the good stuff,' there's also a tendency to make every other business decision by it.
Business evolution
New ideas and products represent the very evolution of business. These ideas are like newborn babies. They must be created in a nurturing environment and handled with care.
It reminds me of a friend who developed complex variable spreadsheets to assess the affordability of having a child in 2007. He did it out of love and learned that he eventually needed to scrap the spreadsheet in favor of assuming some reasonable amount of risk. His beautiful daughter reminds him every day that he made the right decision. If parents only took risk into consideration, there probably wouldn't be any children in the world.
In parallel, many companies attempt to birth business models and products with risk analysis charts and spreadsheets. When the creative process is led by data-driven dummies, the results end up not being very innovative at all. It's like trying to spark a romantic conversation with someone who's in the middle of doing their taxes. Sure, it's possible, but not very likely.
When it comes to innovation, it's important to begin focusing only on what is next, desired, attractive, and effective outside of the boundaries of anything involving budget or risk. Once a great idea has been examined, only then should it be molded into the framework of possibility.
New ideas can potentially be the most powerful asset of all for a company. They should be nurtured and cared for like a newborn.
There is a time and place for risk avoidance, and it must be separate from the creative process or else it's hardly creative at all.
Tim Andren is the founder of Guideas, Inc. an innovation and marketing company.
