How can you innovate with less risk in business strategy?

1 Define your innovation goals

Before you embark on any innovation project, you need to have a clear vision of what you want to achieve and why. What are the problems or opportunities that you want to address? What are the benefits and costs of pursuing them? What are the criteria and metrics that you will use to measure your success? By defining your innovation goals, you can align your team, stakeholders, and resources around a common purpose and direction. You can also avoid wasting time and money on ideas that are not relevant or feasible.

3 Manage your portfolio

Another way to mitigate risk in innovation is to manage your portfolio of projects and initiatives. This means that you diversify your innovation efforts across different types, stages, and domains. You can use a framework such as the three horizons model to categorize your innovation projects according to their impact and time horizon. For example, horizon one projects are incremental improvements to your existing products and services that generate short-term revenue and profit. Horizon two projects are new offerings that create new markets or segments and generate medium-term growth. Horizon three projects are radical or disruptive innovations that transform your industry or create new ones and generate long-term value. By managing your portfolio, you can balance your risk and reward and allocate your resources accordingly.

4 Involve your customers

One of the biggest sources of risk in innovation is not understanding or meeting your customer needs and expectations. To avoid this, you need to involve your customers throughout your innovation process. You can use various methods and tools to empathize with your customers, such as interviews, surveys, personas, and journey maps. You can also co-create solutions with your customers, such as through workshops, focus groups, or prototyping sessions. You can also test and validate your solutions with your customers, such as through usability testing, beta testing, or pilot testing. By involving your customers, you can increase your chances of creating solutions that solve their problems and delight them.

5 Learn from failures

Finally, one of the most important ways to innovate with less risk in business strategy is to learn from failures. Failures are inevitable in innovation, but they are not the end of the road. They are opportunities to learn and improve. You need to embrace a culture of experimentation and learning, where failures are not punished but celebrated as sources of insight and feedback. You need to create a safe and supportive environment where your team can share their failures, learn from them, and apply their learnings to their next projects. You also need to document and communicate your failures and learnings, so that you can avoid repeating the same mistakes and leverage the best practices.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?