Your Innovation Risk Appetite
There are structural reasons why most breakthrough innovations come from individuals or startups outside versus inside existing companies.
Existing Organizations Play It Safe
Existing organizations tend to be more cautious than their startup counterparts. They tend to have more to lose. The pain of loss is more powerful than an unknown pleasure. And it often causes us to err on the safe side.
Companies that play not to lose are over-cautious. They fail to take risks and miss out on opportunities. We’ve seen examples like not talking to customers for fear of damaging the existing brand. Or dismissing a new product idea based on early legal and compliance feedback. However, they miss out on testing assumptions to see if the situation warrants it.
Falling into these traps can lead us to worry more about taking action versus doing nothing at all. Playing it safe or doing nothing is a risky proposition in disruptive environments. There is an inherent fear of failure for existing organizations – a fear of losing what they already have.
Startups Fear Not Succeeding
Startups have the opposite fear – fear of not succeeding. A startup’s default state is failure with a goal to find success. With nothing existing to lose, startups fear the downside of not succeeding much more than losing something they don’t have.
Most of the time, innovations within existing companies offer limited individual upside and downside risks. Suppose a person inside an organization innovates a game-changer. In that case, they may move up the ranks or receive some bonuses. But the outsized benefits of building a business are not usually there.
And unlike startup founders, there are no real downsides for not making payroll, moving fast, taking risks, or finding a way to move the idea forward. At least in the same way when you have everything riding on it.
Autonomy to Change Everything
The final difference is that a founder at a startup has the fundamental ability to change everything (or nothing). Autonomy to make the calls is inherently difficult for an inside founder.
Inside innovators don’t have the flexibility of a blank slate. Legacy brand, existing customers, and the need to protect the core business model is not something startups have to deal with initially. They also lack the flexibility to seek outside funding, partnerships, talent, etc., without approval. Resources, partnerships, marketing, pricing decisions all have the baggage of the core business from which to contend.
Increase Your Innovation Hunger
If you want to foster more innovation, increase your appetite for risk. Let us know how you’ve increased your innovation risk appetite at firstname.lastname@example.org.
More Innovation Tips
- Urgency: Demonstrate Action and Experimentation
- Innovation Vision: What’s Yours?
- Innovation Obstacles: Treating Innovation as a Project
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