{"id":34316,"date":"2020-07-17T06:29:06","date_gmt":"2020-07-17T11:29:06","guid":{"rendered":"https:\/\/adpulp.wpengine.com\/?p=34316"},"modified":"2020-07-17T06:58:55","modified_gmt":"2020-07-17T11:58:55","slug":"corporate-innovation-and-the-risk-reward-equation","status":"publish","type":"post","link":"https:\/\/www.adpulp.com\/corporate-innovation-and-the-risk-reward-equation\/","title":{"rendered":"Corporate Innovation and the Risk\/Reward Equation"},"content":{"rendered":"

\"\"This new article in our Emerging Voices Series is made possible by the generous support of Adpulp’s patrons<\/em> on Patreon. <\/em><\/h4>\n

Please join us and help pay writers.<\/a><\/em><\/h4>\n

 <\/p>\n

Corporations have been wrestling with an innovation problem for decades. Some of the most well-known are infamous for it, with an innovation strategy that appears to downright steal ideas or absorb innovative upstarts into venture funds and incubator teams. Not much seems to come from within.<\/p>\n

The problem is that eventually corporations that fail to innovate, fail. Kodak, Blockbusters, Toys \u2018R\u2019 Us, and HMV\u2019s failures to react to a changing market are well documented, but many have a sneaking suspicion that other giants may be circling the plughole, just on a wider orbit. No business is too big to fail; the bigger ones just take longer.<\/p>\n

By innovation, I don\u2019t mean complete 180s of paradigm shifts every quarter (stability is important), I mean the continuous incremental improvements that keep businesses a nose ahead of competitors and the market. “Adapt to survive” is a mantra for a reason.<\/p>\n

Corporations with ample resources, market knowledge, sharp minds, huge economies of scale, and healthy budgets should be leading the way in coming up with better things, and better ways of doing things. Many have tried to foster this by bringing in chief innovation officers and starting innovation teams, but even that doesn\u2019t seem to be helping. When it comes to ideas, even incremental ones, corporations are still being given the run-around by those who are smaller and more agile.<\/p>\n

Why Is There So Much Stagnation?<\/h2>\n

If you\u2019re reading this, you\u2019re here because your ancestors didn\u2019t do anything too stupid. They weren\u2019t mauled by a bear and didn\u2019t fall into a crevasse before they could manage to reproduce. Your ancestors were risk-averse, and so are you.<\/p>\n

\"\"For thousands of years, being more sensitive to avoiding potential risk than gaining potential benefit has been of evolutionary advantage. On the Savannah, you only have to get it wrong once and its game over.<\/p>\n

It works like a constant equation running in our minds. Potential risk and potential benefit in any situation are continually calculated. If a potential risk is greater than a potential benefit, no action will be taken, but if the potential risk is less than the potential benefit, actions will be taken. It appears that simple subconscious mathematics guides all of our choices.<\/p>\n

Over millennia the great leveler that is Darwinian economics has made sure that the cautious ones multiplied, and the risk-taking ones didn\u2019t \u2014 and here we all are.<\/p>\n

Today, however \u2013 this can translate into our innovation problem. Our amygdala (the part of the brain responsible for our fight or flight response) can\u2019t differentiate between the risk of a bear mauling and the risk of looking silly in a meeting. That\u2019s how stress works. Our nervous system only feels the fear, not the context.<\/p>\n

Large corporations are made up of huge numbers of people focused on getting by without shouldering too much responsibility for decisions or annoying anyone more senior. These people are continually running their risk-benefit calculations and risk is winning. This creates a culture that encourages people to fly under the radar and follow orders. Rocking the boat is a risk. And risks are to be avoided.<\/p>\n

People aren\u2019t really concerned with the efficiency, productivity, or bottom line of the business. The benefit of doing so doesn\u2019t trickle down to them. If someone sticks their neck out with an idea, the benefit is more likely to go into the bonuses of faceless board members, and the credit given to someone more senior. Or louder. According to that person\u2019s subconscious calculation, it\u2019s just not worth it to care too much.<\/p>\n

The Common Sense Approach: Reward Innovative Acts<\/h2>\n

However, I think there\u2019s hope. In theory, fostering innovation in the ranks shouldn\u2019t be difficult, but it does require skillful rebalancing. People in senior positions rightly want to understand the internal equation and alter it. Reducing risk and increasing benefit is good for everyone, the company especially.<\/p>\n

Step 1: Identify the factors that influence the risk side of the equation<\/h4>\n

Why aren\u2019t your employees speaking up? Are they worried about rocking the boat? Causing problems for senior people? That their thunder will be stolen? That their ideas will be shot down? Called stupid? Look silly in meetings?<\/p>\n

Step 2: Identify the factors that influence the benefit side of the equation<\/h4>\n

What would make your employees want to speak up? Financial incentives? Promotions? Bonuses? Recognition? Interesting projects to work on? A team to build? A pat on the back? Power? Money? Influence?<\/p>\n

Step 3: Mediate these risks and benefits and alter the equation<\/h4>\n

For example, if your problem is that people are scared to speak up, then bring in policies to mediate that. Anonymity, assurances, protection from tyrants, flat hierarchies, transparency, vulnerability, psychological safety.<\/p>\n

If your problem is that people lack an incentive to speak up, then set aside some budget. Create innovation prizes, bonuses, cherish ideas, financial and career incentives, awards, and recognition.<\/p>\n

Altering this equation is one of the most effective things a business can do to regain the competitive advantage of ideas. Probably the most advantageous competitive advantage there is.<\/p>\n

It doesn\u2019t matter how you do it, workshops, brainstorms, surveys, questionnaires, interviews, it matters that you work out what\u2019s on either side of that equation \u2013 and change it. The benefits are enormous.<\/p>\n","protected":false},"excerpt":{"rendered":"

This new article in our Emerging Voices Series is made possible by the generous support of Adpulp’s patrons on Patreon. Please join us and help pay writers.   Corporations have been wrestling with an innovation problem for decades. Some of the most well-known are infamous for it, with an innovation strategy that appears to downright […]<\/p>\n","protected":false},"author":29,"featured_media":34323,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[296,52,327,161],"tags":[],"class_list":{"0":"post-34316","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-agency-business","8":"category-change-agents","9":"category-emerging-voices","10":"category-industry-analysis","11":"entry"},"yoast_head":"\nCorporate Innovation and the Risk\/Reward Equation - Adpulp<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.adpulp.com\/corporate-innovation-and-the-risk-reward-equation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Corporate Innovation and the Risk\/Reward Equation - Adpulp\" \/>\n<meta property=\"og:description\" content=\"This new article in our Emerging Voices Series is made possible by the generous support of Adpulp’s patrons on Patreon. 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