Innovation = Creativity x Risk-taking. And more likely than not, the bigger the innovation means the greater the chance of failure. In the pharmaceutical industry, 1 out of 1000 is considered a great success ratio. In the grocery business, the success rate for new product entries is 1 to 100.. Risk-taking will no doubt require failure management. In order to “manage failure,” an Innovation leader needs to define the risk and bandwidth that is OK to team members. Then if we fail, we make it a learning experience and praise people for it.

Failure management means never allowing an unsuccessful risk to hamper a team member’s opportunities and advancement. Let your people feel safe to fail, but empower them to do their best work. After all, failure is not what team members should be thinking about during the New Product Development process. Fear of failure can kill Innovation. Especially in a difficult economy where job security is in question, employees want to play it safe and are hesitant to take risks. In this type of environment the most important thing is to establish trust – so team members are willing to take the risks necessary to act, decide and move forward on the path to Innovation. An Innovation champion doesn’t just award successful ideas, but encourages a tolerance for failure and enthusiasm for risk-taking. Without risk, there can be no Innovation.

Here are a few tips for encouraging your team members.

1. Profiles in risk. Clearly communicate the risk profile you are asking your people to adopt and state why it is important to the organization’s success.

2. Key learnings process. Establish a formalized, non-accusatory process for harvesting key learnings from unsuccessful risks. Distribute these lessons learned.

3. Tools of the trade. Give your people the tools they need to help them improve their risk-taking decisions.

For more helpful tips, see “Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival.”

The success rate when it comes to innovation is very slim. In fact, just 1 in 100 new product entries succeed in the grocery business, according to a study by allbusiness.com. For every innovative product that comes out of the NPD process, there are plenty of ideas that don’t work out – deemed as failures. What’s important is that companies have a tolerance for failure and encourage risk taking.  Fear of failure can kill Innovation. Never punish for failed ideas. Instead, learn from them how to improve in the future. Establish a level of trust so your team won’t be afraid to think outside the box. To build a successful culture of Innovation, encourage everyone on your New Product Development team to take risks!

“Robert’s Rules of Innovation” gives five simple steps for encouraging initiative and Innovation. Here are some tips:

1.   Profiles in Risk: Clearly communicate the risk profile you are asking your people to adopt and state why it is important to the organization’s success.

2.   Failure Management: Never allow an unsuccessful risk to hamper a team member’s opportunities and advancement.

3.   Key Learnings Process: Establish a formalized, non-accusatory process for harvesting key learnings from unsuccessful risks.  Distribute these lessons-learned.

For more, see “Robert’s Rules of Innovation” by Wiley, Spring 2010.

Whether Financial or Innovation applies to both/all, see: http://www.strategy-business.com/article/00010?gko=b6470-27802017-29206682&cid=enews20091201

It needs new views, fresh thinking, a different perspective from across the organization.

We’ve noted that Innovation = Creative x Risk Taking. Setting aside risk for the moment, creativity is a central element to the innovation process. But it must continually be nourished with new ideas from a variety of sources.

Ideation is not a single event. It doesn’t originate from a single silo or one person or one department, although it can come from a single source. Ideation thrives in an open environment; think Wikipedia, the open-source, online repository of the world’s specialized knowledge. It is the result of a collaborative process that welcomes minds and teams from across any organization of any size.

How can you foster a fertile ideation environment?

Start by creating an “idea hopper.” This idea bank is the repository of any idea to be pursued, saved, reconsidered – or at least explored.

In the closing scene of Raiders of the Lost Ark, the Ark of the Covenant is crated and stashed in endless warehouse of similar, non-descript crates. This is the polar opposite. Don’t think of the Hopper as a bottomless pit. Think actionable. While this idea database can be managed online or as a Access Dbase, Word  or Excel spreadsheet, the key word is “managed.” Ideas come in and are vetted by the Innovation Team and the Chief Innovation Officer [link to previous blog on CIO ]. The CIO will organize ideas in order of importance or relevance based on the organization’s current path or needs. Then the ideas then are presented at the next meeting of the Ideation or Brainstorming Session.

About that session… Brainstorm sessions should be held at a regular interval  and include a variety of participants from across the organization. This isn’t just a place for R&D or the New Product team. Sales should be there. So should Marketing. Include Customer Service. Those who interact with customers and have a feel for the shifting tidings of the consumer should have input in ideation – whether in feeding the hopper or digesting its contents.

The meetings also should be structured. They should be scheduled, with an agenda in place so participants know what to expect, the topics of discussion, and the anticipated outcomes. In this instance, the CIO should defer to a facilitator or Innovation Coach who can lead the session with complete neutrality. He or she (or someone designated for that task) will write, chart, graph or otherwise gather every idea presented. There are no bad ideas. All concepts should be filed, prioritized, validated, for future reference and / or use in combination with other ideation session results. The outcome of each meeting besides feeding the hopper is a prioritized list to be worked in in Product Development

Next, feed that hopper. This database needs that constant diet of fresh ideas – especially between brainstorming sessions. Welcome ideas from all corners of the organization – from the C-Suite to the receptionist’s desk. You never know where the next Great Idea will come from.

To be clear, new “ideas” aren’t simply about products. Ideas can include process changes, technological enhancements – anything that represents change in the organization.

In ideation, think green. In those brainstorming sessions, some ideas will rise, some will fall. Throw none away. Those that don’t pass muster at that moment should be placed back in the hopper and recycled. Some ideas fail based on momentary circumstances: bad timing, market conditions, technological disconnect, conflict with the organization’s current needs or vision – any of which can change very quickly. In fact, two ideas discarded today may morph into a better concept tomorrow. Keeping them in the hopper ensures they can be revisited in the future.

The process of ideation isn’t inherently a risk-taking endeavor. But it is part of the experimentation equation. As we’ve noted previously [please link to the blog on Risk], Risk plus Experimentation (plus Failure) equals an Improved Environment for Innovation.

The risk here is to break the mold. Open the silos. Welcome input from across the organization. You might come away thinking, “What a great idea!”