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In this age of cut-throat competition, successful and protracted
innovation must be a ready weapon in every company's arsenal.
As Stanford University Graduate School of Business Professor
Anthony Davila noted, "Superior innovation provides
a company the opportunities to grow faster, better, and
smarter than their competitors, ultimately influencing the
direction of their industry…In the long run, the only
reliable security for any company is the ability to innovate
better and longer than competitors." As Matthew May
of the University of Toyota said, today innovation is a
life or death issue: "Those who fail to constantly
ideate and initiate are destined to be eternal followers.
That's okay for some, even many. But refuse to adapt, and
the near future may include the auction block."
Innovation involves taking risks because it requires working
with the unknown. As Carl Schramm, President of the Kaufmann
Foundation and business theorist said, "It is obvious
that there is no way an entrepreneur can avoid risk. It
is inherent in the process of starting companies."
Strategos Chairman Gary Hamel has showed that, although
some organizations focus upon incremental innovation or
are `fast followers', to limit the risk inevitably associated
with innovation, game-changing radical innovation is essential:
"Without radical innovation, a company will devote
a mountain of resources to achieve a molehill of differentiation."
How is radical innovation defined? As Hamel noted, "A
radical idea is one that upends some industry convention,
significantly changes customer expectations in a net-positive
way, dramatically alters the pricing or cost structure of
the industry or changes the basis for competitive advantage
within the industry."
Schramm asserted that, "Risk can be informed and reduced
with information and practice." The fundamental mechanism
for risk mitigation is increased organizational variability.
This paper surveys measures, many of them strongly counter-intuitive,
that serve to mitigate risk as corporations engage in the
radical innovation so essential to their long-term viability.
To succeed in the modern economic era, companies must ultimately
revolutionize the rules of corporate engagement. As Apple
Inc. fellow and noted entrepreneur Guy Kawasaki said, "Think
different in order to change the rules. By definition, if
you don't change the rules, you aren't a revolutionary,
and if you don't think different, you won't change the rules."
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