This ebook, How to De-Risk Transformational Innovation: The Science Behind Managing Assumptions, breaks down the difference between uncertainty and risk and helps you uncover and remove the landmines to true innovation. Get your copy now. Bold, creative thinking and expansive strategic vision in unfamiliar markets can give you a competitive edge and create profitable and sustainable organic growth. In fact, Harvard Business Review found that top-performing companies that put 10% of their resources into transformational innovation were getting 70% of the financial returns.
How Do They Do It?
Your team develops ideas for new applications with unique customer benefits for unfamiliar markets, too. But these concepts are full of risks that your business model may or may not support and are just too unpredictable to pursue… So, you kill the projects before they begin.Top performers think differently.Instead of looking at the risks, they study what they don’t know — the uncertainties. “We spend most of our time trying to prove we’re wrong,” Astro Teller, Head of Google X, said. “We run at all the hardest parts of the problem first.”
Uncertainty Versus Risk: The Difference Matters
Top performers excel at transformational innovation because they focus on what they don’t know rather than the risks involved. With this in mind, let’s look at the difference between uncertainty and risk.“Uncertainty” is simply something you don’t have knowledge about right now. You can change an uncertainty to a certainty by learning about what you don’t know.“Risk” is when you “put something valuable or important in a dangerous situation, in which it could be lost or damaged,” according to Oxford Learner’s Dictionaries.With risk, you must be able to assign a probability of a negative event taking place. When you work outside your regular market, you simply have no idea what that probability is. So when you start a new project, don’t assign a risk, a probability, an internal rate of return, or anything like that. Instead, simply say, “We don’t know.”
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