The secret to innovation is risk.
The problem is nobody likes risk. Psychologically we aren’t wired to take chances. We like things such as comfort and stability. Most of us are conditioned to gather resources, store them up, and preserve the status quo. We enjoy going from an air-conditioned house to an air-conditioned car to an air-conditioned office. Our society places a high priority on control and comfort. Those are the opposite of risk.
The Science of Risk
Science has only begun to understand the psychology and biology of risk-taking, but it’s quite a fascinating subject. A unique discovery is that our brains have both excitatory cells and inhibitor cells. Those inhibitor cells act like traffic cops and are less active in young brains. They become more active as we get older. This may be one reason why children learn so much faster than adults. Their brain is more open to explore, take risks, and try new things. It also may be why teens have been found more likely to take risks with unknown outcomes or ambiguity.
“Risk-taking is part and parcel of everyday decision-making, and it’s a process not a trait, all of us have the power within us to use risk to our advantage. It’s not just the stuff of super heroes, legends and drug addicts: risk is the key to learning and growth for all of us.”
Science has also found our mood and environment affects risk-taking. “When we’re happy we take more risks,” writes University College London professor Noreena Hertz. “It’s why a country’s stock market tends to rise off the back of a national team’s win at football.” Sunny days can also change your outlook on life and interest in risk-taking some research has found. We tend to be more conservative in the cold winter months and more daring on those warm and sunny days.
Can You De-Risk Things?
The common issue is those that seek to be innovative or claim to invest in innovation end up caught in de-risking cycles. They attempt to hedge ideas or opportunities with processes, structure, or systems and essentially end up with something hardly innovative. Nothing new comes from old ways of thinking. Nothing truly innovative will come out of a calm structure and process. The old adage, “high risk, high reward”, is true. If you want big wins, you have to take big risks.
This is not to say planing, research, and process has no value. Business planning does have value. Imagine standing on a cliff, ready to make a cliff dive. You assess the direction of the wind. You take stock of the distance and the landing area. Perhaps you play out the jump in your mind a few times, thinking through the moves you’ll make and how you might adjust for the wind. Eventually, you have to jump. Once you jump, you’re on your way. Your instincts and training take over at this point, no matter what happens. Should a large gust of wind come about, your plan is junk. You have to adjust as you fall. You can’t start over – you just adjust.
When it comes to innovative ideas, it’s much like the cliff jump. There’s no amount of planning or process that could prepare you for the gust of wind on the way down. Ideas will hit all sorts of roadblocks and setbacks. This is why they are risky. Eventually, they must launch and learn to pivot and adjust on their fall. Some have described innovation as jumping out of an airplane and building your parachute on the way down. If that’s the case, perhaps you’d rather jump out of a plane with a seamstress than a skydiver. A standard skydiving plan doesn’t include “be good and sewing.”
Groupthink Can Kill Innovation
Recently there was a venture capital group, about 30 people or so, discussing their biggest wins-to-date. There were two companies in the portfolio that had far outperformed the others. Even though the group realized this and acknowledged these are their major wins, they still implemented process and structure that wouldn’t allow them to make a similar investment again. The group, in an effort to de-risk their investments and make ‘smart’ bets, implemented guidelines that would have labeled those two companies as too risky at the time they originally invested. They completely eliminated the ability to repeat their success. This is groupthink, and it will destroy innovation.
Groupthink is when patterns of thinking within a group merge to become more alike and aligned. Eventually, the group thought takes over, often eliminating descent or objection. This can become quite dangerous in homogeneous groups of people with very similar world views. A recent article in Applied Psychology stated, “It is concluded that minority dissent stimulates creativity and divergent thought, which, through participation, manifest as innovation.” Innovation requires that leaders seek out diversity of thought and opinion.
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Process Can Kill Innovation
Too much process and structure will suck the life out of innovations. While every project needs some form of planning and structure, too often these are used as a way to de-risk ideas. Some may argue the implementing a certain type of business planning or following a certain structure will making the idea less risky. That’s simply not true and we don’t have to look far to find the anecdotal evidence. There is no single process, system, plan, or structure that every successful innovation or startup shares. Additionally, many startups and innovative ideas have tried using different plans and processes only to fail.
In the Army, they have a concept called Commanders Intent on a battle plan. Military commanders have long known that battle plans rarely survive contact with the enemy. Despite the great discipline of many troops and advanced training, once an engagement with the enemy happens things can go sideways. The Commanders Intent helps field leadership know what the intention is so they can make informed decisions in the field. For example, there may be a detailed plan to advance on an enemy position but the Commanders Intent might simply be to take the hill.
The point is that process or planning is important, but we must give risky innovations the freedom to adjust and pivot. That means you can’t completely plan for how an innovative idea will come together.
Innovation is a Little Crazy
People aren’t as innovative as they like to think. Venture capital investors often follow each other, pumping money in companies with everyone else. Peloton, for example, is a fine company but it’s an exercise bike. There’s nothing that innovative about Peloton. At the time of this article, though, it’s valuation has skyrocketed.
If a business wants to truly innovate and be creative, they have to take a risk. They have to do things other people aren’t doing. Risk is scary; it involves failure, crashing, and embarrassment. But no risk, no reward. The more you try to de-risk an idea, if that’s even possible, the more you’re throwing innovation out the window. Truly unique and world-changing concepts will be crazy risky because they’re crazy new.