With the increase of popularity of solutions, there comes also uncertainty and risk. In technology, the sources of uncertainty could be various: it might be a technological uncertainty, when it is hard for companies to predict new technologies or dominant design; or market uncertainty, which refers to the difficulty to predict demand for innovations. In this post, we look at short and simple strategies for managing such risks, and ways to stimulate innovation in the firm.
Managing risk in tech
- Cooperate with lead users
Simple but always important to have the main users of your technology in mind. Talk to them, listen and identify their needs. They might suggest new product developments. - Limit risk exposure
Avoid capital commitments and keep your debt low. Think over the innovation — how are you going to pay it off if it will not be profitable? In many cases, especially with companies that are only starting out, it is convenient to outsource and use alliances. In this way, you transfer the risk that might come with product development onto others. - Flexibility
No matter the size and age of the organization, it is always beneficial to stay flexible and keep options open. Always evolving tech industry requires to quickly adapt to new information. It is okay to make mistakes, but turn them into a lesson.
How to stimulate innovation in the firm?
- Create cross-functional teams for new product development. People that come from different areas of expertize will bring specialized functional knowledge into creation.
- Assign product champions. Product champions are usually people that have been involved and have a deep interest in the new product. They provide motivation, integration and counteract organizational inertia.
- Buying innovation. Some bigger firms that have complementary resources also like to acquire innovative start-ups.
- Open innovation. We are all in this together — sometimes, it might be beneficial for different firms to share ideas and technical know-how among each other. This will work as an advantage for everyone to be up-to-date with technology and industry trends.
- Create corporate incubators. If constant innovation is the driver of your firm, it might be useful to dedicate special business development units, whose main job is creating new ideas, doing research and improving the firm’s competitiveness.
What to bear in mind:
It is common when established tech loses to new tech with higher performance. What you have to be afraid of are disruptive technologies — more often existing tech loses to new tech with LOWER performance. Why does this happen?
- it might be that many users are unable to use existing tech (due to lack of money, skills, etc.) or existing tech is simply inconvenient to use
- low-end consumers accept lower performance at a lower price. It can be a business model of new tech firms — low prices generate good profit. Sometimes it is better for them to almost ‘give away’ their product in order to fill in the market.
