About 75 per cent organisations are risk averse when it comes to innovation and less than 60 per cent of business leaders support trial and error linked to innovation, according to a new report.

 

As organisations worldwide have been rolling out innovative solutions to overcome challenges brought on by COVID-19, some are struggling to keep afloat due to their inability to adapt to this fast-changing situation, says the report.

 

While there are several possible explanations for this, it seems that aversion to risk could be a big one, says talent assessment and behaviourmetry experts, The Talent Enterprise, along with leading strategy consulting firm Sia Partners and the Global Innovation Management Institute, who have just released The Innovation Mindset of Leaders, a worldwide report based on the study of 600 senior managers and leaders as well several subject matter experts from leading organisations such as Sanofi, SAP and the Dubai Government. 

 

Findings include:

• 3 out of 4 organisations are risk averse when it comes to innovation;

• 41% of organisations open to risk are considered as very innovative while only 3% of risk averse organisations are seen as very innovative; 

• Only 49% of risk averse companies are “good” at cross-organisational collaboration pertaining to innovation compared to 72% of non-risk averse organisations; 

• Risk averse companies appear to be less proficient at analysing risk

 

David Jones, CEO of The Talent Enterprise, explains: “An organisation’s ability to innovate has never been more critical than it is today, and risk-taking is an inherent part of innovation. Having said this, it needs to be calculated and ironically, the numbers show that risk averse organisations are two times more likely to be poor at risk analysis than the ones who are open to it.

 

“If leaders are not willing to analyse risk, it suggests that they don’t truly embrace innovation. In fact, while most managers and leaders feel upper management is supportive of innovation only 59% believe it supports trial and error pertaining to it. According to the experts we interviewed, resistance to change seems to be what lies beneath this phenomenon.”  

 

Unwillingness to change perhaps explains why processes are not put in place to foster innovation. According to the report, 26% of respondents felt their company was excellent at product and service innovation but only 12% felt the same about their processes. Experts however agree that agility and having the right processes in place underpin innovation-readiness. 

 

Rafael Lemaitre, Partner at Sia Partner, adds: “A few months ago, the economic landscape was evolving quickly but in the past few weeks, we’ve seen market needs literally changing overnight. Organisations without the necessary flexibility in their strategies and processes to adapt will struggle. The ones who that do will capture new opportunities.” – TradeArabia News Service