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Is innovation synonymous with risk?

by Euan Brown •
Free resource

“Is innovation synonymous with risk?” – the question was asked to Intermedium’s LinkedIn group members late in 2014 after a government CIO suggested that innovation in IT is in effect synonymous with risk.

The responses received were thought-provoking, and we’ve decided to do a quick round-up so that those who missed the debate or partook can get a snapshot into the ideas that were bandied about.

How we define innovation was a point that emerged from the get-go. The consensus seemed to be that innovation isn’t the same as invention, rather it is the application of better solutions to meet new requirements. “I don't see innovation as synonymous with never been done before or world first”, one contributor wrote.  

Many contributors agreed that innovation equals risk. Some tied innovation to change and change to risk, “Everything we do in IT changes something and change cannot occur without risk”. Others highlighted the role of risk management and the need to mitigate the risks posed by innovation. Ultimately doing nothing was also seen as a risk. One contributor put it succinctly, “All choices come with risk, including the decision to ‘do nothing’. The challenge is managing risk appropriately, including acknowledging that the risk of ‘doing nothing’ grows non-linearly the longer you ‘choose’ this course of action”.

The CIO also said that for core business systems there can be no innovation, and by extension no risk, but that innovation and risk are the domain of non-core or “periphery” business systems.

The suggestion drew some critical responses on the perceived risk aversion of the public sector, one contributor wrote, “to only innovate on non-core systems… is too risk adverse”. Another inferred that the CIO had oversimplified the risk-innovation nexus and that such an oversimplification “serves risk management practices poorly as well as suggesting [sic] an aversion to innovation”. Pointed but illuminating was this comment, “A CIO who sees core business systems (development/replacement) as devoid of risk has a severe case of myopia - any project has risk whether it be innovative or not - the risk increases as the project moves from a high degree of environmental certainty to a high degree of environmental uncertainty.”

Yet there was also sympathy for the CIO’s suggestion, “For core systems in a non-competitive industry (like Government), then I'd agree with the CIO - there's often no need to do something innovative... However inaction also increases risk over time; and we would hope that the CIO is at least managing risk by being a ‘fast follower’”.

Still another wrote, “The CIO may be suffering from ‘innovation fatigue’. Management literature demands mantra-like devotion to improvement through innovation and public servants have heard the message. Most federal departments have multiple innovation programs... and they are jammed with ideas. Thousands of them. Sifting them for gems is a huge task but a necessary one”.

The freedom to fail in a risk adverse environment was discussed. “We must not punish or criticise those involved in the innovation - to do so ensures that we will be stuck in the present and never move forward,” wrote one contributor, whose comments have recently been echoed by the Minister for Communications, Malcolm Turnbull.

Turnbull encouraged CeBIT GovInnovate delegates last November 2014 to learn from the culture of risk-saturated start-ups, arguing that the risk aversion of the Australian Public Service must be flipped on its head. He encouraged delegates to be unafraid of telling the boss when they are wrong.

Nevertheless, as one contributor put it, “no-one wants to be the disaster reported on the front page of the newspaper.”

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