Innovation is not a question of ‘risk’

Unless you’re in the grips of a powerful hallucinogen, a traditional management consultancy wouldn’t be your first port of call for insight about how to create an innovative digital business.

The DNA of these consultancies makes them perfectly good at optimising their clients’ businesses for efficiency. For a whole range of reasons, it also means that they tend not to be terribly proficient at helping those same clients to innovate. But, given the size of the digital prize, it’s an industry that’s now hastily trying to reinvent itself – although plastic surgery can only go so far.

Deloitte is one such ageing starlet. As part of its ongoing attempts at rejuvenation, it has recently collaborated with MIT to gift the world a remarkable paper whose title is – wait for it – “Strategy, Not Technology, Drives Digital Transformation”.

Among the tautologies that masquerade as useful findings in this report are a couple of facepalm classics: “The power of a digital strategy lies in its scope and objectives” is the pick of the bunch. But there is one striking assertion, and it’s worth a closer look. “Amongst digitally mature businesses”, the report states, “taking risks becomes a cultural norm”. It then positions a range of examples (including Google Glass and Cisco’s bet on the internet of everything) as the type of corporate high-wire acts to which other businesses should aspire.

This is problematic. For one thing, risk is relative. What feels risky to you might not feel risky to me. Our respective understanding of the consequences of action or inaction might be totally different. What if Google saw the invention of Glass not as a ‘risk’, but as a necessary experiment to continue to expand its knowledge base and product portfolio in a way that enabled it to continue fulfilling its business mission? What if the benefits of knowledge vastly outweighed the potential costs of failure? What if the greatest ‘risk’ to its reputation was to be seen not to experiment in this way?

And the problems continue to pile up from there. Risk goes to how people feel about a course of action; it relates to emotions. How businesses manage the emotions of their workforces has a huge bearing on their willingness to take perceived ‘risks’. Attitudes to risk can therefore never be measured by traditional research of the type conducted for this report, which only measures rational (conscious) responses. As only a tiny proportion of all decision-making is driven by conscious thought processes, the data on which this assertion is based is effectively worthless.

Taking issue with the language of ‘risk’ isn’t an egotistical exercise in semantic point scoring. It goes to the heart of all effective 21st century change management work. Stake the goal of digital maturity on an appetite to ‘take risks’ and you frame the challenge in a way that is fundamentally unconducive to constructive action for the vast majority of businesses. Taking wilful leaps into the unknown runs counter to most executives’ perceptions of good commercial practice. They will not allow ‘risks’ to become ‘the norm’. But stake maturity on a cultural willingness to continue taking well-reasoned courses of action and you might find a more receptive audience for even the most unorthodox strategy. As ever, context is king.

Media narratives often reinforce this kind of unhelpful perception. ‘Unicorns’ such as Uber and Airbnb continue to command the highest levels of attention in the business press. The question of their precise valuation is interesting, but the veneration of these companies as mythical creatures also has harmful consequences for business culture. Making their success look magical – and framing it as an ability to conquer death-defying ‘risks’ – can subtly undermine the confidence of other businesses who have it in them to achieve amazing things on their own terms. It makes excellence feel out of reach by making the behaviours involved seem not only unfamiliar and mystical but also threatening, and by making victory look partly like a game of chance.

In truth, innovation is a question of everyday emotional management, of learning to navigate the peaks, the troughs and the many boring bits in between that come with trying new things. Framed this way, you start to rethink what insights you need to help business become better at it. For example, in a diagnostic context, understanding the precise emotional makeup of an organisation is far from a nice-to-have.

The issues that most organisations experience are complex, and span politics, operations, structure and culture. Many of them are hidden, as they relate to shared assumptions, decision-making processes and values. Is our hierarchy holding us back – and how? Why do important initiatives always start strong then peter out? Why are we prone to boredom? Why are people more comfortable in silos than solutions teams? Why do we talk about ‘taking chances’ but never do anything out of the ordinary? In our experience, real answers to deep-rooted questions like these do more to get innovation going than all the white papers in the world. Real insight is hard to ignore.