Applying the startup ideal in large organizations has often been an outsized challenge. Many global enterprises are complex and a battery of controls often holds them together. But the side effects can be toxic to innovation—they can create a decidedly risk-averse culture.
Some experts even argue that controls will always stymie innovation. Driving it often requires parallel systems of empowered teams with their own funds and decision-making authority. We argue differently. Through our experience with both innovation and risk management, Accenture has come to see them not as adversaries, but as a potentially powerful union if married properly. In our view, the marriage is about much more than the controls that mitigate downside risks. The fusion of innovation and risk management can play a major role in successfully pursuing upside opportunities that a risk-averse culture may be leaving on the cutting room floor—it can drive a company’s innovation agenda by revealing blind spots and areas of underinvestment that threaten a company’s future.
In many companies however, the union of innovation and risk management is formed around an innovation-choking funnel process—a series of stage gates designed to reduce uncertainty as exposure to risk grows. For many companies, the funnels end up producing only weak, incremental ideas that often come to market slowly and miss cost targets. Despite such dismal results, many companies avoid unleashing innovation, fearing that capital requirements and business risks will soar.