risk, innovation, corporate culture, technology, regulation

Risk? What risk? Nowadays, most managers think that risk is too risky. Most R&D departments are on hold. And most firms are focused on protecting their current products, not creating new ones. But innovation still has its place in today’s recessive economics. In fact, those firms that take the risk now to introduce new products may reap the rewards later as they surpass their slow-moving competitors in the world market.      

A survey of more 750 businesses in seventeen countries found that one factor translated into true financial value—radical innovation. And one element determined whether that innovation was created—corporate culture. More than any other aspect studied, including the home country, an organization’s corporate culture—the set of attitudes, values, and policies that define a firm and its members—determined whether a firm was willing to take a chance in the marketplace.

This culture means that a firm is willing to cannibalize its current successful products so it can develop and launch radically new ones. It is willing to train and educate its employees, and allow them to compete among themselves. It keeps an eye on local regulations and technical developments as well as those found elsewhere. Traditional elements in industrialized countries (such as government, labor, and capital) have become less important. New ideas now attract capital across the board, and across the world, often regardless of the country or financial base.  These innovative firms tend to have similar open-minded and free-thinking corporate cultures.  

How are such forward-thinking corporate cultures created? Several suggestions are made:

• Tolerating, even encouraging, risk
• Cannibalizing existing products
• Focusing on future market orientation
• Empowering product champions
• Encouraging competition within the organization

1. What is risk? What is corporate culture? How do they connect?

2. What does it mean to “cannibalize” a product or line of products? What are the pros and cons of this marketing approach?

3. Give an example of a successful risk-taker in today’s tough business climate. What type of corporate culture and innovation has allowed this firm to take the risk?  

4. How has the global marketplace changed the way that capital is invested in new products? 

“To boldly go.” Accountancy Age, Feb 5, 2009 p20.