Published: 22 November 2005
Disparity in Risk and Innovation Maturity
Early findings from new research into risk & innovation in the public and private sectors, suggests that the idea of considering the two processes in tandem is gaining currency, but that there is a disparity in their maturity in organisations.
The Innovation & Risk Research Project, a joint venture between the National School of Government and the European Centre for Business Excellence (ECforBE), the Research & Education Division of Oakland Consulting plc, builds on the work of the HM Treasury Risk Programme by identifying, promoting & sharing examples of outstanding practice in risk management and innovation.
The study was commissioned to investigate & analyse:
how decisions are taken to initiate change, and
identify the critical factors that enable some organisations to consistently innovate and achieve extraordinary performance.
The project is distinct in that it is concerned with risk & innovation considered together, rather than in isolation - an idea which is now gaining some currency.
This is consistent with the Prime Minister’s position, which is to encourage innovation in public services tempered by sound risk appraisal and management.
An initial review of available literature on risk & innovation led to the development of a study framework which, in turn, was used as the basis of a survey issued to organisations identified as leaders in the field of innovation and risk management.
Early findings from the 56 respondents suggest that innovation is perceived to be less important in the public sector than the private sector and that, across all respondents, is not so well defined as risk management.
Bryan Dennis of the National School comments:
“Whereas nearly all organisations had a definition of risk management, 43% of respondents did not have a clear definition for innovation.
Responses covered step change, continuous improvement and simple problem solving - diverse activities with a wide range of risk implications.”
We also found that approaches to risk management and innovation in organisations are not as mature as we would have thought, given the high profile the subject has enjoyed in recent months.
Typically, there are processes for managing risk but not for innovation – 87% of respondents reported that risk management was embedded in their core processes, and was commonly deployed, reviewed and improved, whereas innovation was considered less systematically.
Incorporating risk management in personal objectives appears far more common than incorporating the need to innovate, for example, and we will look to explore this further in case studies.”
One of the issues explored was whether a strong emphasis on risk management suppressed innovation by encouraging risk aversion, but this proved to be the case in only 7% of the responses.
Rather, around a third of respondents said that effective risk management had a positive, enabling effect on innovation.
Based on the results of the survey, six organisations have been selected for further study, with the focus on what they do and how they innovate and manage risks in pursuit of extraordinary performance.
Following publication of results in December 2005, the National School and ECforBE will support public sector organisations to make best use of what has been learned.
Further information
Contact Bryan Dennis at the National School on 01344 634413
(e-mail: bryan.dennis@nationalschool.gsi.gov.uk)
Innovation & Risk Research Project
European Centre for Business Excellence (ECforBE)
Oakland Consulting plc
HM Treasury Risk Programme
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