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Risk Management vs. Innovation

Risk Management vs. Innovation

It doesn’t have to be an either-or proposition!

At an Australian Institute of Company Directors lunch earlier this year, ex-Telstra and current CSIRO head David Thodey was asked a question during Q&A about his advice for organizations balancing risk management against their need to innovate.

His very simple and astute answer was that “Innovation is risk management.”

Four simple words that encapsulate perfectly the ultimate aim of any business technology strategy in organizations seeking to digitally transform.

The reality is that businesses are more exposed and more at risk of being displaced by disruptive competitors and market forces by doing nothing and simply maintaining the status quo than they are by seeking to innovate.

But innovation comes in various guises. Only the select few will develop the multi-million dollar app or totally disruptive big-bang product or service. The best way we can manage the risk of becoming obsolete or a marginalised “legacy” player, is to incrementally innovate our business fundamentals across four key domains.

  • (1) Governance and strategy direction
  • (2) Customer centricity and user experience
  • (3) Processes, data availability, and flexibility
  • (4) Compliance, security, recovery and sustainability

The tricky part is that ALL four of these domains need to be supported in equal measure – which is no mean feat – even on paper, AND all four can only operate and generate outcomes if the business has a solid technology strategy that spans and integrates all of these elements.

Consider this:

How can a business provide a seamless and sophisticated customer experience (2), without a streamlined set of processes business-side (3)  that are ready to provide the customer with a tailored experience on-demand (or even pre-emptively…)?

How can a business set, assess, and rechart its strategic direction and reach its business objectives (1) without a reliable stream of big data (3) from which it can generate true insights from its own real-time customer and market data (not merely someone else’s …)?

How can a business protect itself from cyber-threats and recover in minimal time to protect (4) its assets, reputation and market share without coordinated governance, planning (1) and processes (3) in place at every level from the top down?

How can we gather data (3), ensure its privacy (4), and use it (3) to provide an optimal user experience (2)? And what’s the strategy that sets out what the business is actually trying to achieve using this data (1)?

This list of questions could go on and on. There are countless scenarios where these four domains need to be aligned and allowed to talk to each other as and when they need, for your business to deliver the whole experience AND be ready to scale up for further innovation.

For the SME that wants to innovate and transform their business to deliver that whole experience via a scalable investment, the first step is to develop a business technology strategy that unifies these four key areas. The traditional “you break it, we fix it” model of IT service delivery SMEs may be used to is simply not enough to support their innovation journey. The mistake is failing to innovate your foundation first by looking at how a comprehensive business technology strategy can be implemented by a managed service provider dedicated to ensuring that your technology and processes are incrementally, proactively, and securely driven forward towards your ultimate business end-game.

Businesses need to innovate their approach to business technology first, to overcome their fear around the perceived risks associated with expenditure or change, and take a longer-term view that a business technology strategy and partnerships are the first of many incremental innovations the business will make to ensure its survival, sustainability and success.

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