Embracing Risk to Grow and Innovate

When it comes to generating business growth by bringing new things into the world, the stakes are high, and risk is everywhere

by Diego Rodriguez and Ryan Jacoby

As an innovator, you’ve likely encountered some of the most challenging and risky problems in the world of business. Let’s grow this lagging brand. Let’s envision the future of our market. Let’s connect to a whole new set of users and customers. When it comes to generating business growth by bringing new things into the world, the stakes are high, and risk is everywhere.

It’s easy and seductive to say that entrepreneurial business people always forge ahead, risk be damned. However, the glamour of bold action is often stymied by the specter of risk. New offerings may succeed in the market, but more often, they fail. Competitors may outwit you. Careers may hang in the balance. Taking bold risks does not feel safe. But to seek out ‘zero risk’ is to commit to doing nothing.

How does one move ahead and create growth in such an environment? There is a better way. We applied the design process to this challenge, and set out to understand how designers approach risk.

What we found is very encouraging. In the world of ‘design thinking’, acknowledging risk is the first step toward taking action, and with action comes insight, evidence, and real options. To increase their odds of innovating routinely and successfully, today’s organizations need to learn to live with risk the way designers do.

The Designer’s Approach to Risk

Risk, in the traditional business sense, is an assessment of the downside that might result from taking a particular action. If the perceived level of risk is too high, people working within a business-as-usual paradigm look for a less-risky alternative, or even forego action altogether.

We’ve found that this traditional, negative definition doesn’t exist in the lexicon of most designers. For them, risk isn’t a measure of ‘the downside’; instead, it is a measure of upside and opportunity. If the risk isn’t great enough, designers might well ask themselves, “why bother?”

Insight #1: Designers don’t seek to mitigate risk. They embrace it, even amplify it.

Yoda was wrong. When it comes to working with risk, trying is as important as doing. Consider what Owen Rogers, a designer who has worked at IDEO for over a decade, told us. Speaking to a set of experiences gleaned from hundreds of client engagements, he summed up how designers approach risk: “For a designer, trying is more coveted than success. The real risk isn’t failing, it is not trying.” Trying is a statement of optimism, and a person, a team, or even an entire company grows more by acting than by standing still.

In the worldview of a design thinker, failure is the best way to clear the fog to see a path to success. With its diminutive wheels and bug eyes, the first generation Toyota Prius looked odd, and its performance was nothing to write home about. Competitors said it couldn’t possibly be profitable. A failure? By conventional standards, yes. But if we had taken Toyota’s view, we would have seen it not as a failure, but as an experience absolutely necessary to creating the second-generation model, which is by all accounts a remarkable success.

Designers see risk not as something static, but as a dynamic element, as yet another design variable. Amplifying risk is a way to increase the amount of information one receives from experiments and prototypes. Markus Diebel, an IDEO industrial designer, told us, “On every project, we have our hands on a ‘risk dial’; we have designers on one side pulling it toward the red line, and our clients and their systems on the other side pulling it toward the safe zone.” In Markus’s mind’s eye, there is a glossy, black-anodized aluminum risk dial, and his “goes to eleven.” Such is a design thinker’s thirst for learning that they actively seek out failures, and even intentionally increase the frequency at which they occur. They then trumpet those failures, rather than hiding them, knowing that the feedback they receive will put them ahead in the long run.