Use innovation to start or grow your business
The risks and rewards of innovation
Innovation is a complex process with many different stages and inherent risks. It will often require an investment of time and money before any positive effects become visible.
Risks of innovation
You can face several types of innovation risks in your business. Risks can be:
- operational - eg failing to meet your quality, cost or scheduling requirements
- commercial - eg failing to attract enough customers
- financial - eg investing in unsuccessful innovation projects
Read also about the Industry 4.0 challenges and risks.
As part of any innovation process, you should strive to understand, evaluate and manage risk. To reduce the risks, you can consider the following:
- Professional advice - consultants, industry professionals or contacts in business networks can provide valuable insight into your related markets.
- Joint ventures - sharing the development process with a business partner spreads the risk, and means you can benefit from their expertise and resources. See joint ventures and business partnerships.
- Licensing - allowing somebody else to bear the risks of developing your idea in return for a fee and royalties.
- Grants - these could help to spread financial risk and allow you to develop your system to a higher quality, reducing operational risk. See innovation, research and development grants.
- Incremental innovations - looking for ways to enhance your existing offering. New ideas for low-cost opportunities may come from customer feedback, employees, or networking with other businesses.
- Ongoing research - keep up to date with market research and technological developments that may influence your business.
To find out how to identify and manage risk in your business, see managing risk.
Protecting your business and your innovations
When you innovate, it's important to protect all your business assets - not just premises and equipment, but also intangible assets such as knowledge, motivation, vision and intellectual property (IP).
Although these may be difficult to quantify, you can still protect them. You should assess what your assets may be and how you can protect them. Read more about protecting intellectual property.