<p>Over the last two decades Risk, Innovation and Sustainability have at various points gained in importance and it has been an interesting evolution for these functions as departments, titles, models for success, and research papers on how they can best operate within existing organizational structures. At points in their evolution, they have struggled to maintain relevance and at others, they have been at the forefront of competitive response. But over the past couple of years, these areas are coming together like never before – accelerated by the disruptions due to the pandemic, without a doubt. There now seems to be a golden opportunity to integrate and leverage their inherent strengths to seek convergence using technology, leading to potentially multiplicative effects in results. I also observe, of late, a number of positions getting created across organizations, integrating at least two, if not all three areas into a horizontal that can expand the scope of action to catalyze the resulting collaborative outcomes into a competitive advantage that can be hard to beat. In this article, I look at the generic views taken by organizations for each of these elements over the years, and ideate on their ability to RISe to the occasion in the imminent future.</p><p>Risk Teams have traditionally been formed usually out of supply chain disruptions or audit reports. For years it was Finance or Audit teams that created templates for risk identification and pushed them to other departments which viewed them with skepticism and filled them frivolously. This spread over time to SC and Procurement teams who analyzed specific risks with no real link to their frontline objectives and hence was done with little or no motivation. A tick-in-the-box attitude towards Risk generates a lot of excel sheets and documentation and gives a false sense of security to carry on doing the wrong things. I have sat through countless BCP exercises with strong theoretical foundations, but low motivation to have “tried” out contingency plans in advance, and almost always when the crisis hits, these plans are the first out of the window and a solution that somehow delivers has to be improvised and executed. Analysis of risks with the purpose of embedding a process change almost always throws up opportunities and creates a deeper understanding of the ecosystem. The magic formula, in my view, is to have a strong relevance of Risk study outcomes to ongoing decisions made every day. Risk studies and validations must be an integral part of the real-time decision-making framework which motivates the system to keep the outcomes relevant.</p><p>Innovation has been at the core of most organizations’ plans to stay ahead of the competition. Many corporate departments (brand teams, R&D teams, etc) like to think they spearhead innovation and manage them as project leaders. At times it seems like ideas come out of specific teams or individuals simply because it is part of their role description rather than a genuine nose for innovation that makes a difference to the consumer or customer. A recent article in the Economist indicated that even the wheel – arguably the biggest innovation on the planet – didn’t happen with an individual flash of inspiration. Evolution and improvements inevitably follow an idea that eventually takes it to the point where it is understood to be game-changing and innovative. On many occasions, external partners come in too late in the day and their expertise is sorely missed at the start of the process. In my opinion, two significant gaps remain despite multitudes of documentation on managing a successful innovation process. The first is the soft skills to connect the dots across teams (internally and externally) and orchestrate the evolution of an idea as it rolls along to become a “wow” to your consumer/customer. The other is the lack of democratization of idea generation. So much corporate energy is wasted when employees don’t have a way to capture ideas that can make a small difference to productivity or a huge difference to the success of a launch or simply generate happiness at the workplace.</p><p>Sustainability, in the world of today, has grown into an important vertical. Companies with a point to prove on seriousness have the role reporting to the CEO. Still others, have created the position hastily and with little thought on the roadmap and how these elements will integrate into the fabric of day-to-day execution. Many sustainability experts enter new corporate realms and lose themselves in the complexities of data accuracy and rigid processes which need to translate into coherent roadmaps in a very short time. A clear sustainability-led purpose can literally pivot the direction of an organization into hitherto unknown zones of discomfort. However, this needs patience and introspections into existing processes with an aim to truly embed Sustainability into almost everything an organization does today. Projects to arrive at sustainability commitments or investment in a game-changing product, are getting bigger and are long-term in nature, with a lot of elements evolving as we progress into a project. There is an uncanny link to Innovation here since most Sustainability aspirations need partners who can collaborate deeply to explore and take joint risks. More often than not this is the spot where breakthrough innovation thrives to create competitive gaps.</p><p>In this context where complex external elements are clearly impacting the evolution of organizations, Risk, Innovation, and Sustainability are poised to come together in ways that can add tremendous value. With a significant part of future consumer expectations from Brands pivoting on Sustainability, Innovation is already accelerating in this blended zone. This zone needs incubation, co-creating, collaborating for new ideas, evaluating, and taking calculated and aligned calls. As we progress on this path, Risks are inevitable, and blending them into the process of decision-making gives a proactive edge to Risk. This changes its character dramatically from the usual post facto exercise which keeps the risk at the back of the head with not much leeway to operate down the road, especially after the idea is successful.</p><p>Bringing it all together, I see an awesome opportunity to create a RIS horizontal, making it accountable to link Sustainability and Risk into the Innovation process. Without integrating this trio into an accountable unit, one or the other aspect will get brushed aside leading to outcomes that may work but certainly won’t be thought through. The time for the exploration of a promising idea is usually… now. Pick the brightest among those who lead/ understand Innovation, Sustainability, and Risk processes in your organization and get them to integrate into a team that is empowered to connect and collaborate internally and externally – push for the use of technology to digitize the experience and throw open the need for innovating everything (including processes!) that you do, to your employees and external partners. If this is not already happening in your organization, you are probably just about missing the bus. When will you be ready to make the paradigm shift?</p>
KR Expert - Kartik Shankar
Human insights are irreplaceable in business decision making. Businesses rely on Knowledge Ridge to access valuable insights from custom-vetted experts across diverse specialties and industries globally.
Our flagship service, phone consultations, enables you to get access to first-hand, grass-root level information from our global expert network to form or validate your hypothesis.