What are some effective ways to address low risk appetites when they limit innovation within data and analytics? What is the best way to sell the value of calculated risk to stakeholders who are more risk averse?
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Head of Data & Analytics3 months ago
The key strategy involves leveraging early adopters within the organization. These individuals are typically more risk-tolerant and can serve as pioneers for new projects. By successfully executing projects with these early adopters, their successes become a powerful testimonial for the more risk-averse stakeholders. It's crucial to present detailed case studies from these projects, highlighting how risks were managed, what the outcomes were, and lessons learned along the way. This approach not only builds trust but also demonstrates the tangible benefits and managed risks associated with innovative projects.Additionally, starting with smaller, less risky projects can help ease risk-averse stakeholders into more significant innovations. It’s about proving the value and manageability of risk in a controlled, transparent manner, which in turn builds confidence and trust.
Chief Data and Analytics Officer in Banking3 months ago
Building on Suzi’s insights, another angle to consider is the strategic use of market trends and a bit of competitive fear. For instance, the hype around emerging technologies like AI can be a catalyst for change. Many organizations fear falling behind the competition, which can be a motivator to adopt new technologies. This approach, while not always ideal, can be effective in certain contexts. It’s about creating a sense of urgency and necessity for innovation, which can help stakeholders overcome their initial hesitance.Ultimately, the goal is to balance trust-building through proven success and leveraging industry trends to encourage stakeholders to embrace calculated risks. Both approaches aim to shift the perception of risk from something to be avoided to a necessary element of competitive advantage and innovation.
Head of Data in Software3 months ago
Low risk appetite can often prevent businesses from trying new things, but by adopting effective and organized innovation management practices, this limitation can be overcome. Innovation management enables the creation of new business models, products, services, and technologies that meet changing market needs, improve customer satisfaction, and increase employee engagement.Methodical innovation management is vital to fostering ideation, validating propositions, resourcing ideas, planning, implementing, and driving adoption. This journey begins by addressing biases, establishing validation guardrails and prioritization frameworks, monitoring progress, validating strategies, communicating effectively, and engaging advocates to overcome resistance. Best practices such as simple experimentation, envisioned scenario surveying, and effective data modeling can help create a culture of innovation, leading to sustainable growth, long-term success, and overall stakeholder satisfaction and well-being.
To successfully implement innovative concepts, organizations must overcome resistance to change and leverage advocates. Effective messaging is crucial in promoting new ideas, and advocates play a pivotal role in influencing idea adoption and mitigating resistance. Building early credibility, enhancing team alignment, and promoting ongoing momentum are key factors in achieving rapid results. By prioritizing these aspects, organizations can accelerate the implementation of new ideas, address concerns, and maximize their impact, unlocking new opportunities for growth and competitive advantage.
In my experience, the most effective way to persuade stakeholders to take a risk is to focus on articulating and quantifying an imperative / need for (greater) upside that requires taking the calculated risk you believe is needed.
For example, benchmark performance metrics linked to the company’s targets or (ideally) the stakeholder’s KPIs against peers / competitors that are outperforming them and link it back to facts known about their innovation practices.
The more specific to the stakeholders business unit KPIs the better. Peers can be used loosely (eg comparing revenue growth of the corporate credit card BU of First Republic Bank against a scale-up venture like Ramp may be a valid comparison, rather than limiting benchmarks to other traditional banks like Chase). And of course the closer you can link the gap in performance to the innovation you are seeking sponsorship or approval for the better (eg data analytics used to identify cross-sell opportunities used to drive faster revenue growth).
I don’t think I’ve ever succeeded in persuading a stakeholder to take a significant risk they don’t already see the need to take based on articulating risk mitigation strategies and potential upside of the specific innovation without “introducing some discomfort with the alternative of staying still”, if that makes sense.