Should we or should we not invest in Innovation?
Magnus Penker has this interesting take when it comes to cleantech and sustainability; there is no miracle going to happen and it's too early to accept that the earth, like the Titanic, is sinking. We can still innovate and find solutions to climate change.
For that though, things have to change.
It is an often repeated cliche; Innovation is a risky business.
Is this true?
Do we understand and distinguish the differences between risk and uncertainty?
To clarify this, we need to understand the terms risk and uncertainty.
Risk is a probabilistic estimate of how likely an event or exposure will be.
If we can calculate the risk and the potential damage from exposure, then we can calculate the amount of money or effort we should expend to control that risk.
Uncertainty is the result of a broad range of possible outcomes and complexity, making it impossible to define a set of probabilities.
We can create and use scenarios to describe the different paths that may happen in the future, but we have no way of knowing which future will happen.
Let me explain this with an example. Take the case of climate mitigation action.
Risk - Investing or not investing in mitigation action is about risk. There is a high probability that climate change will be devastating (and your company may be dead, for example, if you are solely dependent on the ICE vehicle business). There is a probability that some miracle will save the day for you.
Uncertainty - Uncertainty is the fact that the projects that you initiate may have many possible outcomes and you aren't certain about the outcomes (and hence there are possible risks).
Risk and uncertainties are distinct and I don't want to get into a discussion on the topic.
However, I would like to deal with the topic of risk and uncertainty associated with innovation.
Not doing innovation is a risk. Depending on your industry, this risk might vary. However, in the present world, there don't seem to be too many industries, that are immune from disruptions. Hence, not doing innovation is probably a big risk.
Innovation efforts (projects if you want to call them) though have significant uncertainties; we may lack the knowledge or technology or process or customer behaviour insights, that can impact the outcome of your project or initiative.
Simply put NOT Innovating is the biggest risk. The uncertainties associated with your efforts need to be managed. Not innovating because you can't manage uncertainties is like shooting yourself in the foot, when you are in the middle of the forest and trying to find a way through it.
That brings me to the need for innovation focused on climate change, clean tech and sustainability.
Innovation in this space is about as critical as it can be. The risk of not innovating is so high that this should be your top priority.
Regarding uncertainties, learn to manage them. The science of innovation has made dramatic advances and the experts can teach you how to deal with uncertainties.
Cleantech, sustainability and climate change actions are absolutely the top priorities for humankind. Without these actions, we will not have a world to live in. All your cost reductions are meaningless without innovation to solve this problem.
And yes there is going to be no messiah who will save us, Interstellar is fiction, there is no wormhole put out there to rescue us and no Cooper and Murph are trying to save us.
We need to innovate out of this mess and do it now!
Krishnan is a leading innovation consultant and focuses on helping people and organizations innovate and build capabilities for innovation. He brings over 30 years of experience in the industry and consulting. You can reach him by phone / WhatsApp: +919791033967 or email: email@example.com