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Sense of Risk

by Brian Sims
Brian Sims BA (Hons) Hon FSyI: Editor of Risk UK

Brian Sims BA (Hons) Hon FSyI: Editor of Risk UK

Although most organisations do fully appreciate the value of adopting an innovative approach to their business, it’s not always the easiest thing to introduce. That’s not necessarily because people are openly opposed to the idea. Rather, it’s the perceived sense of risk that can ultimately scupper a company’s bold desire to be progressive. Unless an organisation nurtures a culture that fully embraces innovation, it’s absolutely fair to suggest the overriding fear of change can be somewhat stifling.

“Senior management needs to believe in the intrinsic value of innovation and be seen to support initiatives that can make this a reality,” stated Christine Caunce, managing director at APS Group Secure Solutions. “Change has to emanate from the top.”

Caunce rightly asserts that, whenever change occurs in an organisation, there are often bumps in the road. “When those bumps are struck, individuals who may have been unsettled by the disruption to ‘business as usual’ will shine a scathing spotlight on the initiative.” It takes broad-shouldered project leaders to move past the inevitably ensuing criticism. Again, this is where the support of senior management is going to be vital.

“In organisations where the culture isn’t fully supportive,” added Caunce, “individuals will be far more wary of upsetting the apple cart. Potential bumps in the road that could be viewed as hurdles are now looked upon as insurmountable barriers.”

It’s clear to see how all of this might impact decision-making in a tender process. Early discussions focused on innovative ideas wouldn’t be unusual. For instance, a Marketing Department may enthusiastically endorse a new digital approach in co-ordination with traditional printed communications. However, in the later stages of the process, with the fear of change starting to shape lines of thinking, enthusiasm for the new approach could wane.

“Innovation is often introduced into companies with the help and assistance of forward-thinking suppliers,” observed Caunce. “The challenge for procurement teams is that, when one supplier is offering an innovative approach and another isn’t, they’re no longer comparing apples with apples. They’re not able to look at two similar bids and select the most competitive price.”

Innovation harbours an unknown value. In itself, this creates a tricky problem for those tasked with delivering cost savings. Under this scenario, it’s wholly understandable why procurement will stick to what they know. They can then opine: “Previously, we were paying Y. Now, we’re paying X.” The gain, then, is clear.

This procurement challenge is the subject of a recent White Paper entitled ‘Putting a Price on Innovation: The Procurement Puzzle’. The document reviews the example of Philips and how its long-term approach to cost savings has helped the business in successfully building collaborative supplier relationships.

“What’s clear from Philips’ approach,” concluded Caunce, “is that, when innovation is embraced at the top of a company, the perceived risk of pursuing these initiatives is lessened for those individuals occupying lower levels in the company’s structure. To successfully reduce the sense of risk that emerges along with innovation, organisations need to address their corporate culture and put in place systems that actively enable change.”

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