Risk-based innovation
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1 PMINJ International Project Management Day November 1, 2018 Risk-based innovation Dr David Hillson, The Risk Doctor PMI Fellow, PMP, HonFAPM, CFIRM David Hillson/The Risk Doctor Partnership 1
2 Risk-based Innovation David Hillson/The Risk Doctor Partnership 2
3 Three key questions What is risk? What is innovation? What is risk-based innovation? David Hillson/The Risk Doctor Partnership 3
4 What is risk? Risk = Uncertainty Trueor False? Risk = Uncertainty that matters David Hillson/The Risk Doctor Partnership 4
5 Two-dimensional: What is risk? 1. uncertainty 2. effect on objectives probability impact David Hillson/The Risk Doctor Partnership 5
6 The impactdimension What kind of impact matters? Positive as well as negative Opportunities as well as threats David Hillson/The Risk Doctor Partnership 6
7 What is risk? Risk connects uncertainty with objectives An uncertainevent or condition that, if it occurs, has a positive or negativeeffect on an objective PMBoK Guide, Chapter 11 Risk includes both opportunities& threats David Hillson/The Risk Doctor Partnership 7
8 What is innovation? Drucker: Innovation is the instrument of entrepreneurs. Levitt: Creativity means thinking up new things. Innovation means doing them. Anon: Innovation is what happens when all else fails. IDEA CREATIVITY INNOVATION NEED David Hillson/The Risk Doctor Partnership 8
9 What is innovation? David Hillson/The Risk Doctor Partnership 9
10 What is innovation? A complex blend of both success & failure Heathrow Terminal 5 3M Post-It sticky notes Sydney Opera House David Hillson/The Risk Doctor Partnership 10
11 The Innovation Ecocycle [David Hurst, 1995] POSITIVE NEGATIVE David Hillson/The Risk Doctor Partnership 11
12 The Innovation Ecocycle POSITIVE NEGATIVE David Hillson/The Risk Doctor Partnership 12
13 The Innovation Ecocycle Alternates between innovation& development Changing focus: Support innovation maximise time in +veloop Speed return to innovation minimise time in veloop POSITIVE NEGATIVE Need a process to support both loops David Hillson/The Risk Doctor Partnership 13
14 Can risk management support innovation? The systematic process of identifying, analysingand responding to risk. It includes maximising positive events and minimising adverse events. PMBoK Guide, Chapter 11 Risk management addresses both threats& opportunities in a single integrated process David Hillson/The Risk Doctor Partnership 14
15 Risk-based innovation Implementation and review Initiation / Establish context Risk identification FINDING OPPORTUNITIES MAKING IT HAPPEN Risk response planning NOT ONLY FOR THREATS PICKING WINNERS Qualitative risk assessment Quantitative risk analysis David Hillson/The Risk Doctor Partnership 15
16 1. FINDING OPPORTUNITIES: What are they? Opportunity is positive risk Not a benefit Opportunity to succeed Not a response Opportunity to act Not scope creep Opportunity to do something else David Hillson/The Risk Doctor Partnership 16
17 Finding opportunities Opportunities & threats are the same Uncertainty that matters Differ in sign of impact Opportunitiespositive, threatsnegative Use same techniquesto identify? David Hillson/The Risk Doctor Partnership 17
18 Problems with common techniques Threat-focused Habit Familiarity Technique limitations Use two-dimensional techniques David Hillson/The Risk Doctor Partnership 18
19 Example 2Drisk identification techniques SWOT Analysis Structured brainstorm + and S W S O W T O T Fault/Benefit Tree Analysis Yes, but how? Outcomes, Drivers, Uncertainties David Hillson/The Risk Doctor Partnership 19
20 2. PICKING WINNERS: Prioritisingopportunities QUICK WINS: EASY TO GET & BIG BENEFIT WORTH EXPLORING: HARDER TO GET BUT BIG BENEFIT CONSIDER IMPROVING: EASY BUT LOWER BENEFIT PROBABILITY VHI HI MED LO VLO VHI HI MED LO VLO PROBABILITY VLO LO MED HI VHI NEGATIVE IMPACT (Threats) VHI HI MED LO VLO POSITIVE IMPACT (Opportunities) DON T BOTHER! David Hillson/The Risk Doctor Partnership 20
21 3. MAKING IT HAPPEN: Responding to opportunities THREAT GENERIC STRATEGY OPPORTUNITY Avoid Transfer ELIMINATE UNCERTAINTY INVOLVE OTHERS Exploit Share Reduce Accept CHANGE SIZE TAKE THE RISK Enhance Accept David Hillson/The Risk Doctor Partnership 21
22 Final thoughts David Hillson/The Risk Doctor Partnership 22
23 Innovation projects Innovation projects follow Innovation Ecocycle +ve loop: Innovate, Consolidate, Explore, [Barrier] ve loop: Reflect, Learn, Persist, [Breakthrough] POSITIVE NEGATIVE Successful innovation projects must: Maximise time in +ve loop Minimise time in ve loop David Hillson/The Risk Doctor Partnership 23
24 Risk management Risk management is forward-looking radar find potential solutions Help things go right prevent potential problems Stop things going wrong David Hillson/The Risk Doctor Partnership 24
25 Risk-based innovation Risk management helps innovation projects Find innovation opportunities Pick innovation winners Make innovation happen [as well as minimising innovation threats!] David Hillson/The Risk Doctor Partnership 25
26 Thank you Any questions? David Hillson/The Risk Doctor Partnership 26
27 For further information Dr David Hillson The Risk Doctor Partnership +44(0) YouTube.com/RiskDoctorVideo David Hillson/The Risk Doctor Partnership 27
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