Strategy

Mitigating Risk

Jon Kolko

April 3, 2024

5 minute read

Design strategy relies on creativity—challenging existing norms, pushing the boundaries of technology, and shaping behavior in new ways. The challenge is, most organizations are wrought with policies and red tape—much of it aimed at mitigating risk in favor of fiscal responsibility. Internal safeguards designed to create predictable outcomes often directly inhibit creative outcomes and innovative experimentation.

Yes, risks are expensive, but so is falling behind in the market. Let’s explore the interplay between risk and creativity.

Investigating Rules and Why They’re in Place

What value proposition is the product or service offering? Understanding and delivering on that commitment to users is an important part of building loyalty to a brand or product. Rolling out a new idea that is unproven, because the innovation has never been seen or considered before, is risky—and bringing a new product or service to market is expensive; that's money lost if the innovation crashes and burns.

Planning out and testing a process over many years answers essential questions like:

• Do we have a supply chain established for this idea?
• How will this change impact existing contracts with existing customers?
• Do we have buy-in from our partners?
• What methods do we have in place to maximize efficiency and minimize errors?
• How might this product change impact our business relationships and reputation?
• If it’s a monetary change, like implementing a paywall, what’s the risk v. reward or revenue over attrition?

Within the corporate atmosphere, HR legal teams draft important documents for how employees treat each other, how the company adheres to patent and trademark agreements, user terms and conditions, and local and federal laws. These are real challenges with real repercussions—as has been the case for businesses like ride sharing or online alcohol delivery services—services that have faced incredible legal security, and often flat-out rejection, since inception.

Sure, becoming a creative powerhouse sounds exciting, but is a culture without rules and without processes really what you want? Clearly, there are reasons behind the structured, operational, predictable methods of many companies. Is it better to do predictable things and follow a proven process? Especially if that means mitigating negative repercussions?

Investigating What Creativity in Business Really Means

Creating rules about what employees wear and hang on the wall, or establishing hierarchical structure that separates teams based on a top-down approval process, are indicators that employees must seek, and gain, permission before taking action. Intentional or not, the default message in these cultures sounds a lot like: "you cannot do things unless you have permission and a good reason to do them."

Creative exploration is quite the opposite—it’s about doing things “just because” with little view into whether the exploration will lead to something usable 8 hours or 8 weeks later. The sense of needing "Approval" stifles creative problem exploration, particularly when that exploration is intended to create innovative outcomes.

Smaller startups are able to pursue wild and innovative ideas quickly, in part, because they often have very, very few rules. The lack of organizational policies in a startup sends both a literal and figurative message to employees: "Don't spend even one minute of your time worrying about getting sued or fired or reprimanded or not-promoted, because you have more important things to do: Create or Design the next X. You are not constrained at this company. Do outrageous and world changing things.”

Business and Design Have to Work Together

Ultimately, the choice between operational success and creativity isn’t binary—neither extreme creates an ideal space from which to operate a successful business.

So, how do you tackle this duality for your team or organization?

We’ve seen a combination of styles work for partners through the years—and none is a one-size-fits-all solution. Below are a set of learnings we’ve uncovered—consider them through a lens of what could work best for your unique business model at this moment in time, with an eye toward where you might like your company to evolve into the future.

• Make it imperfect on purpose. Bring users into your design process earlier, when the product isn’t tested or perfected. Try an iterative process of informed trial and error through user testing, by sharing incomplete ideas with users to understand if there's a market need—there might not be. Rather than seeing this as a failure, use direct feedback from the market to further develop and design the idea, pivoting the development process and ultimately mitigating risk by ensuring you don’t fund the wrong idea from start to finish.
• Ground creative solutions in research. Using ethnographic research methods to identify where user experiences can be improved with new product or feature innovations puts boundaries around risk by defining a real market need.
• Work along a spectrum of risk. When you look at creativity through a lens of risk, unsubstantiated ideas look unappealing. Consider supporting some of these ideas anyway. Take a wild, creative approach from time to time, showing your team that it's okay to do something completely different. One of these leaps of faith may end up leap-frogging over your competition or bolstering defensibility in the marketplace.
• Make fixed processes flexible. Many companies have a clear process for bringing products and services to market. It’s probably worked in the past, but what if you encourage teams to reinvent that process—even at the expense of measurable productivity—then iterate on it. You could define new more efficient or creative ways of doing things that invigorate the people involved because they were influential in defining them.
• Write new rules. How long has it been since you questioned “the way things are done?” What rules does your company have? Make a list in real language and not something from HR or the head of a department, then cross off any rules that aren’t absolutely necessary for the safety and well-being of your team. Give this looser approach a try, bringing the team together once a month to discuss what’s working, what rules or processes are missing, and new ideas for parameters or constraints that may be useful for the department or organization as a whole. Iterate together.

Companies increasingly need to hit the market with better products faster. By supporting teams that work autonomously with solutions-based thinking, without concern for top-level approval or incremental updates, your organization can break the logjams and bottlenecks of big business processes, ultimately leading to innovative product design, shorter time to market, and stronger in-team communication and alignment.

Yes, minimizing risk is fiscally responsible, but it comes at a price. By encouraging creative exploration and freedom to innovate, your company is less likely to feel the impact of an emerging competitor stealing market share because they got there faster or created a need that didn’t previously exist.