20 Jul The System and the Solution

So when I use the term “risk management system,” what am I really talking about? Are these systems simply checklists to make sure all the bases are covered in designing and introducing a new product? Or do they reach back into the idea generation and prototyping phases to manage, control, stage, check, and evaluate new ideas and the development of those ideas?

As it turns out, many of today’s systems do both. They not only help guarantee that the bases are covered, that a product does what it is supposed to do, safely and securely, but they also help a (usually) dispersed management and engineering team manage and control its own activities. I’m a believer in the checklist part; as we’re finding out today from Atul Gawande’s excellent book The Checklist Manifesto. In today’s complex and fast-paced world, as Gawande points out, it has become more important to “check the boxes” as the world’s aviators have known for years, lest some really simple but critical item is missed.

We don’t want to introduce a car with brakes that don’t work when it hits a bump, and we don’t want to introduce food with any potentially harmful materials, to be sure, and the checklists should guide us away from such failures. But what happens when the risk management process travels all the way back into the “ideation” process in such a way that anything really new or different never makes it past the first checklist? It happens, and it’s happening more and more, as people become more comfortable managing risk and less comfortable with change.

Perhaps is the very speed and volatility of the current business environment that causes risk management to become the ruling force. Perhaps, because it is more systematic and cut and dried that people find it easier to say “no” than “let’s do this;” perhaps it’s today’s corporate reward systems – which tend to punish failure individually while rewarding success to groups and/or top managers within an organization – that are the culprits.

What I see today is that companies need to not just eliminate risk management entirely, but take risk management and its systems in perspective. If they help innovation along, and they help guarantee the success of good ideas, they are good. If they hinder innovation, and especially if they hinder the generation of customer-centered business ideas, look out below.