In the real world, it's impossible to de-risk new ventures properly.

This problem affects every stage gate step, including all launches until scale.

On the one hand, the "pull" factor of remaining showstopper assumptions means that teams should often de-risk more. On the other hand, the "push" factors of competitor action and lacking stakeholder patience mean they have to move on anyway.

In the end, when to move on is an imperfect and subjective leadership decision.

Leaders and teams don't get the time they deserve

To be responsible stewards of organization resources, innovators should not launch (or move on from some other stage to another) with remaining showstopper risks still in place.

But sadly that is only the case for initiatives that are not must-dos, if ever.

In reality, a central element of innovation work is the need to move on despite major risks. The only thing that differs is what exact risks can be defused and what ones one must accept in any given initiative.

Sometimes, the pressure to move on is external. We are not the only teams that know what they are doing. If there is a real opportunity, then at least 3 - 5 other teams are out there pursuing it too. Sometimes, that pursuit happens quietly. Other times, as in the case of "Space Race"-style innovation purposes, that pressure can dominate every moment of the day. Of course, being first or even keeping up is not always critical. But often enough, it is. And the team needs to move on, even with imperfect solutions and businesses.

Other times, the pressure is internal. Leaders only have so much time to deliver results to owners. That timeline has nothing to do with your work. It's decided at a higher level and often arbitrarily. And so, leaders' hand may be forced. They must move on, so they can deliver value in time. And then, you must simply move on too.

… and what it means for innovators

Plan for running out of time: Most assumption prioritization sessions that I have attended focus just on prioritizing risks. It's assumed implicitly that the team will defang prioritized risks more or less completely. The same is true in all I have read from even good people (e.g., David Bland) who thoroughly deserve their status as thought leaders for de-risking businesses. In other words: Even that is already hard enough. Many teams don't even get that far. But unfortunately, it's not enough in many companies' reality.

Obsess about time-to-value: Even iterative, agile innovation timelines still include many linear aspects. Just consider a typical Design-centric timeline in the style of "Discover - Design - Deliver." It's product-centric (vs. business centric). And it assumes that significant recognizable business value occurs in-line with a natural hockey stick growth curve. That may be perfectly reasonable. But your leaders may not have time to wait for the hockey stick effect.

Extend de-risking post-launch: A curious thing happens as young businesses achieve product-market fit and start to grow. They suddenly have a slew of data with which to run quantitative A/B tests. And so they do. But–at least anecdotally from my experience–what also happens is a reduced willingness to conduct major, strategic-level experiments. In effect, those are the earliest inklings of the risk aversion that eventually grabs hold of mature businesses. (It had to start sometime, right?) If significant total-business-level experimentation is not an iron-clad expectation and habit by this point, it atrophies.

How to use it

Plan for running out of time: To plan for running out of time, also discuss what tradeoffs you might be willing (or forced) to make, after you are done discussing what assumptions to prioritize for de-risking. Expect it. Plan for it. Then you can be ready. It's not pessimistic, just open-eyed. In fact, it's similar to special operations teams in police, military, and emergency recovery planning backup plans, in case the original (likely) goes wrong.

Obsess about time-to-value: Getting this to work requires messing with some standard innovation processes. But it's perfectly possible as long as you don't treat your methods as too precious. Specifically:

  • Fold your timelines
  • Rip apart your methods to front-load business value
  • Shape your solutions into independent modules, each of which adds value
  • Reinvent your methods to take full advantage of AI speed.

I get that this recommendation is a pretty major disruption to the way many innovation teams work, too much so just to mention it in passing. I've written more about it and plan to add more complete how-to steps.

Extend de-risking post-launch: Only foresight helps to fight the problem of thoughtful de-risking being replaced with risk aversion. Cross- and super-functional risk identification, sequencing, and de-risking have to be processes, habits, and priorities from Day 1. Even in high-pressure periods, like launches, at least some of this executive-level discussion of assumptions and risks must continue. There is a rhetorical question that I like that deals with this issue: "Question: What is the difference between a 'problem' and a 'lesson learned' at work? ... Answer: Whether the boss was involved ('lesson') or not ('problem')." What it means of course is that voicing risks is only acceptable in organizations if it is an expectation. And it only stays an expectation if leaders at all levels up to Boards believe that they, too, lack the answers but that thoughtful experiments can reach those answers. That happens only through continuous repetition. so keep at it.

T.I.S.C.

Further reading

Bland, D. J., & Osterwalder, A. (2019). Testing Business Ideas. John Wiley & Sons. https://www.strategyzer.com/library/testing-business-ideas-book