Introduction
A large percentage of innovations arise from attempts at risk management. Risk often occurs when managers can assign possibilities to every decision they make. To ensure success, employees and business associated become creative at managing and increasing the possibilities of success. Risk management covers a semblance of uncertainty, where managers are aware of the probabilities of the outcomes but cannot determine the outcomes of the same. Since the probability of success remains unknown, it can be said that managers in this case are working blind, they have little if any information with which to make decisions. These risks often become apparent because changes in the organizational environment result in new kinds of opportunities and threats.
People Also Read
Small businesses are often under the greatest risk when it comes to innovation. The competitors are often providing higher quality products, operating under lower costs of production and showing greater response to consumer needs. In response, the small businesses are forced to employ higher innovation tactics to ensure product development. However on the same page, innovations have proved to be riskier for the small business. They often have limited financial privilege, lower technical advancements and even less information with which t operate. Should the businesses get one thing wrong, or end up with a less than perfect product; the risks of total failure and survival of the business comes under threat. Understanding risk management and innovation is important since customers today are not only looking for a competitive, high quality product that will serve them today but also the ability for the business to maintain high skills, manage resources and the flexibility to remain a quality supplier of the products in future.
Advantages of Studying Risks and Innovation
Understanding business acceleration
For majority of the managers, risk analysis and management is often considered as the main issue that slows down innovation. With the fear of taking major risks, managers are often forced to reduce the rate of innovation and in doing so stifle the acceleration of the business. (Holmes 2002) states that a learning organization treats the process of risk management as an opportunity for learning, developing and growth. Such a business accelerates the process of growth and possibly outdoes competition within a few years. In the past, students have become more focused on reducing the process of risk and in many cases circumnavigating the risk itself. Lessons focused students on reflecting the probabilities and increasing chances of success by minimizing the success.
Encouraging growth
The module offers a better option, and this is simply to use the risk to the advantage of the business. Rather than avoiding risk, the module highlights methods and processes with which the managers can accelerate growth by increasing the risk and managing the same. Through proper risk management, product development and processes that minimize cost and increase profit are possible. The examples in the module show that businesses that manage rather than avert the possibilities of risk are most likely to experience accelerated development even when the business environment may not be favorable.
Managing finances for innovation and risk management
For a manager to be able to lead a genuinely creative and innovative business, it is vital that they release their own nature from the normative and traditional values of the business. For a while now, manager have been trained to focus more on the financial bottom line. While innovation increases the chances of outdoing the competition, the results of increased market share and profits are not immediate, yet this is the measure of performance that managers often focus on. With traditional training, when an innovation fails to produce immediate results, managers are most likely to prematurely abandon the project. The module allows managers to become more patient, carefully manage finances so that the business weathers the storm and therefore succeed in value proposition.
Understand the essence of innovation
In order to effectively pursue risk management, it is important for the managers to understand the essence of risk management. Traditional training indicates that risk management is a preventive measure designed to protect the business. However, the module shows a better and more positive avenue for risk management, and this includes as a bold risk taking measure which entails innovation. (Hopkin 2013) shows that the core business of innovations and companies that have led in their industries with regard to innovation are also highly effective in risk management.
RESEARCH PROCESSES
In understanding the innovation and risk management of the small business, a simple self assessment tool was applied. Being a trained and skilled facilitator, it was easy to bring out issues in the business. Furthermore, as a vacillator, I was able to promote wide staff involvement and open discussion that led to the collection of rich data. During the research process, the vacillator employed participation through various departments and networks through which they could get ideas and create an environment where improvement is the basis. With this environment, it was easy for the facilitator to get the information that they desired.
Case work research process
As (Coldwell and Herbst 2004) observe case work is concerned with the complexity and particular nature of the case in question. The emphasis of the case study was upon intensive examination of the relationship between risk management and innovation. The case study method was selected because while it favors qualitative methods, such as participant observation; it also provides a vehicle through which several quantitative methods can also be combined thereby avoiding over reliance on a singular approach. The results from the case study can be used to understand why so many qualitative management approaches with regard to risk management and innovation are mostly likely to fail. (Zikmund 2003) states that it is important to note that case studies are often heavily dominated by positivism and therefore heavily influenced by epistemological traditions.
Data collection tools: Questionnaires:
While interviews would have proved more helpful in eliciting the right information. This research process was found to be slightly wanting, because employees and workers in the organization were skeptical about being truthful. Based on this, the questionnaire process was chosen. Through this process, the facilitator took time to distribute questionnaires to employees and allow then to return them anonymously. This research tool provided several advantages, for example, it allows the researcher to save much time. Data can be gathered from more people, in a much quicker fashion. This way all employees willing to participate are given the chance to do so and the data is made available and richer information is gathered.
With the purpose of the research aiming at gaining familiarity or new insight into the business and the process of risk management as well as innovation, questionnaire distribution proved quite helpful. The data gathered was more objective and standardized making analysis much easier. With the amount of data that is to be gathered in the business, an objective questionnaire was much more insightful. Surprisingly in this case the return of questionnaires was much higher than expected with majority of the individuals that is, at least 89% returning filled and completed questionnaires. Self completion questionnaires proved valuable in that the respondents did not feel pressured to create time out of their busy schedules to participate in the process of research. In fact, they were much more comfortable setting up their own time and completing the questionnaires at their own sped. However, it should be noted that with the questionnaire, the researcher could not prompt answers and do follow ups to the same answers where interesting points arose. It can therefore be said that the data was less rich than anticipated through interviews. However, since it was a case study, majority of the data could be enriched from other sources. This also applied to the sections of missing data.
Majority of the data gathered indicated or showed that the company had understood the relationship between risk management and innovation. The data gathered was tested using a correlation test which identified a strong relationship between the ability of management to encourage risk and the rate of innovation which in turn increases the chances of development.
Figure I: Participant view on what they consider important in innovation and capability
The organization in the case study was selected on the basis that it provided an excellent opportunity for learning through the application of rich and reliable data. The instrumental case study provided insight into the intrinsic values and compositions of risk management and innovations which could in turn allow generalizations to be made with regard to other organizations.
With experimental and cross sectional designs the typical orientation of the relationship between theory and research is a deductive one. The research design and collection of data are guided by specific research questions. However, in this case the qualitative research design was employed within the cross sectional design allowing the approach to become inductive. (Zwick and Rapport 2002) cite that within the critical case, the research is guided by a hypothesis which is already chosen and has been clearly set. The researcher is therefore on a path towards proving or disproving the said hypothesis. The case is chosen on the basis that it will allow for a better understanding of the circumstances under which the hypothesis will or will not hold. An example of the circumstances included in the research process is shown in the table below:
Table 1: Classification Model
| Chain/ department management | Increased risk management for innovation |
| Functional management
Reduced interaction of internal functions Financial resources are departmentally managed Key performance indicators are considered separately Lack of targeted plans |
Adhoc risk management
Ad hoc risk management processes Changes occurring beyond the functional domain are less visible Redundancy buffers are ignored Absorbs limited volatility to allow for creative management |
| Dynamic
Alignment of key customer needs Segmentation to meet various customer needs Ability to adapt towards frequent changes |
Flexible
Flexibility in company investment towards products, processes and capacity Segmenting the process of risk management Business continuity becomes viable |
CHALLENGES IN THE RESEARCH STRATEGY
Information overload
The volume of information available on the subject of risk management and innovation is much more than has been expected. (Bryman and Bell 2007) cites that the subject of risk management and innovation is not only exciting, it is unique and has drawn interest from experts all over. Unfortunately, the majority of the information has been diluted making it hard to gather the right information. In addition, the concept of risk management is often confused with other management concepts. It is therefore possible to end up with information and data that is completely irrelevant to the subject. With the increased rate of publications in research, navigating the field of risk management could become difficult. However, the module was helpful in providing insightful guidelines and boundaries through which the information could be made more relevant.
Furthermore, the information gathering process provided too much information on the subject. Respondents participated fully, answering all questions and providing more than sufficient data. However, this proved helpful and reliable in understanding management techniques and perceptions of the participants towards risk management.
Ethical challenges
It is often difficult to inform others accurately and in a manner with which they understand the full extent of the research strategy and design. It is also difficult to anticipate the emotions that some questions may reveal. For example, some participants may find the questions being presented in the research to be unsettling. There are therefore several ways according to (Marcoulides 1998), in which there is potential for deception and elatedly lack of informed consent in the business research. These instances point to the difficulty in arriving at ethically informed decisions. Whereas ethical codes give advice on patently inappropriate practices though sometimes leaving room for maneuver, they provide less guidance on marginal areas of ethical decision making.
Reliability and validity
Reliability refers the consistency of a measure of a particular concept. The main challenge in reliability in this module arose from internal reliability. This is whereby the key issue is whether or not the indicator that makes up the scale or indexes are consistent. since a multiple item measure was used, where each respondents’ answers to each question were aggregated to form an overall score, the possibility is raised that the indicators may not relate to the same issue that is, risk management and innovation. Validity on the other hand, refers to whether or not the indicators chosen to measure the concept of risk management and that of innovation actually do so. It should be noted that although reliability and validity are analytically distinguishable, they are also related because validity presumes reliability. If a measure is not reliable, it follows therefore that it cannot be valid.
Understanding the future of risk management and innovation
A striking challenge is that managers and executives each view risk management from their own perspective. Drawing generalized conclusions on the subject therefore is quite difficult, (Das 2006). Whereas conclusions can be easily drawn, the richness of the data and the uniqueness of the research process provided an array of conclusions which are difficult to generalize as can be seen from the figure below:
Figure 2: analysis of risk management challenges in the future
BENEFITS OF THE RESEARCH STRATEGY
Challenging theoretical assumptions
The study of management is one in which various assumptions in theory exist. Traditionally for example, it has often been assumed that risk equals loss. Innovations though encouraged in organizations are bottled under less risky. However, this module opens the possibilities of increased risk for higher returns. By challenging the traditional theoretical assumptions, managers are likely to enjoy higher probability of success in innovations.
(Krause 2006) shows that where managers have often relied and misconstrued the idea of risk management separating it completely from the need for new innovations, the new challenging concept brings together the two. Risk management cannot successfully exist without proper investment in innovations. In addition innovations are less likely where risk management is absent.
Offers excellent alternatives
The module and research design do not just challenge traditional assumptions and leave it at that. There is the possibility of new and excellent alternatives through which managers and entrepreneurs can foster growth. The research strategy offers alternatives tailor mad and customized to specific organizational needs. Whereas there maybe challenges in generalizing and benchmarking these alternatives, they can easily be customized making them unique to competition and offering new opportunities for the organization.
Detail oriented
Using the research deign it was possible to collect much more detail than would have been allowed by other research strategies. With the measures of risk management and innovation being difficult, much information is required to enable strategic decision making. The sample in itself provided a richness of data that remains unequaled by other research strategies. The depth of information made available still continues to be informed. (Agrawal 2009) states that business research should include as much detail to ensure that the variables when manipulated can show probabilities of research. This is especially the case in the analysis of risk management.
REFERENCES
Agrawal, R. C. (2009). Risk Management. Jaipur, India, Abd Publishers.
Bryman, A., & Bell, E. (2007). Business Research Methods. Oxford, Oxford University Press.
Coldwell, D., & Herbst, F. J. (2004). Business Research. New York, Juta Academic.
Das, S., & Das, S. (2006). Risk Management. Singapore, John Wiley & Sons.
Holmes, A. (2002). Risk Management. Oxford, U.K., Capstone Pub.
Hopkin, P. (2013). Risk Management. London, Kogan Page
Krause, A. (2006). Risk Management. Bradford, England, Emerald Group Pub.
Marcoulides, G. A. (1998). Modern Methods For Business Research. Mahwah, N.J., Lawrence Erlbaum.
Zikmund, W. G. (2003). Business Research Methods. Mason, Oh, Thomson/South-Western.
Zwick, R., & Rapoport, A. (2002). Experimental Business Research. Boston, Ma, Kluwer Academic Publishers.
With a student-centered approach, I create engaging and informative blog posts that tackle relevant topics for students. My content aims to equip students with the knowledge and tools they need to succeed academically and beyond.
