Innovation And Productivity Risk:  What Are The Impacts On The Workplace

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The world is changing so fast that even established businesses must operate as startups. Operational effectiveness and flexibility have become the prerequisites to long-term success. B2B companies need to prove to their end customers that they can provide quality products today while also focusing on developing the resources, systems, and capabilities that will keep them competitive long into the future. Data analytics, artificial intelligence-enhanced automation, and cloud computing have opened doors for operational innovation in recent years. B2B SMEs are now equipped with powerful tools and services that can help them dramatically reimagine their internal business processes.

However, the integration of these applications and services comes with added risks. The benefits and risks of continual innovation and improvement within an organisation are consistently in conflict. Companies need to find ways to balance both sides of this equation to achieve success.

Benefits and Risks of Innovation

SMEs who adopt an innovative culture are likely to experience many positive outcomes, particularly increased profitability and growth, as well as an ability to adapt in times of uncertainty. Internal innovation, in particular, leads to greater operational efficiencies, effectiveness, and lower costs.

Forward-looking SMEs are in a stronger position to improve the customer experience. They also have a chance to retain a competitive edge, building systems, tools and processes that allow for new products, and they are in an excellent position to access new markets.

However, the continuous push to innovate on basic operations processes and systems has drawbacks. The pressure to innovate usually means the organisation has to shift its operations. It may involve changing shift patterns and reducing the number of employees, using outsourcing, and investing in new IT systems.

These changes may negatively impact performance, workflow, and employee productivity and morale. Financial and operational risks significantly increase when innovative projects do not deliver the desired results. Successful innovation is, therefore, intrinsically linked with effective risk management. The smaller a company is, the greater the likelihood that its long-term viability depends on the extent to which it can recognise and manage inherent risks to the changes and decide whether benefits outweigh risks.

SMEs looking to take advantage of new tools and systems internally will require a new approach to risk management. Risks to innovation are greater in small enterprises than in larger enterprises, as the small firm typically has limited technical and managerial expertise, financial resources, and access to critical data. The risks of choosing an incorrect innovation solution could even endanger an organisation’s survival. Therefore, the C-suite and the risk managers should determine how much risk an SME can afford and what parameters should be maintained.

A process must also be put into place to determine whether their business case accurately represents the cost of managing the risks of the specific decision. Conducting periodic internal operations audits may help identify choke points and failures and avoid business costs. With that information, corporate leaders can think of solutions that best meet their company’s needs. They should also think about new controls that might be needed to handle unfamiliar, anticipated risks, like the possible rise of fraud and data breaches. Part of this review should involve an approval process for new technological partnerships.

Managing risk for innovation is an ever-evolving process requiring new tools and systems, as digital innovations typically introduce unfamiliar risks, which become evident only with time and might not currently be known or understood. SMEs should be aware of market trends and technology developments because they can affect which solutions make the most sense for business.

When researching any solution, top leaders should also consider the ease of integration, user experience, compatibility with existing systems, data security, and built-in scalability.

Included in this part of the process is a bit of execution thinking. Internal innovation cannot happen without open, active communication. It means employees and senior leaders need to be able to talk with each other, and the flow of communications needs to happen both ways.

Employees across the business need clarity on where the company is today and where it will go moving forward. They also need to know how the new, innovative solutions will likely impact their jobs and what to expect in a transition.


Effective risk management is a significant issue for small-to-medium enterprises with limited resources and expertise.

The bigger an innovative decision, the more details and data must be processed. For that reason, many small-to-medium enterprises will require assistance from experienced consultants and industry professionals who can offer valuable insights and guidance and, in some cases, help with the transformation itself.

In conclusion, the key to balancing the risks against the benefits of in-house innovation lies in understanding what drives the desired changes, determining what solutions make the most sense, and considering the optimal execution.

It is a process that is constantly evolving.

Please read the full article on Real Business

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