There’s a common misconception that intrapreneurs (and entrepreneurs) are high-stakes risk-takers. That’s simply not true. Evidence shows that in reality, the most successful intrapreneurs are exceptional risk managers.
Rather than plunging headfirst into the unknown, intrapreneurs work strategically to minimize risks and set their projects up for success.
This is part 5 in a series of articles taking a look at the eight key characteristics that stand out in intrapreneurs. In this article, we’ll explore why managing risk is crucial for intrapreneurs and how you can improve your risk management skills.
The Importance of Risk Management in Innovation Projects: Embracing Uncertainty
Innovation projects are inherently risky. They typically have limited funding, unclear objectives, and untested market demand. All these factors combine to create an environment of uncertainty and ambiguity. Despite these challenges, successful intrapreneurs are comfortable navigating such circumstances. They recognize that managing risk is a crucial skill to master in order to drive innovation and achieve their goals.
Intrapreneurs systematically reduce risk by designing and executing experiments to gather evidence. By iteratively testing their assumptions, they collect valuable data that informs their decision-making, allowing them to pivot or refine their approach as needed. This evidence-based approach helps intrapreneurs validate their hypotheses, minimize guesswork, and move forward with greater confidence.
Why Novice Intrapreneurs Struggle with Risk Management: Understanding Innovator’s Bias
Many novice intrapreneurs face challenges when it comes to effectively managing risk. One of the primary reasons for this struggle is a cognitive bias known as “innovator’s bias.” This bias occurs when individuals become overly attached to their ideas or products, leading to a skewed perception of risk and potential outcomes.
Innovator’s bias manifests in several ways, including:
Novice intrapreneurs may overestimate the likelihood of success or the value of their ideas, leading to an underestimation of risks. This overconfidence can result in insufficient contingency planning, making it difficult to respond effectively when challenges arise.
- Confirmation bias
Innovator’s bias can cause intrapreneurs to seek out information that confirms their preconceived beliefs while dismissing or overlooking contradictory evidence. This selective focus on supportive data can prevent intrapreneurs from recognizing risks and adapting their approach accordingly.
- Resistance to feedback
An attachment to one’s ideas may make it difficult for novice intrapreneurs to accept constructive criticism or negative feedback. This resistance can hinder the learning process and limit the ability to identify and address potential risks.
- Inability to pivot
Innovator’s bias can make it challenging for intrapreneurs to change direction or abandon an idea, even when evidence suggests that it’s necessary. This reluctance to pivot can prolong the pursuit of unviable projects, wasting resources and increasing overall risk.
Spotting Risks Early: Know Your Assumptions
To identify risks early on, begin by listing all your assumptions. Each assumption carries a risk that it might be incorrect. Assess the size of that risk and determine if it could derail your project. Intrapreneurs commonly face three primary project-killing risks: targeting the wrong customer, addressing the wrong problem, or utilizing the wrong channel.
Prioritizing Risks: Seek Evidence
To prioritize risks, ask yourself whether you have evidence to support your assumptions. If not, estimate the cost of obtaining that evidence. Focusing on assumptions with insufficient evidence and high impact helps you decide which risks to tackle first.
Three Easy Steps to Sharpen Your Risk Management Skills
To overcome innovator’s bias and improve risk management, here are some things you can do:
- Embrace a learning mindset
Cultivate an attitude of continuous learning and curiosity. This mindset helps you remain open to new information and insights, allowing you to adapt and respond to risks more effectively.
- Develop a strong feedback loop
Seek feedback from colleagues, mentors, and stakeholders to gain diverse perspectives on potential risks. Honest feedback enables you to identify blind spots and mitigate risks proactively.
- Practice detachment
Strive to maintain a healthy emotional distance from your ideas and projects. This detachment allows you to objectively evaluate risks and make data-driven decisions, rather than being swayed by personal attachment.
Unlock Your Intrapreneurial Potential
Contrary to popular belief, successful intrapreneurs are not reckless risk-takers. Instead, they are masters of risk management, carefully navigating uncertainties to set their projects up for success. By understanding the importance of risk management, identifying assumptions, prioritizing risks, and honing your risk management skills, you too can unlock your intrapreneurial potential and drive innovation within your organization.
If you’re passionate about becoming more intrapreneurial you’ll definitely want to check-out the Intrapreneurship Mastery Programme. This cohort-based coaching and training programme offers a comprehensive curriculum designed to develop the entrepreneurial mindset and skillset of attendees. Or, contact us if you have specific needs you want to discuss.