innovation lab

Risk Management

Control risk by piloting risky innovations first, so the costs of failure are contained. Training helps employees learn how to spot and refine ideas, so they are more likely to succeed, rather than fail. Be prepared to move on quickly if an idea proves unsuccessful.

  • Use Iterative Innovation to Manage Risk – Throughout Google’s history, the company has followed a philosophy of making its new products “beta launches” then making rapid iterations as users describe what they want more (and less) of. Today, Google continues to listen carefully to user feedback after each launch and revise products based on feedback. The beauty of this approach, according to Google, is that you get real-world user feedback and never get too far from what the market wants. Perhaps they want the features you were planning to add next ... or maybe something completely different.
     
  • Examine Regulatory Constraints First - With most ideas, the greatest risk is violation of state or Federal regulations. At ITD, employees are encouraged to consider regulatory constraints as they determine implementation strategies for their ideas. Sometimes regulations actually prove to be less constraining than originally perceived; for example, ITD has implemented an idea for line marker painting that was previously presumed to be outside regulatory requirements for painting equipment.
     
  • Iowa’s Charter Agencies - In 2003, the Iowa legislature authorized Governor Tom Vilsack to designate six state agencies as charter agencies. The governor asked for volunteers among the agency leaders, and six agencies agreed to become charters: the departments of Human Services, Revenue, Natural Resources and Corrections; Iowa Veterans Home; and Alcoholic Beverage Division. By becoming charter agencies, these agencies were allowed to waive any personnel rule (subject to Iowa’s collective bargaining agreement); hire staff at any pay grade without any employment cap or full-time employee limit; waive any administrative rule regarding procurement, fleet management, printing and copying, or maintenance of building and grounds, as well as information technology; carry over half of budgeted but unspent funds from one fiscal year into the next; keep the proceeds from the sale or lease of capital assets. In exchange for the freedom from these restrictions, these agencies were expected to generate at least $15 million total in savings. They generated $22 million the first year and $20 million the next. Their successes included: reduced child welfare stays in shelter care by 20 percent, or 10 days; increased children with health coverage by 12 percent in FY05 on top of substantial prior year gains; reduced turnaround time for wastewater construction permits from 28 to 4.5 months; and improved rate of individual income tax refunds issued within 45 days from 75 percent to 94 percent. There has been some criticism regarding the need for these restrictions to be lifted in order to actually achieve these results. State Auditor David Vaudt was asked to identify what savings could be directly linked to the agency's enhanced flexibility. His own office acknowledges the challenge of this approach. "It is extremely difficult, if it not impossible, to tell how much it saved," Warren Jenkins, chief deputy auditor told the Des Moines Register. "There was no verification that what they reported resulted from the initiative or if it came from any other reason." Some executives have acknowledged that they could have achieved their positive results without becoming charter agencies. However, this process encouraged them to think differently and not feel restricted by bureaucratic restrictions, which generated more innovation and creative approaches. Thus, while the fiscal savings can be argued, the innovative success has endured.