Never attempt to increase your tolerance for risk as a way to win at innovation – at least not until after you have minimized your innovation risk itself.

Surprisingly, some “experts” are now encouraging Boards and leadership teams to increase their “tolerance for risk” as a way to increase their innovation success.

That’s like encouraging cliff divers to jump before ensuring that the water is deep and unobstructed. It pays to look before you leap with innovation, too.

It’s helpful to remember that innovation is comprised of two high-level risks:

• 1. Market risk: the risk that customers won’t buy what you make
  2. Solution risk: the risk that you cannot make what customers want

We know from study after study that the #1 risk factor for new products is market risk, i.e., customers won’t buy what you make because you misunderstood their needs. It turns out that innovation itself is not inherently risky and messy; the way most organizations go about understanding their target customers’ needs is inherently risky and messy.

Until the advent of the Jobs-to-Be-Done (JTBD) innovation approach, innovation was largely a hit or miss guessing game, and still is in most organizations. But now with JTBD, firms can identify and rank the target customers’ unmet needs (i.e., opportunities for innovation and growth) in virtually any market with statistical validity. This changes the game, dramatically reduces innovation risk, and gives leadership confidence about where to focus and what to do to create unique value (i.e., create competitive advantage).

You don’t have to be super-courageous or creative to win at innovation if you know what your target customers are trying to get done, how they measure success, and where they struggle given their current product/service solution.

A well-defined, validated, unmet customer need is the best way to mitigate risk and unleash creativity.

Reveal needs. Create value. Drive growth.