Diagnosing Risk in Radical Innovation Projects

Abstract

OVERVIEW:Radical innovation projects are inherently risky. A number of in-depth case studies have been carried out to identify the kinds of risk that are characteristic of this type of new product development project. Two kinds of risk were identified. The first—unambiguous risk—was high for three basic questions: 1) Will the new product perform according to specifications (balance between the product components and functional product format)? 2) Can we rely on our suppliers (quality and contract arrangements)? 3) Will consumers adopt the new product (fit with standards and demands, and fit with habits and user conditions)? The second kind of risk—ambiguous risk—included risks for which there were strong differences of opinion concerning internal organization and project management. These results provide guidelines that can help industrial R&D managers improve their companies' innovation capabilities.