How to effectively control innovation risk?

Starting a company is risky. If you don't want to take any risks, you'd better not start a company! Therefore, the key to risk management is how to deal with and control effectively, rather than hoping to eliminate risks. For innovative enterprises, innovation risk can be managed mainly from the following aspects: ensuring the quality of development process through a strong cross-functional team. The quality of each task in the process of new product development is the main source of innovation risk. For example, the customer demand research is not sufficient, and the products developed may not necessarily satisfy customers; If the market research is not sufficient, it is impossible to accurately estimate the market scale, which may lead to the failure to reach the mass production scale after the new product is listed, and affect the return on investment of the project; If the project analysis is not rigorous, the developed products may not be mass-produced or the cost is too high, resulting in unprofitable company. We suggest that cross-functional teams should be used to operate from customer demand research, product definition and project analysis. Every stage, every step, every task and even every activity in the process of new product development must have a clear responsible person, a clear deliverable and a clear completion time limit. The advantages of adopting cross-functional team model in new product development are: (1) Each project has a product manager who is responsible for the final result of the project from beginning to end; (2) Every project has a core team, who is responsible for the final result of the project together with the product manager from beginning to end. The responsibilities of core team members include but are not limited to the responsibilities of functional representatives; (3) From beginning to end, the product manager and the core team can always grasp the core information of the project, reduce the omissions and distortions in the information transmission process, and ensure the quality of the development project. Reduce project risk through multiple decision-making review. The decision-making review team makes strict life-and-death decisions for each new product project at key nodes according to the unified decision-making review criteria. Multi-decision evaluation of the project is the main method to reduce the project risk and improve the overall return on investment of the company. Decision review can stop projects with no future in time and reduce the risks and losses of continuing investment. Project approval, prototype and pre-market review are the key review points of new product projects. The main benefits of scientific decision-making review are: (1) collective decision-making review is conducted by cross-functional teams, which reduces the risk of emotional individual "slapping the head" decision-making; (2) Making decisions according to the unified decision-making evaluation criteria can improve the quality of project decision-making and reduce the influence of corporate political factors on project decision-making; (3) Repeated decision-making review can stop projects with no prospects in time, which can not only reduce the risks and losses of continuing investment projects, but also put the released innovative resources into new product projects with more return on investment value; (4) Strictly check the completeness and credibility of the deliverables submitted by the project team before each decision review, and urge the development project team to be responsible for the quality of the deliverables submitted; (5) The cross-functional decision-making review team promises that the resources for the next phase of the project have been approved, which can ensure that the promising projects get timely and effective support from various functional departments. Avoid and deal with risks through standardized risk management methods. The overall risk of the project is accumulated by the risks of each stage and task. Therefore, adopting standardized risk management methods to manage risks in all stages and tasks in a timely and effective manner can greatly reduce the overall risk of the project. Risk management mainly includes pre-avoidance of possible risks and effective response after risks occur.