Product innovation and risk culture : the experiences of product managers

Abstract

Launching innovative products without risk-taking is nearly impossible. On the other hand, overly stringent risk management practices can have a detrimental effect on an organisation’s ability to launch innovative products. In a telecommunication organisation, initiatives were implemented to create awareness of, and to improve the risk culture, one of which was the updating of the product risk management framework. Based on these updates there was a perception in the organisation’s product development function that risk practices were too severe, resulting in fewer innovative products being launched. The aim of this research was to investigate the effect of the organisation’s risk culture on product innovation. Limited academic articles were found that explore risk culture specific to product innovation and none analysed the impact of a risk management framework on product innovation. The main research question was “Is the risk culture of the organisation too risk averse to maximise the potential of product innovation?” A qualitative study was undertaken, using semi-structured interviews with 12 product managers as the primary data collection method. The findings indicate that the product risk management framework did not adversely affect product innovation. Product managers indicated that they obtained value from the framework, as it gave them a sense of assurance that the launching of products was aligned with the organisation’s risk appetite. I also found that certain risk averse characteristics existed in the organisation which could be improved in order to minimise their long-term effect on product innovation. Recommendations were obtained from product managers about possible improvements to the framework. The findings from this study provide a view of the effect of a product risk management framework on product innovation and therefore the risk culture in one organisation. Furthermore, the findings can guide risk practitioners and academics on factors that can improve such a framework.