Preparing & Responding to Competitive Conditions
A certain level of risk is often unavoidable when it comes to innovation. There’s a core tension between innovation potential and risk while positioning derisking as the strategic solution that forward-thinking enterprises are adopting to improve their success rates.
Through testing, validation and market data such as consumer insights, companies can derisk the process. This involves early and frequent testing through methods like customer interviews, reviews, customer feedback, forums, fake door experiments, and building a business case with market data, which transforms assumptions into facts and reduces the chance of failure.
Itonics, in its article, “How to De-Risk Innovation Investments and Prioritize Opportunities,” outlines some core principles when it comes to the process of innovation, including prioritizing, transparency, and understanding internal capabilities:
- Prioritize with technology portfolios: The first step to de-risk investments in innovation is collecting evidence for expected changes in your company’s business environment, Itonics notes. Environmental scanning software reliably identifies trends, technologies, and developments in any market. Continuous foresight involves relentlessly monitoring change in an ever-evolving landscape and determining how to respond. Scenario planning is a strategic planning method to anticipate possible futures. By understanding future scenarios, organizations can mitigate risks that are likely to arise.
Itonics also notes that while prioritizing is key, that does not mean you should focus on one innovation at a time. A good way to minimize the overall risk of your innovation efforts is not to put all your eggs in one basket. Diversify your innovation efforts. Start with small initiatives and test and validate them before scaling up. One practical approach is to create a dedicated innovation lab, where the team can run quick pilots with a “fail fast” attitude.
- Create transparency with technology roadmaps: Innovation management is interconnected throughout the entire organization. As a result, it can be complex and difficult to oversee. That is why it’s essential to have a single source of truth for all teams to see. If a company lacks transparency, resource planning and allocation may end up disjointed. To achieve consensus, you need to make it easier to inform stakeholders and allow input and overall visibility.
Roadmapping is also critical in consensus-building and crafting future business capabilities. It indicates where contingency plans need to be made. An innovation strategic roadmap enables a team to plot out the scenario events and work backward to develop a timeline of innovation efforts needed to take advantage of opportunities.
- Understand internal capabilities: Imagine your business has a game-changing idea for a new service. However, the technology involved is very specialized—none of the teams know how to implement it. The concept will fail if your company does not have the internal capabilities to capitalize on it. That is why Itonics suggests that roadmapping also involves thinking about human resource requirements. To avoid the risk of pumping resources into developing a service that teams are unable to deliver, it is key to think through the people you will need to execute the vision. Build capability first in order to innovate successfully. Carve out those opportunities that the company is best placed to capitalize upon. You can also scout for a startup that already has the required skills and then acquire it. This can speed up your innovation efforts by assimilating the startup’s much-needed capabilities.
Testing Concepts Before Launch
During FE25, Narek Vardanyan, CEO at Prelaunch, held a session on “How to Create Breakthrough Innovations Risk-Free.” The session explored how brands can de-risk innovation by testing concepts with real buyers—people willing to put money down before a product even exists. It included learning how companies use data-driven validation to refine product-market fit, optimize pricing, and invest in R&D. Discover a proven framework for rapidly testing product concepts in real-world environments.
Key takeaways of the session at FEI included:
- Test before you invest – Learn how to validate product demand before committing resources.
- Real buyers, real insights – Discover how early adopters provide the most reliable market signals.
- De-risk innovation – Use pre-market validation to avoid costly failures and build successful products.
The Reality of Risk in Innovation
There will always be some risk in the innovation process, yet there can be tactics to mitigate this. Turning to and relying on such tools as AI resources, forecasting, data science, analytics, consumer insights and innovation management tools can help improve the innovation strategy and stages of the process, saving time and investments over both the short- and long-term.
As Itonics advises, “Build a culture of innovation at your company where transparency is valued, teams understand their own capabilities to deliver, and can prioritize ideas with the most potential and strategic fit. To decrease the risk of innovation investment, the ideal is to establish repeatable and scalable processes with a centralized repository for knowledge sharing. That way, even if an initiative fails, the stakes are lowered, and teams can learn from what has worked and what has not.”
Video: Narek Vardanyan, CEO at Prelaunch, on “How to Create Breakthrough Innovations Risk-Free,” courtesy of FEI25.