Innovation and Ontologies

126 Roadmap for the Fuzzy Front End
2.5.2.3.3 Risk Management
[…] innovation is not only risk avoidance
but also building on opportunity. (Cunha & Comes, 2003)
Any innovative concept encompasses uncertainty in terms of market failure, increasing with the
degree of novelty involved (Albers, 2004b; Assink, 2006). A special component of this
uncertainty is risk which can again be subdivided into opportunities and threats (Wolff &
Holtrup, 2005).
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For this thesis, risk is defined as probability multiplied by the extent of loss.
Its characteristics are uncertainty of occurrence, expected loss in case of occurrence and the
degree of freedom when taking the decision which encompasses risk (Reichmann, 2006; Wolff &
Holtrup, 2005).
Risk of an innovative project is characterized by failure to realize the targeted quality of the end
product (Brockhoff, 2004), and/ or to overcome constraints. It can be subdivided in two groups,
special risks of an innovative project and general risks of the project, depending on its innovative
character (Wolff & Holtrup, 2005):
Special Risks of Innovative Projects General Risks of Projects
• Risk of coincidence, i.e. the expected invention does
not take place or something unexpected is
invented
• Risk of innovation, i.e. the innovation does not
contribute to success of the company
• Risk of utilization, i.e. the innovation cannot be
utilized (e.g. manufactured)
• Risk of cost or resources, as expenditure in
innovative projects is always insecure
• Risk of time, as amount and duration of tasks in
innovative projects is uncertain
• Risk of technology, as existing technologies might
be unfit for the realization of the innovative
projec
table 41 Special and general risks of innovative projects
Consequently, assessment and management of risk 150 are important parts of innovation
management. Risk management in the context of innovation is the systematic identification,
analysis, prioritization and monitoring of known as well as unknown and novel risks by
executives – prior to significant commitment of resources (Boutellier & Gassmann, 2006;
Disselkamp, 2005; Lister, 1997; Pinto, 2002; Reichmann, 2006).
Apart from establishing a system of early warning, risk management pursues to secure flexibility and
freedom of choice in an uncertain world (Wolff & Holtrup, 2005). Management activity can also
affect variation and repeatability of projects. While lightly managed projects might apparently
proceed more quickly, they hold an immense negative potential of unanticipated problems which
heavily delays them.
150 Risk management for innovative projects can be clustered in (1) risk management for a single project, (2) risk management for a portfolio of
projects and (3) company wide risk management. This paragraph focuses on the first cluster.