Like
HBR.ORG
ApRil 2013 reprinT r1304B
Innovation Risk: How to Make Smarter Decisions assessing the prospects of any new product requires modeling how it will be used. But that exercise has its limits. by Robert C. Merton
The Big idea
innOvAti innOvAti OvA OvAti v sM HOw tO MAke wt
The Big Idea
Assessing the prospects of any new product requires modeling how it will be used. But that exercise has its limits. by Robert C. Merton
2 Harvard Business Review april 2013
This article is made available to you with compliments of FM Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.
iOnDecisiOns Risk ARteR
For ArTicle reprinTs cAll 800-988-0886 or 617-783-7500, or visiT hBr.org
IllustRatIon/PHotogRaPHy: name
april 2013 Harvard Business Review 3
This article is made available to you with compliments of FM Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.
n
The Big idea InnovatIon RIsk: How to make smaRteR deCIsIons
4 Harvard Business Review april 2013
ew products and services are created to enable people to do tasks better than they previously could, or to do things that they couldn’t before. But innovations also carry risks. Just how risky an innovation proves to be depends in great measure on the choices people make in using it. vation—how it will change the trade-offs people make and their behavior—they must be mindful of the limitations of the models on which people base their decisions about how to use the innovation. As we’ll see, some models turn out to be fundamentally flawed and should be jettisoned, while others can be improved upon. Some models are suited only to certain applications; some require sophisticated users to produce good results. And even when people use appropriate models to make choices about how to use an
ApRil 2013 reprinT r1304B
Innovation Risk: How to Make Smarter Decisions assessing the prospects of any new product requires modeling how it will be used. But that exercise has its limits. by Robert C. Merton
The Big idea
innOvAti innOvAti OvA OvAti v sM HOw tO MAke wt
The Big Idea
Assessing the prospects of any new product requires modeling how it will be used. But that exercise has its limits. by Robert C. Merton
2 Harvard Business Review april 2013
This article is made available to you with compliments of FM Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.
iOnDecisiOns Risk ARteR
For ArTicle reprinTs cAll 800-988-0886 or 617-783-7500, or visiT hBr.org
IllustRatIon/PHotogRaPHy: name
april 2013 Harvard Business Review 3
This article is made available to you with compliments of FM Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.
n
The Big idea InnovatIon RIsk: How to make smaRteR deCIsIons
4 Harvard Business Review april 2013
ew products and services are created to enable people to do tasks better than they previously could, or to do things that they couldn’t before. But innovations also carry risks. Just how risky an innovation proves to be depends in great measure on the choices people make in using it. vation—how it will change the trade-offs people make and their behavior—they must be mindful of the limitations of the models on which people base their decisions about how to use the innovation. As we’ll see, some models turn out to be fundamentally flawed and should be jettisoned, while others can be improved upon. Some models are suited only to certain applications; some require sophisticated users to produce good results. And even when people use appropriate models to make choices about how to use an