Six Ways To Manage Innovation Risk
Managing risk is the key to success
Risk is always going to be a part of innovation - but that’s certainly not a bad thing. It’s just a case of managing that risk effectively.
Here we offer some tips.
1. See risk as an opportunity
It’s human nature to avoid risk wherever possible. However, true creative innovation can only happen when risk is embraced. It’s integral in the way we solve problems and come up with the very best solutions, sometimes under pressure.
When we take a risk in trying something new, that’s when breakthroughs occur. If something doesn’t work out first time, the knowledge gained isn’t wasted; it’s used in new strategies going forward. The point is that while risk does need to be balanced, it shouldn’t be avoided altogether.
2. Expect the unexpected
Even with all the time, resource and money in the world, no R&D project will ever go perfectly to plan. The fact is that anything can go wrong at any point, and unrelated risks that occur simultaneously can inadvertently become an adverse event. It’s these events that easily lead to a projects going off course or being halted altogether. But without risk these journeys of discovery, and the overcoming of any challenges, cannot take place. Indeed, R&D researchers will learn far more from a project that goes awry at times that one which goes smoothly throughout.
3. Mitigate - or even eliminate - your biggest risks first
This is something many R&D teams fail to do, simply because it’s frequently overlooked. However, spending time on working out how to reduce the biggest risks, or getting rid of them altogether, is time well spent. Such consideration can often prevent the project from becoming completely derailed later on.
It’s a term which is commonly used amongst entrepreneurs: “Fail fast, fail often”. The beginning of a project is an exciting time, and teams typically get stuck into the least risky elements first. But this should be avoided as it can lead to a significant waste of time and resource further down the road. A good tip is to resolve the most significant risks before investing further in other details.
4. Protect your business and your innovations
We’ve all heard of amazing ideas by entrepreneurs who’ve then had their ideas hijacked by someone else. When businesses innovate, it’s essential that they protect every one of their business assets. We’re not just talking buildings and equipment here, but intangible assets too. This includes elements like intellectual property (IP) rights and patents (you might want to read up on Patent Box tax relief here).
Although non-physical assets can be tricky to quantify, businesses absolutely must still protect them. Otherwise they’re open to having their ideas stolen or their innovative products imitated.
5. Never assume risk management will end
Risk management doesn’t just come to a stop once an R&D project is finished. Although it might seem like all the risks have been managed, it’s always better to be proactive. Risk management practices should therefore be continued, as these will hopefully help you avoid future unforeseen problems. After all, many newly developed products will require upgrades going forward, as well as new accessories and features.
Although never having to revisit an R&D project again might feel like a good thing, it rarely makes long term commercial sense to do this. Continuous assessment of risk, and how it will be managed, is not simply a one-off thing. It’s an ongoing commitment if R&D is to become part of the company’s fabric.
6. Get to grips with R&D financial assistance
Innovative R&D work will likely be costly, so taking advantage of financial help is a great way to reduce risk. For many UK companies already battling the economic effects for coronavirus, additional R&D expenditure is less than appealing.
But the government has long encouraged UK companies to innovate and grow, as this in turn boosts the wider economy. For many years now, various grants and HMRC tax incentives have therefore been available to help companies meet their innovation costs.
One particularly popular way of funding innovation is through R&D grants. Available via a range of local, national and European organisations, R&D grants are offered ‘competition style’. This means that applicants must make the most compelling argument for the cash in order to ‘win’.
Different funding rounds will be open at various points each year, but competition can be fierce. This means that not only do you need to know when each type of grant is available and whether your business is eligible, but also what makes an outstanding application. This is where the Myriad Associates team can advise you around when grants open, and ensure you have the best chance of success - find out how.
Then there’s R&D Tax Credits - and this scheme is incredibly generous. It means that companies engaging in relevant R&D projects can claim back a large proportion of the costs. These costs are reimbursed either via a reduction in their Corporation Tax liability, or - if the company made a loss - as lump sum cash instalments.
How much a company can claim will be based mainly on its size and whether it has previously received any state aid. This determines whether they should claim under the SME branch of the scheme, or RDEC. However, with as much as 33 pence for every £1 of eligible R&D expenditure claimable, R&D Tax Credit awards can quickly run into tens of thousands of pounds.
Don’t miss out. Find out more on our R&D Tax Credits page.
How the Tax Cloud portal allows for easy, accurate R&D Tax Credit claims
The purpose of the Tax Cloud portal is simple - to make it quicker, easier and cheaper for UK companies to claim R&D Tax Credits. Since its launch in autumn 2017, Tax Cloud has helped hundreds of organisations achieve the money they’re owed. No stress, no hassle - and everything is completed remotely. It’s simply a case of following the steps to put together your claim in a fully guided way, with support from the Myriad Associates team when you need it.
If you would like to discuss anything we’ve addressed in this article, or about R&D funding in general, please do contact our specialists or call 0207 360 4437.
- Submitting R&D tax claims since 2001
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- Over £70m claimed and counting
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