Risk and innovation: Polar opposites?

By Rebecca McCaffry

Photography: Paul Goldstein

To the uninitiated, we accountants are generally regarded as grey-suited, risk-averse types; crunching numbers and counting beans. We like things to be ‘just-so’, stick to the rules, and fear change. Innovation isn’t for us, oh no. Far too risky!

I recently attended a 'Polar Journeys' talk by an acclaimed wildlife photographer,which included fascinating images of albatross and seals, penguins and polar bears. All very well, you may think—but what does this have to do with risk and innovation?

We heard stories about the Anglo-Irish explorer Sir Ernest Shackleton, who led three British expeditions to the Antarctic. Shackleton, we learned, was a fine leader—a man who knew when to delegate; a man who inspired others; a man who got things done. And, of particular relevance here, an innovator who understood the risks of his operating environment.

Shackleton was keen to score a ‘first’. Almost a century ago, the South Pole already conquered by Amundsen, he set his sights on the first land crossing of the Antarctic, a mission doomed to failure when his ship, the Endurance, became caught and crushed in pack ice.

You may wonder why I’ve chosen a failed innovation as an example. It’s easy (and quite possibly true) to say that, had Shackleton employed a management accountant, the Imperial Trans-Antarctic Expedition would have achieved its original objectives. But the real point is that innovation is a learning process, even when ‘unsuccessful’, and its benefits should not be stifled by over-zealous risk management.

So what can CGMA designation holders and intrepid explorers learn from this failed expedition? First, we need to be flexible. Shackleton’s objectives changed swiftly from exploration to survival. Your latest project may not be quite so extreme, but be ready and able to respond to external changes.

Secondly, if you’re exploring a new area, listen to the experts. At his final port of call before the Antarctic Circle, Shackleton chose to ignore the warnings of local sailors about unusually thick pack ice. Result: disaster.

We also need to appreciate all of the risks we are facing. Shackleton was an experienced polar explorer who understood his environment. Faced with the expedition’s failure, he led by confident example, recognising the negative impact that disappointment and anxiety would have upon his crew.

And finally, it’s important to focus on future successes rather than past failings. Once the Endurance was lost, Shackleton set himself a new goal: to bring his men home safely. Eventually, after considerable hardship, he succeeded.

Our professional training tends to instil an aversion to risk. We don’t like failure, losses, negative NPVs, unbalanced balance sheets... but what we need to recognise is that innovation has an important role in creating long term growth and business success. In today’s fast-moving world the biggest risk of all is to ignore this.