This document discusses creating an innovation framework using a train analogy. It defines innovation and risk tolerance, explaining that innovation requires engaging with the unknown, which increases the likelihood of failure. It notes that people of faith tend to be risk averse due to a focus on preservation and a "broken theology of failure." However, the document advocates developing a redemptive view of failure and managing versus avoiding risk, in order to support organizational decision making around innovation. It provides templates for writing risk tolerance policies and statements to outline acceptable levels of risk related to outcomes.

1. Creating an
Innovation
Framework
Using the analogy of a train
Webinar #3
Risk Tolerance in Innovation

2. Defining
Innovation
“Fresh thinking that
creates value.”
Richard Lyons
“Significant positive
change.”
Scott Berkun

3. What is a
framework?
A basic structure underlying a system,
concept, or text.
Source: https://jooinn.com/abstract-framework-background-3.html

4. Stakeholders
Vision
Risk
Tolerance Lifelong
Learning
Best
Practices
DNA
Values
Individual
Learners
Learning Orgs
Best Practices - November 12 9 a.m. Mountain Time
Risk
Tolerance
Theology of
Failure
Risk/
Reward

5. Walking into the Unknown
• Innovation requires engaging the unknown
• The unknown increases the likelihood of
failure dramatically
• Our ability to push forward with
innovation is dependent on our
tolerance for risk and our approach to failure
Photo by Cristofer Jeschke on Unsplash

6. Not our Natural Posture
• People of Faith focus on
• calling people back to their roots.
• calling people to something they haven’t heard of
• The faith isn’t new - we are calling people to something that is stable
and true to God’s vision for the world
• We are protecting and guarding orthodoxy - in that mindset we tend
not to think about creating new things
• We are dramatically risk adverse

7. Why does preservation rein?
•Broken Theology of Failure
•We believe that failure equals a lack of faith, a lack
of God’s blessing or a lack of God’s provision
•People want to see the model and stories of
success
•We are not willing to trust God for the unknown.
•We will need a lot of grace, but we don’t always
receive it

8. A Journey of Risk
Psalm 73
• Oppression from evil
imagination
• Godly motivations in fresh
thinking
• Kingdom values applied to
our efforts
• God’s promised strength in
failure or success
• Ultimate victory

9. “The Risen Christ is the
answer of God to human
failure. It is the hope, joy
and consolation for the
billions of little “nobodies”
whom the successful and
powerful of this world deem
to be total failures, that God’s
standards of success and
failure are not ours.”
Father John Navone
Photo by Zohre Nemati on Unsplash

10. Photo by Dmitry Ratushny on Unsplash
“Failure is a beautiful
gift wrapped in an ugly
package. With a
redemptive view, it is
an opportunity to
experience grace in
new expressions and on
new levels.”
JR Briggs
Failure is not a step on
the journey to earthly
success. It redefines
success as glorifying

11. Photo by Leio McLaren (@leiomclaren) on Unsplash
There is a difference
between “Failure in the
Christian life and failure in
the life of a Christian.”
William Lane Craig
The difference between SIN
and SITUATION!

12. Tim Keller’s Insight
• Risk began to be socialized in the 1600’s
with the entry of capitalism
• Deism: Risk management grew as God
began to shrink
• ”In some ways the idea of risk isn’t
directly addressed in the Bible, yet the
underlying factors are…fear and control.”
• Fear: Psalm 3
• Control: James 4:13

13. Manage vs. Acknowledge
• To manage risk is to affirm our sense of control over the situation
• Do we believe we can control our circumstances?
• What is our expectation of control and what do we depend on God for?
• To acknowledge and understand risk is to affirm the potential sacrifice
• Everyone has a threshold of risk - no two are the same
• Growing in Christ can change our threshold
Photo by Robert Wiedemann on Unsplash

14. “Risk is measured by the distance between the
best thing that can happen and the worst.”
Bruce Bruinsma, Envoy Financial
Risk: possibility of loss or
injury
“Risk tolerance is most
prevalently understood as
a measure of one's
financial ability to
withstand losses.”
Photo by Zach Savinar on Unsplash

15. Understanding Risk is key
to Organizational
Decision-making
• Board and management require a
clear assessment for reality-
centered decision-making
• Staff & Stakeholder
Communication needs to
recognize risk and address it

16. Risk Profiles
• The Risk Avoider: Risk stops them in their tracks and halts progress
• The Risk Manager: Risk is a reality to be managed and controlled
• The Risk User: Risk is a tool to influence people and programs
• The Risk Flaunter: Risk awareness is timidity and needs conquering

17. Risk Tolerance Scale / Matrix
Risk Level Definition Implications
Level 1 Low risk Define
Level 2 Moderate risk Define
Level 3 High risk Define
Level 4 Extreme risk Define

18. Governance
• Risk Tolerance Policy
• Definition of a Policy: “The purpose of policies is to protect and steer the staff
and the board as they fulfill the mission of the organization. They are a
reference tool for appropriate action, ethical decision making, and for dealing
with potential or actual conflicts.” - BoardSource.org
• Policy should include:
• Wording related only to the (Ends - outcomes)
• Describes how risk tolerance informs executive limitations (Means - what’s off limits)
• Outlines how the board would monitor risk in relationship to Ends and Means
• Must communicate what the board feels is risky - very subjective and context specific

19. Writing Risk Statements
• Statements outlines parameters for the levels
of risk related to:
• People
• Assets
• Funding
• Reputation
• Leadership
• Under what circumstances are we willing to
take a risk?
• Align risks with organizational outcomes
• What metrics will be used to assess risk?

20. Risk Statement Template and Example
• Template: The [Risk] is being evaluated at [Risk Tolerance Scale] in
pursuit of [Outcome]. The risk is [constrained by] but is acceptable as
long as it fits within [metric].
• Example: A hostage situation in transit in Colombia is a Level 2 Risk
and is being taken in pursuit of our desire to help every community
have clean water. The risk is constrained by our staff’s compliance
with security protocols but is acceptable as long as there is no
government restriction in the given area.

21. Risk Statements for Innovation
• Example: A new program that requires more than 25% of
undesignated annual revenue is a Level 3 Risk and is being taken in
pursuit of our desire to give women the opportunity to thrive through
education. The risk is constrained by our ability to develop a robust
business plan for the program but is acceptable as long as there is a
pathway to recover the investment in five years.

22. Stakeholders
Vision
Risk
Tolerance Lifelong
Learning
Best
Practices
DNA
Values
Individual
Learners
Learning Orgs
Best Practices - November 12 9 a.m. Mountain Time
Risk
Tolerance
Theology of
Failure
Risk/
Reward