Innovation and Risk


There's an article in Bloomberg Businessweek about that most prosaic of thing, the wooden pallet. Ikea uses 10 million pallets around the world, and it's replacing them all with cardboard. Yes, you read that right. They've created a corrugated cardboard design which is 2 inches high, 5.5 pounds and can support 750 kilos. They estimate it will save $193M a year.

The article goes on to discuss some drawbacks with the pallets (they're not as weatherproof as wood for example) but for a potential saving of $193M, it's worth trying, don't you think?

It's easy to think of the risk when discussing change, and to focus on that rather than the potential upside. If you're wondering why there isn't enough innovation in your team, it might be because you're more risk averse than necessary.

These are awful

Having just received a cardboard pallet (not an IKEA one), I can tell you that they are awful.  It was damp/snowy here the day the items arrived & it was all we could do to get items off the semi-truck without dropping them because the cardboard couldn't be carried like wood or the cardboard was melting causing a wet, soupy mess.

To me, this is a cost-savings measure that doesn't begin with the customer in mind.  We weren't set up to deal with this kind of pallet and the truck driver indicated he's had nothing but problems with them as well.

I understand that we're talking about risk & change, but before you leap, be sure your customer has the ability to catch you!  Had we known about the cardboard, we could have done several things differently that day to accomodate the new technology, including unloading in a covered building.  (By the time we got the cardboard, the truck was 3/4 unloaded, too late for a venue change)

Take a risk, but always begin with your customer.



Innovation occurs in our lives, firms, and reegions . It is very important for the survival of these areas. The relationship between innovation and risk management will exist always while we continue to live in a global world that has originated a global market in all economic sectors. - Dan Sciscente