In considering an R&D investment, assess each opportunity wisely and take risks that are prudent, calculated, and thoroughly explored. Likewise, don't "bet the farm" on any single piece of research or in developing any individual idea, product, or service. Instead, think of each R&D investment as just one part of a diversified portfolio.
There are four criteria that can help foundations assess risk in any R&D investment:
1. Cost. What investment will this require in terms of grants, staff, outside expertise, new technology, time?
2. Benefit. What are the potential benefits to the foundation, community, field, etc.? Do the potential benefits outweigh the costs? How long until the effort achieves results?
3. Strategic fit. Does this opportunity fit with and advance the foundation's mission and strategy? There are many great ideas out there, but no foundation should invest in great ideas that take it off course or off mission.
4. Risk types. Risk can come in many forms, from potential financial losses to a damaged reputation or strained relationships with partners or community. What kinds of risk are most likely for this particular investment? How severe could they be?
Brainstorming and listing risks with foundation staff, board, and partners can help clarify the realities (and dispel misconceptions) about the risk a foundation faces in each R&D investment. But don't leave that initial list on a shelf! Instead, bring your "risk list" to every team meeting involving your investment and discuss what you've done, or can do, to continue to keep risk to a minimum.