Are You Killing Innovation Without Realizing It?

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We recently wrote about insights – what gives them a “magical” quality and how they seem related to other psychological processes, like sensemaking and framing a problem. At ShadowBox, we are frequently approached by individuals and organizations interested in boosting insights – both in frequency and quality. Many people are seeking quick tips and tricks, and we offer guidance such as: look for unexpected connections or anomalies that violate expectations. But the reality is that, especially for organizations, creating a sustained culture that supports insights is quite complex.

Why Organizations Struggle to Balance Efficiency and Discovery

Many organizations strive to create environments in which insights are encouraged. They stress to employees, “There are no bad ideas.” And many organizations sincerely believe that they embrace innovation. They encourage people to share suggestions for improvement freely and create opportunities for brainstorming and “out-of-the-box thinking.” 

But, by nature, all organizations are inherently risk averse. They strive for predictability, consistency, and standardization. They want to avoid errors, which can be costly. Managers want to ensure projects run smoothly, with no delays or overages. In response to an unexpected disturbance, they quickly re-plan to make sure hours and expenses can stay near projections. In other words, they focus on the “down arrow” in the above diagram. The goal is to reduce uncertainty, make accurate forecasts, and reduce errors as much as possible. 

On the other side of the diagram, insights are almost the complete opposite of predictable. They can be chaotic, arrive at unpredictable times, and effectively disrupt the status quo. Insights often require additional effort to implement, increase coordination costs, and carry risk, requiring people to deviate from established plans. Even though the payoff of a new innovation can be transformative, leaders often struggle with embracing insight, due to the uncertainty associated with novelty.

So, how can organizations balance the desire for consistency and stability with the goals of innovation? Creating an organizational culture that embraces insight is not trivial. The answer comes from striking an effective balance between the “up” and “down” arrows depicted above. The overarching advice here is to decrease pressure on the “down” arrow – try not to overly emphasize error reduction as the main pathway to success. Instead, guide the organization to increase insights and investigate conflicts and confusions. 

To convince organizational leaders of the need for balance, it would be great to compare data from companies that place extreme emphasis on the down arrow with companies that don’t. Luckily, a program was introduced and adopted by several large corporations in the last 30 years that promised to drastically eliminate errors. The program is called Six Sigma. Companies that implemented Six Sigma were convinced that reducing errors was the key to improving a company’s performance. Except, it wasn’t. 

By 2006, analysts reported that 91% of the companies that adopted the program had not kept pace with the S&P 500 since the late 1980s, when Six Sigma was first popularized. It turned out that by focusing on the down arrow, these companies were missing opportunities for new ideas and products. Not that Six Sigma is meritless; it just needs to be balanced by other approaches to boost insights and enhance the “up” arrow.

Creating a Culture That Fosters, Not Filters, Insight

In his book, Seeing What Others Don’t (2013), Gary Klein mentions three potential strategies organizational leaders can use to boost insights.

First, companies can consider establishing insight advocate teams, analogous to teams whose purpose is to find and reduce defects. These folks could harness the bold and innovative ideas from other areas of the company or perhaps elicit stories about tough challenges and how people overcame them to foster innovation. On the other hand, it feels like such initiatives could have an impact in the short-term or toward a specific goal but could stall on a longer-term basis.

Another way to think about the “down” arrow is that it can directly interfere with the “up” arrow; in other words, the emphasis on reducing errors can “filter out” good ideas. Think of these as organizational barriers to change, such as review processes for external-facing communication or a series of people who need to “sign-off” on a new company strategy. To counteract these tendencies, organizations could establish oversight boards that have the power to overrule some of these “filters” for ideas that are exceptionally important or provocative (in a good way). 

A third strategy is to increase organizational willpower. This strategy involves increasing the organizational willpower to actually implement changes that are suggested. A famous example of the failure to act in a changing environment is from the Eastman Kodak company, which was on the cutting edge of film technology in the 1880s when it introduced the first flexible roll film. The Kodak company ultimately folded in 2012 because it did not effectively pivot to digital technology. A surprising twist to the story is that the first digital camera was actually invented by a Kodak engineer in 1975. So, the Kodak organization was aware of digital technology. It just failed to appreciate the power of their own innovation. They were stuck in the status quo (and higher profit margin) of film-based technology. Leaders lacked the willpower to effectively pivot the company toward a new era of technology. Organizations demonstrate willpower when they act on insights, particularly insights about their primary goals. Sometimes, this may involve rethinking the goal.

Ways to Build a More Resilient, Innovative Company

People are often looking for simple, easy strategies to boost their insights. But real, lasting changes require increased attention from organizational leaders. Instead of trying to emphasize error reduction or purely boosting insights, leaders must be sensitive to the tension between increasing efficiency and improving resiliency. When these two forces achieve harmony, your company will be able to unleash the power of optimized performance.

ShadowBox training can be a powerful tool for calibrating teams and increasing organizational willpower. If you or your organization is considering solutions to help you achieve balance between the two arrows, contact us.

In addition to Gary Klein’s book, Seeing What Others Don’t (2013), he has also written about the topic on his Psychology Today blog. Click the link below to learn more.