One of the hottest topics in business now is innovation. The days when you can be successful and sustain organizational growth through efficiency and productivity alone have long passed.
Business leaders often have tried to generate more innovation in their organizations by hiring creative people and giving them resources to develop new ideas. AT&T had its Bell Labs, and Xerox had PARC. While successful to a degree, especially in new discoveries, these units often fell short of true innovations that helped their parent companies. Even today, most organizations fumble their way through innovation.
One of the key reasons is the difference between creativity and innovation. Most leaders confuse these two concepts. Here is the basic difference: Creativity is focusing on generating new ideas that are novel and unique. The graphical user interface for computers—developed at Xerox PARC—and the mouse were novel ideas. On the other hand, innovation is bringing these creative ideas into practice. So, Apple, with the leadership of Steve Jobs, was successful in bringing the creative ideas of the GUI and mouse into practice by creating the Macintosh computer.
Success and failure
Why is it so difficult to innovate? The reason lies in the inherent duality that exists with the concept of innovation.
The first duality of innovation is the notion of success and failure. We, as a nation, seem to be obsessed with success. This goes along with our “winner worship.” There is a saying that goes “nobody remembers a second-place finisher,” and the winners are celebrated as heroes. Just look at how Tom Brady was celebrated as he led his team to victory in this year’s Super Bowl. Actually, if you look at sporting events, most force produce one winner. Some employ a sudden-death playoff to determine the winner, and for other sports, the game goes on and on until the winner is identified (golf, for instance). What is wrong with the notion that there are co-champions? Is it sacrilegious to have more than one winner?
Failure carries a negative stigma in our culture. Experimentation carries a risk in that you do not know if you are going to succeed. Rather than considering failures as finite outcomes, consider them part of the process. Thomas Edison is quoted as saying: “I have not failed. I’ve just found 10,000 ways that won’t work,” and “Many of life’s failures are people who did not realize how close they were to success when they gave up.” Both statements make perfect sense. In other words, a failure is not a static outcome but a piece in the process. If you can learn from failures and move forward with new ways of doing things, eventually you can reach a successful outcome.
We often talk about being “results driven or focused,” but if the above example is any indication, you do not want individuals to focus simply on results. Rather than focusing on results, we should be focusing on the process where we can engage in experimentation that leads to innovation.
Let’s look at a scenario where a risk-reward ratio provides a completely different picture for an individual versus a collective. If you have a project that provides a 300 percent return on your investment if successful but also a negative 100 percent return if you fail, and the odds for success are even (50 percent), then you as an individual might not want to take the assumption of risk since you might end up losing 100 percent of your investment half of the time. In fact, if the alternative project provides you with a 10 percent return but no loss with a 90 percent certainty, then you as an individual are more likely to take on the second project rather than the first. Given the negative stigma associated with failures, it is easy to see why many managers would pursue the safe project rather than the risky: “I got a nice return of 10 percent,” or “at least there was no loss of investment.” However, for the entire organization, it would be so much more advantageous if the managers pursued the risky option (100 percent return instead of 9 percent return). If your organization creates a culture of innovation where there is a risk-free and experimental- focused environment, then more of your managers would want to pursue the risky option.
The second duality lies with learning and performance. Often the notion of “results driven” encourages us to be “performance focused” rather than “learning focused.” Organizations always focus on maximizing performance, but often such emphasis on performance retards learning. By nature, learning is not efficient. Imagine a time when you were trying to learn something new. You are not familiar or proficient with it, so you will be slower and, as a result, your productivity is bound to suffer.
If you are an aspiring Olympic gold medalist, the last thing you would do when you are engaged in your final competition in the Olympics would be to say to yourself that you will engage in experimentation and will try something you have not tried before just to see if you can do it. Instead, you would be reminding yourself that you have done this routine thousands of times, and you would want to repeat your best performance. So, here the athlete wants to focus on performance. However, innovation requires you to try something new and different, so excessive emphasis on performance does retard learning and curtail risk-taking and experimentation.
The third duality of innovation is disruption and chaos versus stability and order. We as human beings strive to maintain our order. Our brains are designed to make sense of chaos and to seek order to reduce uncertainty. The level of stress that uncertainty generates is enormous. Our brains are designed to avoid using excess energy for anything else than our own survival since early human history. So, our instincts are driven to prefer routines over non-routines and order and certainty versus disorder and uncertainty.
In many organizations, the budget and planning process is executed each year to provide order and minimal disruptions to the operation of the organization. Such was the purpose and objective of management systems organizations created to maintain stability and order. Unfortunately, such systems detract from our ability to innovate since innovation is often disruptive to the system. Innovation takes us away from our routines and orderly existence and into more non-routine and chaotic existence.
The ultimate question we need to be asking is: Where do we draw the line? Do we emphasize performance over learning, results over process, and order over chaos? There is a need for structure and control so that an organization can function as a collective. The types of behavior that might lead to more innovation—risk taking and experimentation—create more feeling of uncertainty and at times chaos. As you can see, these are all related concepts of duality that either seem to facilitate or interfere with innovation. What is needed is for us to recognize such duality, which can be paradoxical, and figure out how to create the best or optimal balance between these two extremes.
There are several ways organizations can go to resolve these dualities. For success and failures, organizations can move toward collective reward rather than individual reward. In addition, organizations can also reward not the results but the processes—in other words, reward people for experimentation and learning. Encourage employees to see not just their own situation but also the bigger picture and consider how a collective action might benefit the organization as a whole rather than an individual action that would benefit the individual. In addition, leaders in the organization should try to align their organizational goals with individual goals so that they can pursue organizational goals while still empowering their employees.
The norm for the organizations can be established to disrupt and challenge the status quo rather than emphasize conformity and stability. Foster constructive or positive disruptions that are self-inflicted, meaning you have to generate internal drives to make changes rather than have them be forced to be changed due to external factors. In order to challenge the status quo, you have to keep asking, “why,” and “why not” when people say, “We tried it before,” or “It won’t work here.” As discussed earlier, organizations need to focus on learning and experimentation rather than solely on performance. Organizations need to encourage people to become comfortable with uncertainties and ambiguities. In short, disruptions become a part of the norm.
If innovating were easy, then every organization would be innovating. What makes innovation difficult is the intrinsic dualities I’ve described. The test of whether organizations will move toward creating a culture of innovation depends on how optimally they resolve three dualities. If the organization moves toward rewarding experimentation and risk-taking, encouraging learning over performance, and fostering disruptions over order and control, then more innovations will result. On the other hand, if these dualities are resolved unfavorably, it could mean a death knell for innovation in the organization
Kenneth Rhee is the dean of the School of Business and Leadership at Nazareth College.