Co-written with fellow Future Shaper, Sabine Simon.

Margeret Heffernan, Professor for Practice at Bath University and Entrepreneur, points out that „For good ideas and true innovation, you need human interaction, conflict, arguments and  debate.“ The obvious: a lack of this will jeopardise innovation. Plenty of obstacles can put a stranglehold on innovation projects on the team or individual level. 

In the first two articles on the Killers of Innovation (The Failure and The Organisation), we focused on the reasons and consequences of failures, their importance for innovation, and the factors that inhibit innovation in organisations. Often, businesses that have been successful over years or even decades are prone to collapse in dynamic and changing environments. The so-called Icarus Paradox, a term coined by Danny Miller, Economist and Professor for Strategy at the HEC Montreal, implies that these successful organisations tend to become overconfident and blind to the changes that jeopardise their business. They continue their businesses the same way, based on the same strategies, often without open ears to the necessity of innovation. While this is, to some extent, caused on the organisational level, the root causes are located in teams or even individuals.

Organisations consist of teams, which have individual members. On both levels, pitfalls can cause severe damage to necessary innovation. 

In the 20th century, Edwin Land was an iconic figure in innovation. He registered a sheer number of 535 patents. The likes of Steve Jobs admired him. Andy Warhol used his products for his artistic, creative projects. Land was the co-founder of Polaroid, a company that revolutionised photography with instant images. He invented the polarised filter, worked on tasks for the US Military during the Second World War, and was best known for introducing the first camera that could print pictures in „only“ 60 seconds. This was back in 1947. Polaroid was a role model for Apple in many ways. Especially for transforming the introduction of a new product into a fantastic on-stage show. But as Kodak, they were heavily affected by the introduction of digital photography. They were offered the technology early but were reluctant to invest, which ultimately led to their demise at the end of the last century.

It is worthwhile to take a closer look at how this unfolded as Polaroid became a victim of Innovation Killers that prey on the team and at individual level.

Team Factors

 After the success of the instant camera, Polaroid worked to take their success story to the next level. In 1978 they released their instant movie camera Polavision. A huge technological breakthrough, heavily marketed, but a disaster regarding market success. It competed against the rising, but still expensive and too bulky video cameras. Sales were slow, and Polaroid stopped production in 1979. The loss for the camera, which took over two decades to be developed, rumored to be in the area of $15m, and it was tough to take. Edwin Land exited the company in 1980. 

The failure, which at least had a hand in the demise of Polaroid, is an example of the Innovation Killer called groupthink. 

Killer No. 1: Groupthink and Group dynamics

Organisational Psychiatrist Adam Grant defines groupthink as „the tendency of a group to seek consensus. “1 This psychological phenomenon occurs when the desire for harmony in a group disregards a healthier exploration of alternatives. There is a danger that groupthink develops so strongly in one direction that other options are no longer recognised. Group dynamics also play a role in this. Group dynamics and groupthink go hand in hand. 
The main consequence of groupthink is the loss of individual creativity, uniqueness, and divergent thinking. At Polaroid, this particular Innovation Killer struck twice. 

First of all, Polaroid hired employees with the same passion as Land, focusing on diversity of talent, a passion for innovation and a strong dedication to the mission. The resulting sense of belonging led group members to seek to discover common ground, minimise conflict and reach a consensus decision. The strong belief in the success of Polavision was able to brush doubts and conflicting views aside – despite competition or the inadequacies of the camera (only 2.5 minutes of film and no sound). While this seems to be a pillar of successful start-ups as it helps to follow a certain path and achieve exceptional results in the early stages of the journey, it can have negative effects in the long run, as this example shows. Alternative ideas or points of view are no longer critically evaluated. 

Secondly, the company firmly believed in the longevity of classic print images and not in the digital future of photography. Within the group now governing Polaroid, there was a strong consensus from the experience of failure and a tendency of avoidance and insufficient risk-taking. They were convinced of the technology and business model, which meant not to focus on selling the hardware, but the film. When they realised the change of technology was shifting both business models and the market, it was too late. When Polaroid launched its digital camera in the mid-90s, it was already too late as there was already too much competition in the market. 

Killer No 2: Diversity 

“Diverse and inclusive cultures give companies a competitive advantage over their competitors.“2 This quote sums up the conclusions of the Wall Street Journal’s first corporate ranking of diversity and inclusion among S&P 500 companies. The work of the Journal’s researchers joins a growing list of studies by economists, demographers, and research firms that confirm that socially diverse groups are more innovative and productive than homogeneous groups.

Employee diversity takes different forms. There are the commonly considered innate characteristics of age, gender, ethnicity, race, and sexual orientation. But other types of diversity, acquired through experience, are also important. They can include academic subjects, industry background, career path, status, and foreign work experience, which teaches one to appreciate cultural differences. Leaders and teams with a mix of innate and acquired forms of diversity seem to be the most productive. 

The right choice of team members is thus directly related to innovation success3. Jenewein & Heidbrink distinguish between alpha and beta errors. Studies in high-performance sports teams show that it is less harmful not to consider the one right expert than the one who does not fit into the team. However, the beta error, i.e., choosing the wrong person, is much worse for the team’s climate and groupthink.

Founder Ray Dalio built Bridgewater on principles to create an idea of meritocracy. He focuses on diversity, on the engagement of each individual, and on a commitment to radical truth and radical transparency to promote open and honest dialogue so that the best ideas can prevail. His principles were captured in a TED Talk4 and published in a best-selling book in 2017. Ray sees the engagement of each individual and the commitment to questioning what already exists as individual factors to prevent groupthink.

Killer No. 3: Dysfunctions

In his book “The Five Dysfunctions of a Team,” Patrick Lencioni presents a team efficiency model that focuses on elements that teams should not have to work well together. He and Amy Edmondson, a professor at Harvard Business School, consider trust and psychological safety as the basis for successful or failing teams. Amy Edmondson became known through her hospital study5. To her great surprise, she found that the best teams made more mistakes than the worse teams. The solution to the riddle: the best teams did not make more mistakes, but fewer. However, the openness and willingness to report them were higher. That was the starting point of their research on psychological safety. Impressive proof of the power of psychological safety was Google’s “Project Aristotle” (2016). This study aimed to find out what differentiates high-performing teams from other teams. It regarded many variables that could affect the team’s performance. Unsuccessful. None of them had any particular predictive value until they added “psychological safety” as a variable. Psychological safety was, in fact, the predictor with the highest predictive power for team performance. “Project Aristotle” made the concept of psychological safety known worldwide. Thus, there is a well-documented and stable relationship between psychological safety and learning and psychological safety and performance.

If teams don’t build trust and thus psychological safety, they fail.

As a result, teams cannot address conflicts (both factual and personal), which Lencioni describes as the second dysfunction. An apparent consensus harms creative idea generation. If teams lack commitment and engagement, decision-making and meeting deadlines become a rollercoaster ride – the third dysfunction. Ambiguities lead to disorientation and demotivation. The fourth dysfunction elaborates on the low responsibility of individual team members. Standards and demands remain low. Quality, productivity, and creativity decline as a consequence and lead to a downward spiral that can no longer be stopped. If there is a lack of attention to team goals – the fifth dysfunction – personal goals and own interests comes to the fore. The focus on the overall goal is lost, and failure is inevitable. 

Many of these dysfunctions and killers at the team level are tightly linked to the individual attitudes and competencies of the team members. Therefore, it is also essential to consider the individual factors.

Individual Factors

All innovation starts with an individual at the foundation of each team, each organisation, or startup. With their thoughts, decisions, mindsets, skills, motivations, confidence, resilience, and other essential factors, individuals influence the performance and outcomes of innovation projects. We want to highlight three elements that stand out when regarding innovation killer potential.

To complete the story of Polaroid, it is essential to move to the level of the individual. The company leaders were convinced that sticking to their existing and successful business model was the right way to move forward. In 1985 McAllister Booth (Polaroid CEO) elaborated in a letter to the stockholders that „…As electronic imaging becomes more prevalent, there remains a basic human need for a permanent visual record…“. When an engineer suggested acquiring a startup with the technology of digital imaging, the CEO overconfidently dismissed the idea and said, „Polaroid doesn’t sell what it didn’t invent.“ 

This particular example illustrates the most significant Innovation Killer in individuals: bad decisions making. Innovation Projects often are narrow paths with lots of forks and twists suddenly appearing out of nowhere. They are not like fully developed highways with early announced exits. The problem: Innovation involves insecurity, ambiguity, complexity, dynamics, and requires a lot of, often spontaneous or under pressure, decision-making. Which idea to select, which path to choose, which problem to prioritise, act now or later, whom to talk to, which feedback to trust, what to do next? The decision-making process and ultimately wrong decisions often cause innovation to fail. 

Often, because our bounded rationality limits our decision-making capabilities. 

The term “bounded rationality “was coined by Herbert A. Simon. He elaborates that “boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information.” Our mental models of reality, of the complex world, are limited. Daniel Kahnemann introduced the two cognitive systems 1 and 2 for that are involved in perceiving and processing information. While it works efficiently, System 1 tends to cloud the view of the complexity and multi-layered nature of problems and quickly make decisions based on heuristics. We often tend to make decisions intuitively, which is suitable for many of the daily decisions.

Regarding innovation, however, this is counterproductive. Our view of reality is distorted. All kinds of cognitive biases – over 180 according to the Cognitive Bias Codex – strongly influence it. A lot of them, like the authority bias, the confirmation bias, the sunk-cost fallacy, the illusion control, and illusion validity effects, are affecting the decision-making process. 

It’s important to emphasise the survivorship bias. Confidence and conviction are essential prerequisites for implementing innovation. Nevertheless, a realistic assessment of the prospect of success is vital. A focus on past success or success stories obscures the view of risks and dangers. Thinking only in terms of best-case scenarios is not enough. The danger lies precisely in an overly optimistic assessment of the prospect of success.

Getting back to the demise of Polaroid, overconfidence in the known and market-proven technology and their established business model backfired. The overconfidence bias makes us blind and inattentive to our surroundings because we strongly believe in our experience, skills, or knowledge.  

So, there is no homo oeconomicus and no rational decision-making to guide through innovation. Acting too much on a potentially biased intuition and missing relevant facts puts the ventures at risk. While wrong decisions often prove to be fatal, delaying crucial decisions can have the same effect. Of course, gathering information is vital to make them on solid ground, but sometimes speed and timing are vital. Success is also depending on setting the priorities right. A lack of focus on prioritisation can prove to be costly. Setting priorities in a  fact-based manner is essential. However, an “analysis paralysis “due to a data overload could lead to getting lost in measuring and analysing activities. Of course, it is also essential to follow up on urgent matters with a high priority, but not at all at the cost of critical issues. There is always a danger of getting lost in small  urgent tasks’ hyperactivity and losing sight of the big picture. This could also spell doom on any innovation effort.

One often overlooked aspect of decision-making is that humans have a finite amount of willpower for their daily decisions. Roy Baumeister and John Tiernay elaborate on this in their book „Willpower. “ Making too many decisions will lead to decision fatigue. In this state, it might not be easy to distinguish between essential and less consequential decisions. Also, at low levels of willpower, humans tend to be more focused on the short term and make decisions more intuitively with unfinished assessment – with disastrous consequences for innovation. Stress levels must also be regarded. While stress and the relevant hormones and neurotransmitters help focus and provide additional energy, they also narrow one’s perspective. Thus, with shrinking numbers, pressure from market changes, or new clients, individuals and groups are more prone to making the wrong decisions. 

Another Innovation Killer is individual uncertainty or lacking either faith or conviction. This factor automatically leads to a lack of energy and motivation, required as constant drivers, reminders and inspirations of an idea, its value, and potential. If the individual evaluates a task or situation as too great a challenge and thus as uncontrollable, intrapsychic processes are released that inevitably lead to defence mechanisms being set in motion through corresponding thinking and action.6

In a Forbes article from 2018, Alex Goryachev (Managing Director of Innovation Strategy & Programs at Cisco) states that „Innovation is Communication. “ In his view, it is the most critical factor. Communication is the driver of every innovation project. On an individual basis, it happens with the team, with partners from the ecosystem, with clients, venture capitalists, etc. Thus communication mistakes can deliver a fatal blow to all innovation activities. Missing transparency, a lack of empathy, insufficient inspiration, not listening, or missing feedback are all communication mistakes that can deliver fatal blows to innovation endeavours. 

Finally, the same that counts for risk- or change-adverse mindsets of organisations is valid for the mindsets of individuals. It cannot be attributed to a specific category but jeopardises innovation at all stages. To understand the mechanics for innovation right from the beginning, the Technology Adoption Model by Everett M. Rogers provides valuable insights. The model distinguishes between five social groups with different characteristics. Innovators (2.5%) and Early Adopters (13.5 %) are a minority group. What counts for markets is also true for others. The distribution makes it quite clear why it is challenging to develop an equilibrium where innovation can truly thrive. While the effects of innovation-adverse mindsets often only become visible at the team or organisational level, the source is the individual. Of course, many other factors are involved, and it is difficult to isolate the mindset as the sole factor for innovation failure. However, sentences like „That’s the way we’ve always done it “ or „This will never work“ seem to be quite common and frequent. Therefore the factor mindset cannot be disregarded. The work of Carol S. Dweck, published in her book „Mindset, “provides another perspective on the role of the mindset. She distinguishes between a fixed and a growth mindset. The fixed mindset prefers to avoid challenges, ignore negative feedback, or give up more quickly. While humans have both mindsets to some extent, it is easy to assume, when regarding these traits, that a dominant fixed mindset has more of a negative impact on the success of innovation.

Conclusion Part 3: The Origin is the Individual

While the list of factors is by no means comprehensive, it is essential to understand that the three Innovation Killers are strongly related. Bad decision-making does not only happen on the individual level but also on the team or organisational level. The origin, however, is the individual. Unfortunate distribution of power in teams and organisations, lack of diversity, and other factors lead to the fact that wrong decisions often prevail and innovative behaviour and thinking are paralysed. It is essential to acknowledge that the individual with their thinking patterns and mental models are at the beginning of the process.

In the fourth and final article of the Innovation Killer series, we will take a closer look at the adversity of environments and analyse the interaction of the four categories that make successful innovation so tricky. Until then, stay tuned!

 

Sources:

1 Adam Grant, Originals, p. 176

2 The Business Case for More Diversity – WSJ , 26.10.2019, Dieter Holger, Wall Street Journal

3 Diversity at Work,” BCG article, July 2017; “The Mix that matters,” BCG, & TU Munich, April 2017

4 Ray Dalio: How to build a company where the best ideas win | TED Talk ; April 2017

5 Amy Edmondson, Psychological Safety and Learning Behaviour in Work Teams, 1999

6 Lazarus, R. S. (1991). Cognition and motivation in emotion. American Psychologist, 46 (4), 352-367. Available at: http://search.ebscohost.com/login.aspxdirect=true&db=psyh&AN=1991-23402- 001&site=ehost-live