Inspire Innovation By Avoiding Decision-Making Traps16 April, 2020 / Articles
It’s always been important for decision-making and innovation to work in tandem, but it’s even more apparent during uncertain times. Many companies are looking at how they make and prioritize decisions while still trying to innovate to remain competitive. Soon, your company may realize that without a proper system in place, you end up chasing hundreds of goals and failing to achieve any of them.
“More than a few companies, if they’re honest, would admit that they pick prospective innovation projects based on who raised the idea, how ‘sexy’ the idea is or what piqued the interest of their CEO,” writes Jake Carter, partner and CIO of consulting firm Credera, on the company’s blog. “Contrast this to companies that have a systematic way to pick projects, and the difference is stark.”
As enticing as the allure of innovation is, leaders of companies can’t afford to get distracted. At the same time, businesses that fail to innovate inevitably lose ground to more agile competition. To find the balance, work proactively to develop a system that can make the hard decisions for you. Use the below guidance to build a process that can facilitate innovation and help avoid the pitfalls of time mismanagement.
Translate purpose into action
Identify your company’s purpose, and use that purpose to help decide which goals deserve your attention. The larger your company grows; the more opportunities you’ll find to expand into new verticals or take on new competition. Some of those opportunities provide necessary growth; others only distract. By leaning on purpose, you can weed out the opportunities that don’t fit your vision for your business.
Five years after CVS stopped selling cigarettes in its stores, company president Larry Merlo stands by the decision. As Merlo writes in a guest column for CNN, “Our own actions to exit tobacco came out of a realization that not only was the sale of tobacco a barrier to the future growth of the company … Moreover, our exit from tobacco helped validate CVS’s evolving role in the healthcare marketplace and disrupted access to cigarettes.” CVS took a major risk, and though the company dealt with some financial turmoil, it positioned itself as a health-first brand at the right time.
Set aside a budget for experimentation
Personal-finance gurus teach people to stop looking at how much money they have in their bank accounts and start thinking about the difference between their earnings and their expenditures. In business, looking at total budget when evaluating innovation opportunities follows the same faulty logic. Rather than consider whether you have the cash, set money aside proactively so you can conduct experiments to validate potential ventures.
In Harvard Business Review, Peder Inge Furseth and Richard Cuthbertson explored the difference between innovation capacity and innovation ability. In this context, capacity refers to assets and resources (including talent), while ability refers to the more nuanced aspects of innovation. You can scale capacity much more quickly than ability, so start with small experiments and invest in the ones that show the most promise.
Reward smart risks, not just positive results
Innovation stands out because innovators do things others either weren’t willing to try or didn’t consider in the first place. Unfortunately, many workplaces punish workers who take risks — even companies that claim to encourage experimentation. If your employees see risk takers fail to earn promotions while people who play it safe become managers, your workforce will cease to support innovation.
Avoid becoming a hypocrite by establishing a system to evaluate potential risks before acting on them. Reward employees for their initiative, not necessarily for their results. Many great ideas flop for one reason or another. Make sure employees understand the goals and boundaries of their experiments before signing off on something. When you analyze risk upfront, you can spend more of your energies following up on the ones that show the most promise.
Avoiding decision-making traps doesn’t mean stifling worthy ideas. On the contrary, your goal should not be to limit volume, but to weed out low-ceiling opportunities quickly and easily. Once you put your system in place, you can start chasing more worthwhile innovations and spend more time growing your company in promising directions.