Photograph by Lasse Kristensen—Getty Images/Moment Open
By Anne Fisher
April 27, 2016

The history of business is filled with what look, in retrospect, like boneheaded decisions. Remember when Excite (since evolved into Ask.com) had the chance to buy a wacky little startup called Google for $750,000 — and turned it down? Or when Kodak developed digital photography before anybody else, and chose to keep it quiet? Or how about the 12 publishers who rejected J.K. Rowling’s first Harry Potter book, before the series went on to sell more than 400 million copies?

The problem isn’t that decision-makers are dumb, observes Jeffrey Loewenstein. “It’s that recognizing great innovations ahead of time is hard.” Loewenstein is the academic director of the executive MBA program at the University of Illinois at Urbana-Champaign, and he studies creativity in organizations. Along with three co-authors of a yet-to-be-published paper on the topic, he has spent the past few years analyzing precisely how innovation gets squelched inside companies — even when managers genuinely believe they’re encouraging it.

In a nutshell, the research shows that people often reject new ideas without knowing why. “In a typical organization, some people generate ideas, and then other people decide whether to go ahead with them,” notes Loewenstein. The decision-makers are motivated by what you’d expect — how feasible something is, and whether it’s likely to make money — but also, and most often unconsciously, by a concern Loewenstein’s team has dubbed “social approval.”

This boils down to the question, “How weird is this, and how crazy am I going to look if I green-light it?” Nobody, after all, wants to be known as the guy who authorized the Edsel. Most untried ideas by definition score low in social approval, and since decision-makers don’t even realize they care about it, “they tend to dismiss innovations on other grounds, like feasibility,” Loewenstein says. “It’s not deliberate. They just know they don’t like the idea.” So they react with what one reader of the research memorably described as “an intuitive ‘yuck.’”

One way around this, Loewenstein’s team suggests, is to divide the approval process into two parts. Instead of putting the whole weight of the decision on a manager, try having a group of subject-matter experts evaluate innovations first. (An ad hoc team of developers and programmers would rate an idea for new software, for example.) Then, let them recommend the ones they think show promise.

Simple as it sounds, this works for two reasons. One is that “do-ers and decision-makers evaluate creativity by different criteria,” Loewenstein says. Most important, a two-part approach cuts back on the risk managers unconsciously perceive — partly by generating social approval, and partly because they’re basing their decision on the expert judgment of a group, instead of flying solo.

Some companies known for their innovative cultures seem to bear this out, Lowenstein notes. At Google, 3M, Adobe, and other places that give employees the time and resources to develop their own ideas, “the cool part is that people work on each other’s projects. The most interesting ones get a lot of buzz and attract a following. That creates the social approval a truly innovative idea needs if it’s ever going to get out of the lab.”

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