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How company leaders talk about creativity can hurt investor confidence – Business Scribble

How company leaders talk about creativity can hurt investor confidence – Business Scribble


Creativity is often touted as a positive activity for organizations, but it is inherently risky. Research led by management professors at UC Riverside has found that when company leaders discuss creativity and innovation, investors react negatively to the perception of risk, displaying a creativity bias. However, the research also shows that this reaction may not be warranted because creativity-speak is linked with higher firm financial performance. Moreover, investor confidence is affected by the tone company leaders adopt when talking about creativity and innovation. Leaders who talk about creativity in a confident, positive manner reassure investors, while creativity-speak that takes a more negative tone turns them away. 

“Companies love to play up innovation and creativity and most research on creativity says it’s a good thing,” said Michael Haselhuhn, a UC Riverside associate professor of management. “But there is some research that suggests the opposite. Creative ideas are inherently risky and people don’t like novelty or uncertainty in leaders. We wanted to see if the creativity bias holds in the real world where it matters so we looked to see how investors respond to executives’ discussions of creativity.”

Haselhuhn and Elaine Wong, also an associate professor of management at UC Riverside, and Margaret Ormiston at George Washington University, obtained transcripts of conference earnings calls made to investors. They used a computer program to analyze the transcripts for words related to creativity and innovation, tracking how many times these words were mentioned during the conference calls. From other sources, they found stock return data and financial performance data. Then, the researchers ran regressions and robustness checks on the combined datasets and found correlations between creativity-speak, investor confidence, and earnings.

They found that firms whose top executives discussed creativity and innovation to a greater degree had relatively lower stock returns, indicating lower investor confidence. But the same did not hold true for company earnings.

“Surprisingly, and in contrast to the creativity bias expressed by investors, firms with leaders that engaged in creativity-speak actually had higher earnings,” said Wong. “The perception of risk, however, was still enough to deter investors, but only in certain circumstances.”

When executives talked about creativity with a positive tone and emotions, and communicated confidence and optimism, such as crediting creativity for recent positive performance, the researchers found no negative effect on investor confidence. But when executives talked about creativity in a more negative tone, for example, suggesting that creativity and innovation were solutions to lagging company performance, investors turned away. 

“The tone of conversation was more important than the industry or situation. If you mention negative things alongside creativity you’ll hurt investor confidence,” said Ormiston. “Investors are wary of creativity and innovation as evidenced by lowered stock returns in response to creative expression. Top executives need to understand this concern and make efforts to minimize it.”

The paper, “Investors respond negatively to executives’ discussion of creativity,” is published in Organizational Behavior and Human Decision Processes and is available here.

Creativity has always been at the heart of business, but until now it hasn’t been at the top of the management agenda. By definition the ability to create something novel and appropriate, creativity is essential to the entrepreneurship that gets new businesses started and that sustains the best companies after they have reached global scale. But perhaps because creativity was considered unmanageable—too elusive and intangible to pin down—or because concentrating on it produced a less immediate payoff than improving execution, it hasn’t been the focus of most managers’ attention.

Creativity has, however, long been a focus of academics in fields ranging from anthropology to neuroscience, and has enticed management scholars as well. Therefore, a substantial body of work on creativity has been available to any businessperson inclined to step back from the fray of daily management and engage in its questions. And that’s suddenly very fortunate, because what used to be an intellectual interest for some thoughtful executives has now become an urgent concern for many. The shift to a more innovation-driven economy has been abrupt. Today, execution capabilities are widely shared and the life cycles of new offerings are short. As competition turns into a game of who can generate the best and greatest number of ideas, creativity scholars are being asked pointed questions about their research. What does it mean? How relevant is it? Does it offer guidance on the decisions that leaders in creativity-dependent businesses have to make?

To help make the connections between theory and practice, we recently convened a two-day colloquium at Harvard Business School, inviting business leaders from companies whose success depends on creativity—such as design consultancy IDEO, technology innovator E Ink, internet giant Google, and pharmaceutical leader Novartis. At the gathering, leading scholars presented their newest and most important research. In all, we brought together nearly 100 people who were deeply concerned with the workings of creativity in organizations and let the sparks fly.

Over those two days, we saw a new agenda for business leadership begin to take shape. At first, we heard skepticism that creativity should be managed at all. Intuit cofounder Scott Cook, for example, wondered whether management was “a net positive or a net negative” for creativity. “If there is a bottleneck in organizational creativity,” he asked, “might it be at the top of the bottle?” By the colloquium’s end, however, most attendees agreed that there is a role for management in the creative process; it is just different from what the traditional work of management might suggest. The leadership imperatives we discussed, which we share in this article, reflect a viewpoint we came to hold in common: One doesn’t manage creativity. One manages for creativity.

Drawing on the Right Minds

The first priority of leadership is to engage the right people, at the right times, to the right degree in creative work. That engagement starts when the leader recasts the role of employees. Rather than simply roll up their sleeves and execute top-down strategy, employees must contribute imagination. As Cook put it, “Traditional management prioritizes projects and assigns people to them. But increasingly, managers are not the source of the idea.”

Tap ideas from all ranks.

Cook told the story of an eye-opening analysis of innovations at Google: Its founders tracked the progress of ideas that they had backed versus ideas that had been executed in the ranks without support from above, and discovered a higher success rate in the latter category. Similarly, it was noted that Philip Rosedale, the founder and chairman of Linden Lab, the fast-growing company that manages Second Life, claims to give most workers enormous autonomy, and says the greatest successes come from workers’ own initiatives.

Research by Israel Drori, a professor at the College of Management in Israel, and Benson Honig, a professor at Wilfrid Laurier University in Canada, highlights the hazards of not distributing creative responsibilities across the organization. They observed an internet start-up offering a new, sophisticated form of computer graphics from its inception in 1996 until its collapse, seven years later. While the venture enjoyed initial success, it was ultimately unsustainable because it depended too much on the genius of its award-winning artist-founder—and took organizational creativity for granted.

Encourage and enable collaboration.

As leaders look beyond the top ranks for creative direction, they must combat what Diego Rodriguez, a partner at IDEO and the leader of its Palo Alto, California, office, calls the “lone inventor myth.” Though past breakthroughs sometimes have come from a single genius, the reality today is that most innovations draw on many contributions. “Consider the examples of InnoCentive, of Mozilla, of Wikipedia,” Rodriguez said. “All are contexts that bring in lots of contributors. And the fundamental structure of such networked organizations is not centralized and top-down. People don’t do what they do because someone told them to do it. Contributing to an interdependent network is its own reward.” Rodriguez argued forcefully that, even in today’s highly networked world, organizations fail to take full advantage of internet technologies to tap into the creativity of many smart people working on the same problem. (For Scott Cook’s thinking about tapping the input of people outside the organization, see “The Contribution Revolution,” Reprint R0810C.)

A study by Victor Seidel of the University of Oxford’s Saïd Business School identified one practice that leaders would do well to promote: the use of “coordination totems” in the conceptualization of new products. Seidel looked at the problem of how to achieve collaboration on radical innovations; when no obvious antecedent exists, it’s difficult for a vision to be shared. His analysis of six award-winning products (from three quite different industries) showed how product development teams used not only prototypes but also metaphors, analogies, and stories to coordinate their thinking.

Robert Sutton, a professor at Stanford University’s School of Engineering, noted that most companies have hierarchical structures, and differences in status among people impede the exchange of ideas. How to remedy that? Sutton couldn’t resist pointing out the huge inequalities in salaries at today’s firms and suggested that if the field were more level, more people might speak up and be listened to. He urged leaders to define “superstars” in their organizations as those who help others succeed. Wryly, he recalled seeing powerful people hold forth in meetings even though others in the room had much better ideas for solving problems. It should be management’s mission, he suggested, to “figure out how to get people to shut up at the right time.”

Open the organization to diverse perspectives.

Frans Johansson, author of The Medici Effect, described his finding—based on interviews with people doing highly creative work in many fields—that innovation is more likely when people of different disciplines, backgrounds, and areas of expertise share their thinking. Sometimes the complexity of a problem demands diversity; for example, it took a team of mathematicians, medical doctors, neuroscientists, and computer scientists at Brown University’s brain science program to create a system in which a monkey could move a computer cursor with only its thoughts. Other times, the application of one field’s methods or habits of mind to another field’s problem produces the breakthrough.

Even within the mind of an individual, diversity enhances creativity, according to a study a professor at the University of Michigan, his Michigan colleague Fiona Lee, and Chi-Ying Cheng of Columbia University. Their research focuses on people who have multiple social identities, such as people who are both Asian and American, or who are both women and engineers. Social identities often have distinct knowledge associated with them, and to the extent an individual is comfortable integrating multiple identities, his or her knowledge sets can combine productively. Indeed, through two experiments, these researchers found that people with higher levels of “identity integration” display higher levels of creativity when problems require that they draw on their different realms of knowledge. (One experiment asked Asian Americans to invent new forms of Asian American fusion cuisine, and the other asked female engineers to imagine new features for a cell phone for women.) This research sparked a great deal of personal interest and has implications for management. If managers cause people to suppress parts of their identity, they limit a potentially valuable source of creativity. If managers can encourage identity integration—think of female engineers working in an environment where they don’t feel they have to dress like men—people may be more innovative.

Managers can also enhance diversity by looking outside the organization for sources of creativity. Collaboration need not be bounded by the walls of the firm, as Rodriguez noted, pointing again to networked organizations such as Wikipedia. Many, in fact, see the recent phenomenon of open-source development as the future of innovation.

For those who may worry that open-source innovation is still unproven and relevant only in software, Peter Meyer, an economist with the U.S. Bureau of Labor Statistics, put the matter in perspective. He analyzed the invention of the airplane, which, by today’s definition, could easily be termed an open-source innovation. In the years before the commercial potential of aviation was recognized, the Wright brothers were just two of many enthusiasts who shared their discoveries and ideas freely and frequently in the manner of avid hobbyists. These “tinkerers,” as Meyer characterized them, were motivated not by the desire to get rich but by the technical challenges and romance of the quest for human flight.

The openness of the network, Meyer showed, greatly assisted the development of the airplane; the Wright brothers participated actively in it from 1900 through 1902. However, as the Wrights realized how important their breakthroughs were likely to be in creating viable commercial and military aircraft, they focused on securing patents and finding ways to make money from their inventions. Collaborators became potential competitors, and secrecy the new norm among them. The dual implications of this research are intriguing. Open-source innovation, with its ability to tap the passion and ingenuity of tinkerers, offers enormous potential for creative output, and new industries with proprietary or secret technology can arise from it. But open-source processes may work only in certain kinds of endeavors or for limited windows of time.

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Bringing Process to Bear—Carefully

Can creativity scale? That question was posed by Kim Scott, who had good reason to ask: She works at Google, where she is director of online sales and operations for AdSense, DoubleClick, and YouTube. She believes that creativity within an organization depends on vibrant, ongoing collaboration and free idea flow—which tend to dry up as a business adds people and projects. A former entrepreneur (Scott was involved in three start-ups before joining Google), she hates the fact that more layers of management often lead to more bureaucracy—and the end of entrepreneurial spirit, risk taking, and learning from mistakes. At the same time, she recognizes that it is not reasonable to have organizations so flat that managers are saddled with dozens of direct reports. “How do you get lift out of adding layers,” she asked, “instead of weight?” One solution she offered is greater investment in infrastructure, whether high-tech or low-tech, that makes collaboration easier.

The classic response to increased scale in an operation is increased reliance on process—a standardization and continuous improvement of “the way we do it.” Many at the colloquium, however, rejected the notion that creativity could be so straitjacketed. “If there is one device that has destroyed more innovation than any other, it is Six Sigma,” stated Mark Fishman, MD, president of the Novartis Institutes for BioMedical Research. Bob Sutton echoed the sentiment, citing research showing that when organizations focus on process improvements too much, it hampers innovation over the long term. “The poster child here is Kodak, which kept making the process of manufacturing and distributing chemical-based film more efficient instead of devoting attention to making the shift to digital photography,” he said. “In other words, it kept getting better and better at doing the wrong thing.” For Kim Scott, the problem comes when an emphasis on efficiency causes managers to try to avoid duplication of effort. “In creative work,” she noted, “you need to have people approaching a problem from different angles.”

Map the phases of creative work.

Process management, Mark Fishman explained, is appropriate in some phases of creative work but not others. The leader’s job is to map out the stages of innovation and recognize the different processes, skill sets, and technology support that each requires. For instance, efficiency-minded management “has no place in the discovery phase,” he said. While recognizing that pharmaceutical firms desire predictable output from their R&D operations, he reminded the group of a remark by Nobel laureate Peter Medawar: “To predict an idea is to have an idea.” Because it’s impossible to know in advance what the next big breakthrough will be, “you must accept that the discovery phase in pharmaceutical innovation is inherently muddleheaded.” Worst of all, models like Six Sigma are geared toward reducing variability and achieving greater conformance to a desirable norm. But in the fuzzy initial stages of innovation, Fishman said, “you want people to work at the ends of the Gaussian distribution. Efficient models make good sense for the middle and end stages of the innovation process, when the game has moved from discovery to control and reliability.” He offered three pieces of advice for leaders in creative settings: Know where you are in the game. Appreciate the different creative types among your people—and realize that some are better at certain phases than others. And be very tolerant of the subversive. Creative work must, like Mark Twain’s character Huck Finn, avoid all “sivilizing” influences.

Manage the commercialization handoff.

Few people have equal capabilities in idea generation and idea commercialization; that’s why large corporations normally separate the two functions. The consensus is that, eventually, an innovation reaches a point where it will be best served by people who know how to take it to market. Unfortunately, since the passion for an idea is highest among its originators, projects often lose steam at the handoff. Management’s job is to limit the loss of momentum with adroit timing and handling of the transition.

In entrepreneurial settings, idea originators are often forced to engage in commercial activity well beyond their comfort zones. Bob Litan, VP of research and policy at the Kauffman Foundation, which supports American entrepreneurship, noted how great a barrier that constitutes for many inventors. He described a program in which Kauffman links postdoctoral scientists to commercializers, rather than trying to teach inventors to spot market opportunities for their discoveries. Nonetheless, many inventors do successfully grow their businesses (think Google). These opposing models highlight the tension that always exists in the management of creatives: whether to round out their individual skill sets or allow them to run with their unique strengths and then balance them with complementary resources.

Provide paths through the bureaucracy.

Colloquium participants were of one mind on the subject of bureaucracy: It stifles creativity. Clay Christensen, a professor at Harvard Business School, offered a useful analogy for understanding why. He likened the life of an idea in a large corporate setting to that of a bill going before the U.S. Congress. The idea is reshaped at various points along the way to suit the agendas of the people whose support is required in order for it to be funded. “You’re not into it two weeks before you hear from sales or finance or engineering that they will block it unless you change it to fit their needs,” he said. “These powerful constituencies inside the company collectively beat things into a shape that more closely conforms to the existing business model rather than to the opportunity in the market.” What’s the solution? Christensen advised managers to recognize what that process does to ideas and deliberately decide to contain it.

Kim Scott added that the manager must act as a shepherd—an analogy also used by Christy Jones, founder of Extend Fertility. Both believe that executives must protect those doing creative work from a hostile environment and clear paths for them around obstacles. In fact, Scott warned the managers in the room that, by creating the necessary new structures to support cross-unit collaboration, they might unwittingly create other forms of bureaucracy. Introduce any set of mandated protocols and checkpoints, she warned, “and Dilbert has entered the room.” Other executives and researchers emphasized the need to create a culture in which creativity can thrive, repeatedly returning to the image of a gardener who prepares the creative soil and nurtures the seedlings of ideas.

Create a filtering mechanism.

Not surprisingly, some push-back occurred. It all sounds very nice, someone pointed out, but gardens do have weeds; managers must not only water and fertilize, but also kill off the stuff that holds no potential. For every idea with real commercial promise, there are dozens that aren’t worth pursuing. At what point and by whom should that determination be made?

One school of thought says that the people closest to the idea are best equipped to make the call—but only if their personal commitment to its success, and the professional ramifications, can be severed. Pharmaceutical giant Merck tries to accomplish this by offering “kill fees.” As reported by BusinessWeek, Merck’s R&D chief, Peter Kim, rewards stock options to “scientists who bail out on losing projects.” Without such incentives, it’s hard for people to throw in the towel. Indeed, Kim Scott admitted that “we set a goal at Google to cull a percentage of our projects this year, and it was a real challenge.”

In a spirited discussion of how ideas should be winnowed, Johansson suggested that the filters must be diverse. Unless the people sitting in judgment represent a variety of disciplines, functions, and viewpoints, they are unlikely to make wise decisions. Russ Wilcox, cofounder and CEO of E Ink, suggested that the filtering might even take place outside the organization. Perhaps the best way to tap the wisdom of the broader market is to give it the power to turn thumbs up or thumbs down on new commercial possibilities. That approach resonated with the company founders present. “The thrill of being an entrepreneur,” one said, “is that you get your ideas out in the real world, and they live or die there as opposed to in committee. That committee is death to creativity.” Bob Litan described two recent developments that allow for external vetting at an early stage: the increasing use of prediction markets, and the rise of business “accelerators” like Y Combinator and the Foundry, “which are essentially the American Idol approach to entrepreneurship.”

Fanning the Flames of Motivation

Motivating people to perform at their peak is especially vital in creative work. An employee uninspired to wrap her mind around a problem is unlikely to come up with a novel solution. What spurs creativity, however, has long been a matter of debate.


Creativity serves several purposes. It not only combats stagnation but facilitates growth and innovation. Here are five reasons why creativity is important in business.

1. It Accompanies Innovation

For something to be innovative, there are two requirements: It must be novel and useful. While creativity is crucial to generate ideas that are both unique and original, they’re not always inherently useful. Innovative solutions can’t exist, however, without a component of creativity.

2. It Increases Productivity

Creativity gives you the space to work smarter instead of harder, which can increase productivity and combat stagnation in the workplace. Routine and structure are incredibly important but shouldn’t be implemented at the expense of improvement and growth. When a creative and innovative environment is established, a business’s productivity level can spike upward.

3. It Allows for Adaptability

Sometimes events—both internal and external—can disrupt an organization’s structure. For example, the COVID-19 pandemic has dramatically changed how the present-day business world functions. In such instances, imaginative thinking and innovation are critical to maintaining business operations.

Creatively approaching challenges requires adaptability but doesn’t always necessitate significantly adjusting your business model. For example, you might develop a new product or service or slightly modify the structure of your operations to improve efficiency. Big problems don’t always require big solutions, so don’t reject an idea because it doesn’t match a problem’s scale.

Change is inevitable in the business world, and creative solutions are vital to adapting to it.

4. It’s Necessary for Growth

One of the main hindrances to a business’s growth is cognitive fixedness, or the idea that there’s only one way to interpret or approach a situation or challenge.

Cognitive fixedness is an easy trap to fall into, as it can be tempting to approach every situation similar to how you have in the past. But every situation is different.

If a business’s leaders don’t take the time to clearly understand the circumstances they face, encourage creative thinking, and act on findings, their company can stagnate—one of the biggest barriers to growth.

5. It’s an In-Demand Skill

Creativity and innovation are skills commonly sought after in top industries, including health care and manufacturing. This is largely because every industry has complex challenges that require creative solutions.


While creativity is highly important in business, it’s an abstract process that works best with a concrete structure. This is where design thinking comes into play.

Design thinking—a concept gaining popularity in the business world—is a solutions-based process that ventures between the concrete and abstract. Creativity and innovation are key to the design thinking process.

In Harvard Business School Dean Srikant Datar’s course Design Thinking and Innovation, the process is broken down into four iterative stages:

  • Clarify: In this stage, observation and empathy are critical. Observations can be either concrete and based on metrics and facts or abstract and gleaned from understanding and empathy. The goal during this stage is to gain an understanding of the situation and individuals impacted.
  • Ideate: The ideation stage is abstract and involves creativity and idea generation. Creativity is a major focus, as the ideation phase provides the freedom to brainstorm and think through solutions.
  • Develop: The development phase is a concrete stage that involves experimentation and trial and error. Critiquing and prototyping are important because the ideas generated from the ideation stage are formed into testable solutions.
  • Implement: The fourth stage is solution implementation. This involves communicating the solution’s value and overcoming preexisting biases.

The value of design thinking is that it connects creativity and routine structure by encouraging using both the operational and innovation worlds. But what are these worlds, and how do they interact?

The Operational World

The operational world is the concrete, structured side of business. This world focuses on improving key metrics and achieving results. Those results are typically achieved through routine, structure, and decision-making.

The operational world has many analytical tools needed for the functional side of business, but not the innovative side. Furthermore, creativity and curiosity are typically valued less than in the innovation world. Employees who initiate unsuccessful, risky endeavors are more likely to be reprimanded than promoted.

The Innovation World

The innovation world requires curiosity, speculation, creativity, and experimentation. This world is important for a company’s growth and can bring about the aforementioned benefits of creativity in business.

This world focuses more on open-ended thinking and exploration rather than a company’s functional side. Although risky endeavors are encouraged, there’s little structure to ensure a business runs efficiently and successfully.

Connecting the Two Worlds

Although the operational world and innovation world are equally important to a business’s success, they’re separate. Business leaders must be ambidextrous when navigating between them and provide environments for each to flourish.

Creativity should be encouraged and innovation fostered, but never at the expense of a business’s functionality. The design thinking process is an excellent way to leverage both worlds and provides an environment for each to succeed.

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Since the design thinking process moves between the concrete and abstract, it navigates the tension between operations and innovation. Remember: The operational world is the implementation of the innovative world, and innovation can often be inspired by observations from the operational world.


If you want to facilitate an innovative workplace, here are seven tips for encouraging creativity.

1. Don’t Be Afraid to Take Risks

Creativity often entails moving past your comfort zone. While you don’t want to take risks that could potentially cripple your business, risk-taking is a necessary ingredient of innovation and growth. Therefore, providing an environment where it’s encouraged can be highly beneficial.

2. Don’t Punish Failure

Provide your team with the freedom to innovate without fear of reprisal if their ideas don’t work. Some of the best innovations in history were the product of many failures. View failure as an opportunity to learn and improve for the future rather than defeat.

3. Provide the Resources Necessary to Innovate

While it can be tempting to simply tell your team to innovate, creativity is more than just a state of mind. If your colleagues have the opportunity to be creative, you need to provide the resources to promote innovation. Whether that entails a financial investment, tools, or training materials, it’s in your best interest to invest in your team to produce innovative results.

4. Don’t Try to Measure Results Too Quickly

If an innovative idea doesn’t produce desirable results within a few months, you may consider discarding it entirely. Doing so could result in a lost opportunity because some ideas take longer to yield positive outcomes.

Patience is an important element of creativity, so don’t try to measure results too quickly. Give your team the freedom to improve and experiment without the pressure of strict time constraints.

5. Maintain an Open Mind

One of the most important components of an environment that fosters creativity and innovation is keeping an open mind. Innovation requires constantly working against your biases. Continually ask questions, be open to the answers you receive, and don’t require fully conceptualized ideas before proceeding with innovation.

6. Foster Collaboration

Collaborative environments are vital for innovation. When teams work together in pursuit of a common goal, innovation flourishes. To achieve this, ensure everyone has a voice. One way to do so is by hosting brainstorming sessions where each member contributes and shares ideas.

7. Encourage Diversity

Diversity fosters creativity and combats groupthink, as each individual brings a unique outlook to the table. Consider forming teams with members from different cultural backgrounds who haven’t previously worked together. Getting people to step outside their comfort zones is an effective way to encourage innovation.


Creativity and innovation are immensely important skills whether you’re a job seeker, employer, or aspiring entrepreneur.

Want to learn more about design thinking? Start by finding fellow professionals willing to discuss and debate solutions using its framework. Take advantage of these interactions to consider how you can best leverage design thinking and devise different approaches to business challenges.

This exposure to real-world scenarios is crucial to deciding whether learning about design thinking is right for you. Another option is to take an online course to learn about design thinking with like-minded peers.

Are Business Leaders Lying?

It is possible that business leaders are lying about their desperation for creativity. For some nefarious reason, they say they want creative employees and their ideas, yet they really do not. But, if this is the case, we need again to ask “Why?” Why would leaders lie about their desire for creativity? I can find no rational answer to that. Can you? Claiming to want creative people and ideas when you knowingly do not want either can only lead to trouble as creative people come knocking at your door with their ideas and curricula vitae (CV). Why would a business leader invite that kind of interruption if she does not want it? Most business leaders already have too many people knocking at their doors and sending their CVs.

Are Business Leaders Stupid?

It is possible that business leaders are stupid; that the Dilbert cartoon strip and The Office television show reflect accurately the lack of intelligence of senior managers in most companies. But, I do not believe this is true. It takes intelligence to manage a medium to large corporation successfully and managers who drive their businesses to bankruptcy are unlikely to stay employed long.

Do Business Leaders Fail to Understand Creativity?

This leaves us with the possibility that business leaders simply fail to understand creativity. I believe this to be the case for three reasons. Firstly, creativity has often been portrayed as a Boolean thing. In other words you either have creativity or you do not have creativity. An idea is either creative or it is not. Creativity is either on or off. Secondly, creativity is often presented as an easy, positive thing with no side effects or downsides. Once you have creative people on the payroll and invest in some idea management software, creative ideas will come rolling in and they can be implemented risk free − leading to increased profits and everyone living happily ever after. Thirdly, creative employees are perceived as smiling, conforming, non-disruptive people who fit right in and come up with clever ideas on command, like well trained and groomed dogs.

The truth, of course, is more complicated than that.

Creativity Is a Spectrum

Creativity consultants love to say everyone is creative. This is true, of course, but some people are only a tiny bit creative and a few are extremely creative and most people fall somewhere in the middle. Likewise, ideas are often called creative. But a creative idea could be a slight improvement on something that already exists or it can be mind-blowingly original or it can fall somewhere between those two extremes. We talk of creativity as if it either exists or it does not exist. The truth is, creativity is a spectrum ranging from non-creative to brilliantly creative. Creative people sit on a spectrum from idea challenged to overactive imagination and possibly insane.

Risk Correlation

There is a strong correlation between how creative an idea is and how risky an idea is. The first Star Wars film was very creative and very risky. Science fiction was not a popular medium in the 1970s and science fiction films of the time were very different from Star Wars. The film’s special effects cost a bundle and, if Star Wars had flopped, the studio would have lost a lot of money and George Lucas probably would have been out of a job.

Of course, it was not a failure. It was a massive success. As a result, Mr Lucas decided to make sequels. These were less risky than the first film. The Star Wars formula had been established and a huge audience loved it. Future films could reuse the popular characters, stick to the formula, develop the story and would probably succeed. These films would not have the impact of the original. They would probably not generate the revenues of the original. But they would probably not fail. The sequels were much less risky than the original. But they were also less creative.

Likewise, the original iPhone was very creative and very risky. It was entirely possible that people would not want smartphones with touch screens. Customers might have found them too big or inconvenient or too expensive. However, the iPhone concept did succeed. Spectacularly.

Samsung’s first smartphone included changes and improvements on the original iPhone, but it was not nearly as creative as the first iPhone. Likewise, it was not so risky. A market for smartphones had been established and demonstrated.

Risk, like creativity, is a spectrum and it is a spectrum that is strongly correlated to creativity. Look at any big, creative idea in business and you will see that its implementation was fraught with risk. Business leaders tend to be averse to risk. Small ideas, on the other hand, tend to be low risk, something business leaders prefer.

Change Correlation

Along with risk, there is also a correlation between creativity and change. The iPhone involved lots of change for Apple, which until then had not manufactured telephones, as well as their customers. Apple needed to design the iPhone from scratch, hire people with mobile phone technology expertise, redesign production processes, collaborate with telecommunications providers, design new packaging, create new marketing, prepare their store owners for the new product and more. That is a massive investment. Had the iPhone failed, it would have been spectacularly expensive.

Moreover, the iPhone’s success required that Mobile phone users learn how to use a new kind of telephone. They needed to learn about apps, how to use them and how to download them. They needed to learn how to swipe the screen. They needed to be more careful. Old style telephones are more likely to survive falls than are smartphones. The cracked screen on my Smartphone is testament to that!

And this is a problem with creativity: the correlation with change and risk. Most people, and especially senior managers whose jobs and remuneration are dependent upon results, do not like high levels of change and risk. That’s okay if you do not want high levels of creativity. However, you cannot have super, mind-bogglingly creative ideas that are risk free and involve little change.

How many businesses would be willing to take such a huge risk with a radical new product? Not many. But once the product is established, lots of businesses are willing to invest a little bit of creativity and launch products inspired by the radical new one. Think of all the smartphones on the market today. 

However, it seems that most business leaders want lots of creativity with little risk or change. This is not possible. It is like looking for a sugary and rich chocolate cake that is not fattening. You either need to reduce the sugar and fat or be willing to ingest a lot of calories with little nutritional value.

Creative People and Status Quo Divergence

Creativity in people also exists on a spectrum. Some people find it very difficult to devise creative ideas and when they do, their ideas are not that inspiring. Others are fountains of creativity. They have ideas all the time. They write novels, compose music or devise radical new product ideas on a regular basis. Most people are somewhere in the middle of the spectrum.

As a rule of thumb, the more creative a person is, the more she diverges from the status quo. Proposing a creative idea requires that you reject an aspect of the status quo and propose something you believe is better. When Steve Jobs introduced the iPhone, he had to reject the notion that mobile telephones needed keyboards and are primarily for telephone calling. When George Lucas wrote and directed Star Wars, he had to reject the status quo on science fiction films in the 1960s and 1970s.

The problem is, most people (low to moderate levels of creativity) like the status quo and become uncomfortable with actions that force them to diverge from the status quo.

Diverging from the status quo results in behaviours that include questioning established ideas, rejecting current ways of doing things and rebelliousness. Highly creative people may refuse to follow your dress code, question insecure managers in public and reject your established processes in favour of their own methods. They may not be team players and may be team provocateurs. Their ideas will not always be brilliant. In fact, many will be daft. They will behave differently than other employees and will surely have a different background than other people in their divisions. They can be hard to manage.

And, this correlation between an individual’s creativity and her divergence from the status quo is a problem for leaders who tend to want people to fit in on their teams, not rebel and not reject processes that are important to the leader’s organisation. Business leaders seem to want people who are highly creative, but who do not diverge much from the status quo. Again, this is not possible. An individual cannot be blindingly accepting of the status quo and have big, bold, game-changing ideas. Indeed, you cannot change the game without rejecting the existing game.

Leaders Need to Find the Right Balance

It seems that the problem is that leaders are looking for the impossible: highly creative ideas that are low risk and do not involve change; and creative geniuses who pretty much conform to the status quo. I believe a better approach would be for leaders to accept that creativity and creative people exist on spectrums and those spectrums include correlations to negative things like risk, change and status quo divergence. Instead of seeking creative employees, a leader should determine what mix of creative thinking and status quo divergence she wants. At the same time, she needs to work out what level of creativity she wants in her organisation along with what level of risk and change she is willing to accept. In most cases, she will want high levels of creativity and low levels of risk and change. So, she will need to make compromises. Fortunately, that compromise need not be fixed in stone. If a leader finds that she and her team learn to accept risk and change, she can increase the level of creativity she encourages.

Likewise, if the leader hires a couple of non-conformists, makes the effort to fit them into the company and successfully implements their ideas, she may decide she can hire more people with higher levels of creativity.

Originally posted 2022-10-26 22:23:28.

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