In times of uncertainty we search high and low for answers to our overarching question, “How do we dig ourselves out of the deep pile of…stuff we’re in?” If there are qualifications for uncertain times, present economic indicators demonstrate that all criteria are not only met but exceeded. And our search for answers (and perhaps a shovel) continues in haste.

With very few macro-economic levers left for government officials and public policy experts to pull as they try to shift the economy into a growth pattern, our range of vision and influence narrows. We won’t find big fixes no matter how hard we look. Larger businesses have cut costs dramatically and now find themselves with large cash reserves, waiting for the economy to turn around. They patiently await orders for more products and services, before they place any orders or invest in anything themselves. Essentially, each large enterprise is waiting for the next firm to blink.

Instead of waiting for bail-outs or big business-driven economic up-ticks, we must turn to one of the greatest sources of scalable economic activity and innovation, the small to medium enterprise, for our answers. When highly functioning, these smaller enterprises know how to: make scarcity work for them (they live it every day); work closely with their customers to meet their most pressing needs; and make rapid learning the activity that gives them momentum in the marketplace.

More with less
No complaint … is more common than that of a scarcity of money.
- Adam Smith

In the popular press (whatever that might be today!), it’s difficult to get a firm handle on what’s going on, or better yet, what could go on with small businesses. By their nature, small businesses are harder to classify and quantify than their big business brothers and sisters. If we consider the small enterprise to be a business of fewer than 200 people, it still leaves a bulk of the economic activity of most developed countries and nearly every developing country. These are the firms for whom bootstrapping is not something done only during times of economic distress, but all the time. They know how to stretch a dollar, or euro, or peso. But that’s not the only thing they know how to stretch.

Time, not just money, is a malleable resource, too. How you invest your time—and on what—drives a higher return on investment. For small businesses stretching time, doing more in a shorter period, gives them an economic leg up, especially when it comes to embracing and extending technology. Smaller firms have many advantages as innovation sources because they are quick to adopt new and high-risk initiatives; they facilitate structures that value ideas and originality; and they have a better capacity to reap substantial rewards from market share in small niche markets. This first-mover advantage was created by and for the small enterprise. It enabled them to get closer to customers other firms little-realized existed.

Closer to our customers
There’s a lot more business out there in small town America than I ever dreamed of.
- Sam Walton

By decreasing their cycle time, small enterprises can do more for their customers than most large enterprises would commit to. The small enterprise, which usually carries with it a smaller customer base, can remain closer to their customers’ various needs—a distinct advantage over many larger businesses. This means smaller firms can pick and choose where and when to provide innovative products and services. By virtue of their size, the small business can choose to invest a larger proportion of time, energy, and expertise to discover the depth of their customers’ needs, and then pursue those needs by creating innovative solutions.

This closeness to the customer experience is also driven by the need to maximize their share of their customers’ expenditures. By remaining close to the customer, the small enterprise can seize newly arising opportunities to provide value and increase revenues simultaneously. Correspondingly, by seeking to win more business by remaining close to existing customers, the cost-of-sale is driven down, which has a positive benefit to the bottom line: a positive, deep relationship is usually a more profitable relationship. And when there a fewer customers, it’s usually easier to read which ones will be more profitable than not, and that means more effective targeting for higher risk efforts that may yield greater innovation benefits.

Faster mistakes
With any loss, you want to try to regroup and learn from mistakes.
- Elena Leon

Which leads us to another reason why small enterprises are a better bet for long-term economic recovery—they are learning machines. For an employee to add to an innovative process, it may take time for them to understand the research agenda of, and challenges faced by, the firm in which they are employed; in other words, an employee may need to move up the learning curve before adding to the innovative activity of the firm. In a smaller enterprise, that learning curve may be much shorter. Existing processes and systems may be much more fluid. The amount of information to be learned and retained as working knowledge may be smaller. Better yet, the social network through which so much learning and experimentation takes place is smaller and easier to navigate, too.

For the smaller enterprise, the whole employee pool can be geared toward discovery. Each interaction, whether with an internal peer, or an external client or supplier, can be seen as an opportunity to explore possibilities. Within that exploration will be a series of hits and misses. This doesn’t mean that the inherent failures associated with trying something new within a smaller enterprise are less impactful—far from it, but it does mean that the recovery from those missteps may be easier and often shorter.

This is not to negate the impact of the larger enterprise on economic recovery, because without them there would be no recovery, as they provide a stable foundation for the broader economy. But it is to the smaller enterprise we should look for more rapid improvements. The smaller enterprise is thrifty by nature, eager to embrace its customers’ experiences, and willing to risk—through innovation—for greater reward. Unlocking the power resident within small enterprises is key to broader economic recovery. We’ll explore some of those methods in future posts.

Thanks for your patience. Attached is the transcript from the “Innovation Backwards?” chat, which was incredibly well positioned thanks to the great framing post from Caroline Di Diego and excellent moderation by Renee Hopkins.

A favorite tweet from this week’s post? This insight from Jose Briones:
The biggest issue is that in most cases picking winners from the ideation process really means picking favorites.

#innochat – transcript August 19 2010

Effective innovation demands embracing change. Unless you are completely dissatisfied with what you have now, the idea of forsaking some of your present discomfort for the pain of full-blown change not only seems unlikely, it is downright foolish. This is the conundrum faced by those tasked with improving their organization’s innovation culture. (“Wet noodle at the ready? Push! Push, I say!”)

Regardless of whether we choose to embrace it or not, change happens. The rules of participation are frighteningly simple—lead, follow, or get out of the way (with a hat tip to General Patton.) But here’s the issue: what we say we want to do (innovate) is not necessarily what we end up doing (clinging to our known circumstances), because so much in our individual psychology is reinforced when we gather with others in groups. We fall prey to our inability to avoid groupthink, we rely on stereotypes, and we cling to our current circumstances by embracing system justification.

Mine! Mine! Mine!
If you’re not a liberal at twenty you have no heart, if you’re not a conservative at forty you have no brain.
- Winston Churchill

As much as Churchill’s quote above rankles me, I cannot deny it. The young easily seek out and embrace the new, because they have a bias towards discovery. They are “wired” to look for ways they can differentiate themselves from their elders, and even classify themselves as distinct and separate from their peers based on their passing passions.

The young, and perhaps the young-at-heart, are predisposed to innovation. They possess things fleetingly—not with less longing or even covetousness, but simply with the notion that something newer and brighter and shinier will arrive soon. For them, the novelty of the new outweighs the inconvenience of making a change, because it is relatively easy to move on to the next new thing if you haven’t lived with the old thing for very long. (This may be one of the primary reasons why consumerism has gained such a toe-hold among burgeoning middle-class youth worldwide.)

Those older and, if we are casting about for additional generalizations, wiser do seem to slide into conservative patterns. The pace at which they exchange the old for the new slows down. Fads pass by at an alarming rate. Innovations in technology and customs become more elusive. Why? Primarily the status quo, like some extraordinary gravitational object at the center of our lives, begins to take hold and lock things into our personal orbits. This causes habits to form around the objects and ideas that comfort us, including existing products and services. And we hold on to them dearly, as though they were the true bedrock of our existence.

In light of this, is it any wonder that innovations struggle to come to life in organizations where management systems and processes are usually governed by those in place the longest?

The problem with habit-forming
The riskiest thing we can do is just maintain the status quo.
- Bob Iger

We have a cognitive bias for the status quo. People tend not to change an established pattern of behavior unless they have a direct and compelling incentive. Status quo bias is a reliance on the status quo in the absence of supporting evidence in its favor, or even in the case of evidence for not supporting its sustenance. Arguing to preserve the status quo is usually happens when people oppose a large, often radical change. Status quo bias accepts the present situation without the benefit of any inquiry or conversation about its merits.

Hard at work supporting the status quo is system justification. System justification is a theory within social psychology that holds that people not only want to see themselves and their own groups favorably, but they also want to look favorably on the overarching social order (the system they are justifying). A consequence of this behavior is that existing social, economic, and political arrangements across organizations (small or large) are often preferred, and any alternatives to the status quo, if conceived of, are maligned or avoided. System justification works to make the present circumstances unassailable.

The status quo, like a pack-a-day smoking habit, is a hard habit to break.

When faced with a bias-led desire to retain the status quo, newly conceived innovations may face the psychological equivalent of the immoveable object. Breaking through that requires putting the status quo front and center. It means not accepting it at face value, but rather examining it to reveal its deficiencies and incapacities in a public manner. Only by opening up the status quo to analysis can we make room for new thinking and behavior that attends innovation.

But that is only the beginning.

Yes, we’re all individuals
Take your life in your own hands, and what happens? A terrible thing: no one to blame.
- Erica Jong

Along with the impossibility of shedding an unexamined status quo, we are also faced with unexplored attitudes that provide support to the status quo by reinforcing our thinking about people in our organizations. This stagnant thinking is the result of stereotyping. Stereotypes are insidious, standardized and simplified concepts of classes or groups of people based on some prior assumptions. They are often learned by observing others, and may be highly contagious, and possibly one of the most harmful forms of groupthink pervading social structures.

As much as we might believe we are unique and truly individualistic in our world views it is remarkable how much stereotyping is at play in the life of our organizations. Our familiarity with negative stereotypes in terms of gender roles or race may lead us to believe we are beyond that, but in organizations, stereotyping is rife. Consider the ways in which we stereotype engineers, or accountants, or human resource professionals; how often do we fall prey to the casual shorthand of referring to all members of a business function in the same general terms? By doing so, we prevent our ability to see circumstances clearly, seeing behavior and explaining it away, rather than observing without judgment in order to form true insights.

The peril of stereotypes, especially when buttressed by the warm embrace of the status quo, is that they leave little room for the novel. They dismiss or disregard differences at the expense of perceived uniformity, and cut off yet another path to creativity and innovation.

Look anew with fresh eyes
The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew.
- Abraham Lincoln

If ever there was a time that we needed to innovate, it is today. The status quo is not an acceptable alternative. A stereotypical view of the people around us will give us no source of joy, either. We must break our habits and see the world around us with fresh eyes. That might even mean taking a close look at where we stand (or sit) in the world, too.

By moving our position, and choosing to question what we think we know, we can begin to create room for more innovative solutions to the pressing demands of the present. To keep doing what we are doing seems not only foolish, it may be downright dangerous.

What can you see anew?

One of the questions often asked by those seeking to create a strong innovation culture is, “What are some good tools for engaging people across my organization?” Well the consultant in me would usually hedge his bets and would offer the universal response, “It depends.” But that is as singularly unsatisfying to say as it is to hear, so I mostly take a multiple alternative approach in the hopes of landing close to the targeted need. The first place I usually start is with some of the very lowest of low tech: playing cards, or their trading card equivalent. Why?

For the reason why, see the full post here at the OnInnovation blog – powered by The Henry Ford.

In honor of the recent football (okay, soccer) World Cup—and congratulations to South Africa for pulling off a sterling tournament (Bafana Bafana!) and the Spaniards for their first tournament victory—it seems appropriate to consider the impact of the herd on innovation practices. Not just any herd, though; this is the herd that forms when two opposing packs of 5-year-olds play the glorious game: the herd of Pee Wee Soccer.

Sound and motion with little to show for it
For those of you who don’t have children or have not seen children this age playing soccer, you have missed what certainly is an experience. The rules of soccer seem immaterial. Yes, there is a ball in play. Yes, there are referees and linespeople. Yes, there are goals at each end of the usually shortened field and two equal-numbered teams of players. The basic framework is the same, but the way the game is played is quite…different.

The pervading game objective practiced by both teams is to quite literally “crowd the ball”: where the ball goes, that’s where all players attempt to go, except for those few who become distracted by a parent or sibling on the sideline, or by the color of the sky, or by something bright and shiny, or need to re-enact football hooliganism an so on. You get the picture. What forms is a tight pack around the ball, hiding it from the spectator’s view, and which moves as a herd up and down the field. Occasionally the ball will “escape,” only to be recaptured by one of the team members who, in their inability to run and dribble the ball simultaneously, will stall until the rest of the members from both teams re-form the herd.

No one here but us sheeple
The greatest difficulty is that men do not think enough of themselves, do not consider what it is that they are sacrificing when they follow in a herd, or when they cater for their establishment.
- Ralph Waldo Emerson

What of this herd? And what does it have to say about the impact of the herd mentality on innovation? A short explanation can be found here.

Given our complex worlds with their voluminous sensory inputs, we are wired to adopt a series of mental shortcuts (termed heuristics) that enable us to process only the amount of data necessary, in as short a time as possible, to meet our immediate needs. Think of heuristics as experience-based models that help in problem-solving and discovery. They drive much of our daily behavior without us even recognizing it. The reason they are effective is that they relieve us from treating every circumstance as critically important, offering relief from having to think too hard. Is it really necessary to calculate the optimum parking space at the mall, taking into consideration timing, prevailing weather, shopping patterns, etc.? No? Right—open space, here I come!

By employing heuristics, we create a series of short cuts that enable us to focus on more complex issues, more holistically and systemically, as the need arises. Heuristics, however, reinforce situational thinking and action. In recent studies conducted at the University of Leeds in Great Britain, researchers discovered that it takes a minority of just 5 percent to influence a crowd’s direction—and that the other 95 percent follow without realizing it. If we hearken back to the heady days of the dot-com book in the early 2000s, we can see this pattern in the practices of developers, who threw together “me-too” websites; institutional investors, who threw money at anything with a website; and stock market investors, who piled their money into every “sure thing” they heard about from their hairdresser, dog walker, or cab driver. And that herd behavior ended well, didn’t it?

Wise crowds and the benefit of discomfort
The dissenter is every human being at those moments of his life when he resigns momentarily from the herd and thinks for himself.
- Archibald MacLeish

Unless we take steps to separate ourselves from the crowd and seek to break our ingrained patterns of thinking, we will continue to be drawn to the herd. In James Surowiecki’s bestseller The Wisdom of the Crowds, he noted that there are highly functional types of groups that possess not a herd mentality, but an inherent wisdom. From his perspective, if four basic conditions are met, a crowd’s “collective intelligence” will produce better outcomes than a small group of experts. Surowiecki says that wisdom will prevail even if members of the crowd don’t know all the facts or choose, individually, to act irrationally. “Wise crowds” need 1) diversity of opinion; 2) independence of members from one another; 3) decentralization; and 4) a good method for aggregating opinions. In short, effective groups need guidelines (like heuristics), but ones that are focused on differentiation and not similarity. “Me-too” has to be retired so that “What if” might prevail.

Unfortunately, when wisdom meets the herd, the prevailing outcome is the dumbness of the crowds.

To reach beyond the herd, organizations must embrace difference and the discomfort that comes from not adopting the first, or easiest, answer to a presenting challenge. Clay Shirky, a professor in NYU’s Interactive Telecommunications Program, described in his book Here Comes Everybody the benefits of groups breaking out of the herd mentality and moving toward “collaborative production”:

Collaborative production, where people have to coordinate with one another to get anything done, is considerably harder than simple sharing, but the results can be more profound. New tools allow large groups to collaborate, by taking advantage of nonfinancial motivations and by allowing for wildly differing levels of coordination.
Shirky, pp. 109

Over time, even the Pee Wee Soccer team learns how to play the game. Each player discovers his or her own strengths, and a good coach will recognize those differences and create something greater than a mob out of them. Their efforts become grounded in collaborative production. In our organizations, innovation processes that support our thinking and don’t provide ready answers give us the opportunity to develop solutions that reach beyond the herd. We can choose to stretch past the simple and explore the complex so that our solutions are new and not “me-too.”

We herd sheep, we drive cattle, we lead people. Lead me, follow me, or get out of my way.
- General George S. Patton

Being in a herd is actually a matter of choice, one that must be made consciously in order for a range of alternatives to be revealed. In a competitive marketplace, would you rather be in the herd, where the view rarely changes, or out front? I thought so.

Raise your hands if you have ever met someone who has a tendency to relive their glory days. You know, that one person in a group who fondly remembers better times, or who always finds the present lacking because “the last time this same thing happened, there was a much better result”? We are not talking about the story teller, who fires up those around them with their passionate recounting of a victory or a discovery, nor even someone who occasionally reminisces. We’re talking about the person with a pathological need to live in the past, who might be physically in the present but whose mind is a year or ten in the past. Strangely enough, they keep visiting the present, trying to capture us and cart us back there with them.

We’re going to do what we’ve always done (and wonder why we always get what we’ve always got)
May you have the hindsight to know where you’ve been, the foresight to know where you are going, and the insight to know when you have gone too far.
- Irish Saying

As we noted in a previous post, storytelling has a vital role in a healthy and vibrant organization. This type of storyteller is not the same. The resident revisionist historian simply cannot let go of the past. With perfect hindsight they see how things were so much better before, and that when change occurred, it put us on the road to ruin. The revisionist doesn’t seek to use their past experience to inform their present-day actions. They would rather live in the past. Over and over and over again.

What students in the United States knew of George Washington’s youth was that he apparently chopped down a cherry tree on the family property. Unfortunately, this is a blatant piece of revisionist history. An archaeological dig at the Washington family home found no such cherry trees. In fact, additional research uncovered that the original biographer of Washington, Mason Locke Weems, fabricated the story in order to make the general, first president, founding father, and all-round statesman “more honest”! Strange to think that aggressively pruning a prunus avium and not lying about it would be considered a honest act.

This fabrication and the apocryphal story built upon it lend little to Washington’s character, and revisionist history lends little to the life of an organization. Sorting the truth from fact can be a running battle that can exhaust an organization, leaving fewer resources for creative endeavors, and drain the will of the organization.

A friend of mine, Sam, used to tag people as “radiators” and “drains.” Which I believe he picked up elsewhere (perhaps here?) Now, I’m not one for labels. They’re inflexible and terribly difficult to remove once in place. But his notion that people either radiate energy to those around them or they drain it from them — like so many dim-witted psychic vampires — rings appallingly true.

How do you think this plays in an organization attempting to embrace and extend its ability to innovate? Not well at all.

Looking forward but only seeing the rear view mirror
In today’s complex and fast-moving world, what we need even more than foresight or hindsight is insight.
- Anonymous

Another powerful, distorting perspective present in the psychology of organizations is hindsight bias. This is the inclination to see past events as being more predictable than they in fact were before they took place. Hindsight bias has been observed experimentally in a variety of settings, often where defined levels of expertise are expected, including politics, sports, games, and medicine. In psychological experiments of hindsight bias, subjects tend to remember their predictions of future events as having been stronger than they actually were, in those cases where those predictions turn out to be correct. This inaccurate assessment of reality after it has occurred is also referred to as “creeping determinism.”

How does hindsight bias impact an organization’s ability to innovate?

By disguising past performance, hindsight bias makes it difficult to determine how original actions may have resulted in a specific outcome. The memory of events may become so distorted that it bears little resemblance to the reality of what occurred; that makes any potential lesson learned not only poor but potentially hazardous.

Learn from your mistakes – don’t relive them
Traditional scientific method has always been at the very best, 20 – 20 hindsight. It’s good for seeing where you’ve been. It’s good for testing the truth of what you think you know, but it can’t tell you where you ought to go.
- Robert M. Pirsig

Frank and honest sharing of information is for a wider benefit. It creates a mental space for new ideas to crop up or flood in. This differentiates it from the dynamic surrounding those who are “revisionistas” and “hindsighteers.” (There should be a club for this which involves hats with rearview mirrors attached, I’m sure.) In this dynamic, any benefit, if it can be called that, is derived primarily for themselves. Their approaches leave little room for learning, positive affirmation of true success, or the opportunity for discovering a more holistic solution to the pressing challenges being addressed.

Mistakes and missteps for anyone interested in innovation are a gift. They help define more clearly “where you ought to go.” In being honest about our challenges and the qualities of our successes, and not disguising them or explaining them away through false tales, we will build towards innovations that are truly extraordinary.

As a process to connect people and transmit ideas within organizations, effective communication is essential for fostering innovation. Aristotle told us, nearly two and a half thousand years ago, that if communication is to change behavior, it must be grounded in the desires and interests of the receivers. Organizational life relies on folklore and myth to create a connection between its members that influences their behavior, including the creation of innovation.

Folklore serves as mental scaffolding to help us gather, sort, organize, and support our thinking about the world around us. From an organizational standpoint, folklore provides what Ronald A. Heifetz termed in Leadership Without Easy Answers a “holding environment.” A holding environment enables a witness to the folk tale to distance her or himself from present reality. It enables the conception of possibility, and is a key ingredient in sense-making. To understand how it can inform, or impede, innovation, it’s necessary to explore folkloric communication and the way it helps define boundaries for action and dialogue in the life of organizations.

A billion little pieces
The universe is made of stories, not atoms.
- Muriel Rukeyser

Storytelling reveals and explores the potential of individuals and the social context in which they find themselves. Stories open the organization to the power and relevance of innovation as the organization members seek to grow and evolve it over time. Folkloric communication helps to define organizational reality, providing deeper levels of meaning. By capturing reflections of the past and displaying them in ways that are engaging to the present, it brings to light the fundamental building blocks of the organization which can then be used for creative ends.

In their reflective work on the possibility of a more holistic model of organizational life, A Simpler Way, Rogers and Wheatley note that “most people have a desire to love their organizations.” This notion drives much of the latent, often unexamined, innovation in organizations. It also means that organizations embrace stories about themselves that may not be factually accurate.

From the big reveal to the big conceal
Storytelling reveals meaning without committing the error of defining it.
- Hannah Arendt

The identity of the organization as it is expressed–its potential–speaks to participants’ own potential. Participants, through folklore and stories, envision places for themselves in the organizational whole. They see ways they might add to, or live out, a part of organizational history. Organizational folktales become ways for building shared coherence, defining the “fundamental integrity about who we are.” The key is shared commitment to the intent behind a story. Regardless of whether it’s a tall tale or true account, if enough people in the organization recognize its validity, it will have enough weight to influence practices.

The boundary-making qualities of folklore show organizational participants how to transgress, to reach beyond them, and build new tales. The dual nature of folklore is its ability to define both the boundaries of organizations and the people within it. Folklore in this manner is fundamental to the culture of an organization through its constant interaction with the organization’s own social dynamics.

Culture is both a product and a process. As a product, it embodies accumulated wisdom from those who came before us. As a process, it is continually renewed and re-created as newcomers learn the old ways and eventually become teachers themselves.

– Bolman & Deal (1997, p. 217)

At its root, folklore in organizations is a metaphoric framing device, providing a context in which newcomers to organizations see ways they might engage with the organizational whole and leave their own mark. For this reason, the guardians of organizational folklore have significant power within it. They set the tone by determining when and where folklore may be revealed. They choose the focus of the delivery. Their opinions and attitudes directly color the way in which others may view the organization. Stories are a filter through which others catch glimpses of past organizational life. For any person new to an organization, this may be intimidating or welcoming, depending upon the manner with which the mythology is engaged.

It is vital, however, for people to feel at ease with an organization’s folklore if they are to become an engaged component of the systemic whole and add their own creative spark. Avoiding folktales, or denying their power within the organization, is the denial of an elemental part of how the organization operates. Folktales exist for numerous reasons, and each serves a unique purpose for the organization, be it framing patterns of behavior, orienting newcomers, or galvanizing the weary. For many organizations, however, the concept of a place for myth and folklore is not only foreign to them, it is anathema to their technical and rationalistic worldview. What need do they have for stories when there is a budget to be balanced and a headcount to be reduced?

There are a thousand stories in the naked city
To be a person is to have a story to tell.
- Isak Dinesen

The dark side of organization myths and folklore is that they may be the result of confabulation or impression management. They are tales told with willful, ill intent, and can play havoc with an organization’s success. Sometimes these tales may be used to create distractions, or to hide the true intent of storytellers.

In the case of confabulation, the reporting of events that never happened, it creates confusion and distraction. Rather than reinforcing a deep-seated truth about the organization which all may tap into as a source of inspiration, like the most powerful folktales, it causes chaos and distraction. Think of this factitious behavior as a mild version of Münchausen’s Syndrome, without the tendency to invent illness.

That and four bucks will get you a cup of Starbucks
Stories are the creative conversion of life itself into a more powerful, clearer, more meaningful experience. They are the currency of human contact.
- Robert McKee

A more hazardous practice is that of impression management. In both sociology and social psychology, impression management is a goal-directed conscious or unconscious process in which people attempt to influence the perceptions of others about a person, object, or event. Usually this practice is adopted for the improvement of their own standing within a given social context, and is accomplished by regulating and controlling information in social interactions: access to information, the way that information is presented, and the rules by which it might be shared are controlled.

The resulting distractions, as people seek to sort fact from fiction, cause confusion and frustration. One other victim in this process is the truth, without which clear thinking about innovation is sacrificed.

Impression management is usually synonymous with self-presentation, in which a person tries to influence the perception of their image. Impression management also refers to practices in professional communication and public relations, where the term is used to describe the process of forming a company’s or organization’s public image.

An organization that embraces its mythic traditions and openly embraces its folkloric symbols is one that is living with rare vigor. If the folklore and myth resident in an organization are used to galvanize and energize existing members, and create engagement points at which new members can find a way to contribute and belong, the resulting creativity and innovation will be remarkable.

A good story cannot be devised; it has to be distilled.
- Raymond Chandler

When introducing innovation into existing, stable organizations and systems, you must navigate around authority. Like the tip of an iceberg, the influence of authority across an organization may be quite visible, but that only accounts for a small percentage of the influence it has on the successful introduction of an innovation. The types of authority involved are not only the explicit authority that comes with subject-matter expertise, role definition, and position within a hierarchy, but also the perception of authority, real or imagined. That influence lies hidden from view but is no less profound, especially when you run into it.

Rather than dwell on the explicit authority, we’ll explore three different aspects of perceived authority: directed deference, projection bias, and asymmetric insight. Each bias offers a different slant on the challenge of authority to the viability of innovation. Once again, forewarned is forearmed.

I don’t know much, but I know I love you
Unthinking respect for authority is the greatest enemy of truth.
- Albert Einstein

There is an ongoing infatuation with the idea of the heroic leader in organizations that belies the true extent of their power and capability. Setting aside his tin ear and habit of only opening his mouth to exchange feet, Tony Hayward, the ever-hapless and likely short-term CEO of BP, is a case in point. While serving as a focal point for the ire of a nation looking on in horror at the disaster playing out in the Gulf of Mexico as a result of BP’s oil spill, Mr. Hayward can personally do little more than remain the public face of his company. Our expectations of him as a leader have not been met. For some reason, we actually expected him to correct the damage his company has wrought. A similar pattern exists in the way people appear to perceive President Obama. In both cases, the circumstances these leaders find themselves in overrun the public’s perception of their responsiveness and capabilities.

Each leader has been measured and found wanting. But the reverse is true, too.

We love the myth of the heroic CEO. The man or woman who, through their personal excellence, intestinal fortitude (aka, guts), and general capacity for delivering results saves the ailing enterprise is a tale we love to hear. Much of the reporting of a company’s success refers to the role of a heroic CEO. This too is a false perspective. We ascribe collective success to individuals, especially in circumstances where we have little understanding of the context in which success was achieved.

This mindset is termed directed deference, and it represents the tendency to value an ambiguous stimulus (e.g., a company’s financial performance) according to the opinion of someone who is seen as an authority on the topic. For those who seek to innovate, it means that what is and is not possible may be impacted by our perspective of those who lead us. If we fail to question our perspectives, we may kill an innovation before giving it an opportunity to grow into something meaningful.

I’m feeling you
All authority belongs to the people.
- Thomas Jefferson

Another aspect of the way our perspective on leadership can influence innovation choices is found in projection bias, the tendency to unconsciously assume that others (or one’s future selves) share one’s current emotional states, thoughts, and values. The weight of our own perspective means we may color our choices based on personal experience rather than the facts on the ground.

The impact of projection bias on innovation is one of homogeneity. The inclination to look across the organization and see only ourselves, or slight variations of ourselves, limits what we can conceive. Our leaders, and their motivations, look like our own (or what they would be if we were in the same position). This means that our attempts at innovation may suffer from small ambitions and a limited will to see them to success. Or we may misread what the organization can tolerate and over-commit resources to fruitless endeavors.

Knowledge and understanding are essential to avoid the pitfalls inherent in this slanted perspective.

I know you are, but what am I?

Rather than having a twisted perspective of a leader’s motivations and attributes, what if we think we know others better than they know us? A reversal of the directed deference perceptional bias is the illusion of asymmetric insight, which occurs when people perceive their knowledge of their peers to surpass their peers’ knowledge of them. Instead of seeing an authority figure external to us, we find one in ourselves. Falling into asymmetric insight bias means we believe our keen powers of insight and remarkable personal ability to assess the mannerisms and patterns of behavior in others enables us to stay one step ahead of the experience curve. At an extreme, we consider ourselves flawless prediction engines.

The only problem with this is that in the absence of data, our predictions are not rooted in any basis of reason, and our successes come from pure luck rather than wisdom.

From an innovation perspective, we are mentally running through the childhood taunt, “I know you are, but what am I?” a never-ending response to all perceived or actual slights or criticisms. Whether ignoring the evidence of a particular situation or ascribing our innovation success to our ability to second-guess others’ motivations, we are playing a foolish game.

How do we address these biases? How do we contend, in the absence of any meaningful information, with the over-reliance on position or status as a signifier for comprehension, wisdom, or insight? The answer comes through observation and engagement. By taking the time to assess the ways in which our innovation efforts are perceived and understood, we can gain more data that will inform our decision-making and design practices. But unless we seek to close the gaps in our ignorance with data gathered through inquiry instead of our own biases, our innovation efforts will struggle to be realized.

Anyone who in discussion relies upon authority uses, not his understanding, but rather his memory.
- Leonardo da Vinci

“When we say that the design must “tell a story,” we are not just talking about games or interactive fiction, or even about turning a work application into an adventure (“Conquer the benefits allocation maze…”). Instead, we mean the kind of stories that help you create new designs. These stories are used to make you think of new possibilities, give you the tools to encourage a self-reflective kind of thinking—design thinking—or so you can imagine designs that will improve the lives of other people. Stories explore ideas from user research.” More here..

The more we learn about the individual and social psychology misunderstandings at play in organization life, specifically in the development of innovations, the harder it is to identify clear and unambiguous actions we can take to address them. We must become adept at inquiry, observation, exploration and reflection – any of which might be effectively preceded by the word “self”. Thankfully these are prerequisites for effective innovation which makes for some strong synergies if we can apply the skills effectively. The challenge, as highlighted previously, is that we seem to lie to ourselves. We suppose we are rational, clear-thinking beings when in fact we are often confused, frequently wrong, and willfully ignorant. And that misconception is a problem no matter how smart we might think we are.

Judge and jury
The power of accurate observation is commonly called cynicism by those who haven’t got it.
- George Bernard Shaw

The next psychological influence on innovation performance is correspondence bias or, to call it by its more common name, fundamental attribution error. No matter what it is called it can mean trouble to any potential innovator or innovation team. I detailed how I personally experienced fundamental attribution error when I reran an experiment in this area in a previous post. (See: Seeing the world around us). At the time the post was focused on how this bias manifests itself and what it does to our perspective on the situation in which we find ourselves.

From my experience of that experiment it is clear that people tend to consider their own behavior as being driven by different influences and motivations than those that drive the behavior of others. We try to be logical yet we often fail because we neglect to see the wider context in which behavior occurs. As a result we are prone to making faulty judgments.

Stop. Look. And listen.
A few observations and much reasoning lead to error; many observations and a little reasoning to truth.
- Alexis Carrell

When we employ limited observational studies to our clients, in our attempt to recognize unmet needs, we can often be caught in the trap of ascribing their behavior to something we perceive in their manner. The reason for this is that we tend to attribute an observed effect to potential causes that capture our attention. This means we can often miss underlying influences that have greater influence but remain hidden to us.

When we observe other people, the person becomes our reference point. All our assumptions about what they are doing and why they are doing are seen to come from an internal motivation. This tight focus on an individual’s behavior usually means that the situation in which they are acting is overlooked as if it is nothing but mere background. So, attributions for others’ behavior are more likely to focus on the person we see, not the situational forces acting upon that person that we may not be aware of.

The strange thing is that on those rare occasions when we observe ourselves, we are much more aware of the external forces acting upon us. Our bias is to infer that others are much more in control of their actions while we are more constrained by the impacts of our surroundings. It hardly seems fair, does it? Regardless, it is a pattern in which we derive greater meaning from observed behavior than all the factors that might be influencing behavior. The implication being that we are making design and innovation decisions based on a flawed perspective, especially if our observations are cursory.
That is not a winning prospect at all.