Thursday, September 20, 2007

Creating a positive bias

In most businesses, it's easier to be pessimistic than optimistic. That's because most of us would rather be seen as "realists" rather than optimists, since we don't control many of the inputs and outputs. Rather than have overly optimistic projections, and miss those projections, we'll pull in our horns a bit to stay safe. Likewise, it's usually easier to kill an idea than it is to sponsor one. New ideas require investment, risk and change, and the current environment of most businesses greatly dislikes these attributes.

When we work with firms to generate ideas and move them through a process to become products and services, we like to think about changing this "negative bias" - for several reasons. First, it's a cultural phenomenon throughout the organization, so everyone is looking for things to "stop doing". This means that the risk tolerance is very low, and change is resisted. In this environment, it is very difficult to create and evaluate ideas. Second, an innovation pipeline should be similar to a sales pipeline - many ideas should be generated early in the process, but over time as the ideas mature there will naturally be reasons to stop considering some of the ideas. Perhaps a competitor already has the projected product or service, or the concept does not fit within the business model. As ideas fall out of the idea pipeline, the pipeline gets smaller and smaller. If your "bias" in the idea generation and evaluation phase is too negatively weighted, by the time your process reaches new product development, your team may have ruled out all of the ideas.

Consider a venture capital business model. Fifteen to twenty businesses are funded, with the expectation that one hits a "home run", three or four become viable businesses and the rest fail. If you limit the number of ideas through a negative bias early in the process, you'll simply not have enough "critical mass" in the pipeline.

This concept of negative or positive bias impacts the culture as well as the idea pipeline. What do you want your organization to do and to think? Do you want them to reinforce the excitement and viability of ideas, or do you want your teams to constantly look for ways to eliminate ideas? Look at your rewards, recognition and compensation systems. What do you reward people to do? It's very difficult to innovate in a firm that has a negative bias towards ideas.
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posted by Jeffrey Phillips at 4:51 AM


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