A quick guide to improving your innovative capacity

   By Ira S Wolfe

When the economy was roaring and business was predictable, it seems management teams were loaded with “sharp” minds. Now, current economic conditions have exposed an organizational vacuum which exposes the inability of many managers to keep pace when change is complex and the conditions are ambiguous and dynamic.

Complex and dynamic change have recently hit many companies in the form of canceled lines of credit, tanking employee 401(k) plans, slowing sales, and negative cash flow.

Management today, and into the unforeseeable future, must be able to find solutions to these problems. The task of solving these problems in a short time, under harrowing conditions, on the basis of hunches and instinct is daunting.

How ready and able are you and your management team to find opportunity when everyone else sees crisis? How can you reward and motivate employees when your business seems to be crumbling? What solutions can your products or services offer to businesses in other industries or to different problems in the same industry?

The answers to these and many other challenges may differ widely from business to business but they all share one thing in common:  the best results will require an ability to find creative and unconventional solutions paired with a willingness to take the necessary risk to implement them. 

This pairing of creativity with risk-taking--termed “innovative capacity”--creates golden opportunities for business during tumultuous times. Those businesses that innovate successfully will end up with the durable competitive advantage that generates high returns going forward. 

When the marketplace was predictable, incremental improvements and sticking with the tried-and-true was good enough. But as Albert Einstein said, “there is nothing that is more certain sign of insanity than to do the same thing over and over again and expect the results to be different.”  When the market conditions are characterized by constant change and economic upheaval, the capacity to think innovatively escalates in importance from a strategy for growth to a solution for business survival.

The world is reorganizing on the fly and the winners will be determined by the businesses that find new ways to solve old problems or find solutions to problems that didn’t exist before.

Research has uncovered four key factors that drive innovative capacity:

• Key personnel with high cognitive abilities
• effective handling of ambiguity
• resiliency or the ability to adapt and learn in the face of adversity
• authenticity or being genuine

Cognitive Abilities

Cognitive abilities shouldn't be confused with "IQ" or education. It’s how quickly and accurately an individual can sift through unfamiliar information, understand what it means, and then apply it effectively. Higher abilities could simply be observed when an individual calculates a percentage change in the cost of goods and its effect on the bottom line in your head (vs. having to pull out a calculator or plug it into a spreadsheet). People with higher abilities also can pick up a complex article or proposal and quickly read, analyze and comprehend what they need to know before others read the cover page. They can listen to a conversation and visualize the final design without ever seeing a blueprint or illustration. 

Unfortunately, improving cognitive skills is not easy. You either have it or you don’t. For that reason, it’s important to test for cognitive skills in the hiring and promoting process.

That doesn’t mean individuals with lower abilities are hopeless. Many successful CEOs and managers have average and below average cognitive abilities. They succeeded because of their vision, planning, deliberate execution, and willingness to surround themselves with the right people. They are highly challenged however when situations change unexpectedly.

Ambiguity

Handling ambiguity is one area where corporate America struggles greatly. Making sense out of fast changing events is a much-sought-after talent these days. It’s the ability to think clearly when faced with “unknown unknowns.” Being able to operate in unprecedented, complex and fast-changing conditions means you must be able to deal with uncertainty and vagueness. Only fresh approaches will provide businesses with a durable competitive advantage. Decades of orthodox management decision-making practices, organizational designs, and approaches to employee relations provide no real hope that companies will avoid faltering or suffering painful restructuring.

But innovation entails risk.  Most businesses however discourage risk-taking by rewarding predictability. Initiatives focused on zero-defects such as Six Sigma and TQM attempt to remove all ambiguity. While these initiatives create great improvements in productivity, they crush the incentives and the willingness for people to innovate.

Ninety percent of the problems that managers solve are ambiguous. It’s neither clear what the problem is nor what the solution is. The competitive edge will go to those who can comfortably make good decisions with less than all the information, in less time, with few or no precedents on how it was solved before.

Resiliency

A second driver of innovative capacity is resiliency, the ability to rebound, adapt and learn even in the face of adversity and stress. Resilient people pick themselves up after being knocked down. They’re able to create options from any circumstance. Resiliency’s opposite is rigidity and inflexibility, characterized by a desire to stick to the plan at all costs even when the evidence is overwhelmingly stacked against success. Rigidity speaks to a fear of failure and a need to be right. Resiliency requires adaptability and flexibility and is the greatest long-term predictor of success.  As Thomas Edison said, ‘there is always a way to do it better…find it.”

Authenticity

Authentic people mean what they say and say what they mean. They are straight-shooters who believe that living by their core beliefs is the most important and highest value. Their actions are congruent with the values they preach. 

You may not always like what the authentic person says, but you always know where he or she stands on an issue.  The opposite of authentic is political.  Political people are always navigating or positioning for self-advantage. Politics and self-interest are at the very least destructive traits and at their worst deadly strategies.

How prepared is your management team to handle the current state of business and come up with alternative strategies? An immediate and necessary first step is an accurate assessment of your crew’s innovative capacity. 

de Bono’s Six Hats

One of the best tools for helping teams improve the ability to handle ambiguity and increase resilience is de Bono’s “Six Hats.”  Six Hats is a technique to get groups to think together more effectively. The process injects creativity into the most risk-averse group and provides a safety net for the emotionally charged team. It is being embraced by organizations world-wide to foster unconventional thinking and innovation.

The six colored hats symbolize different types of thinking. Groups can put colored hats on or simply imagine that they have colored hats on. The process give everyone a chance to think and speak without retribution and fear, and focusing on the result, not the process.

The six hats are represented by:

Blue Hat: Setting the focus, ground rules, and agenda. When discussions migrate off course, the blue hat ensures rules are followed.

White Hat: Getting the information – both what you know and what you don’t know. This hat is particularly effective for improving how people deal with ambiguity

Red Hat: Gives permission to express how you feel. It’s the chance to “get-it-off-your-chest” without repercussions. 

Yellow Hat: Looks at the value and benefit of every idea.  The yellow hat forces people to look through the short- and long-term lens.

Black Hat: Point out what can go wrong. The black hat gives everyone the chance to consider the risks, difficulties, and potential problems.  

Green Hat: This is the hat of possibilities and alternatives. Speaking through the green hat challenges the status quo and uncovers opportunity.

This brief discussion of hats does little justice to the system’s effectiveness. I highly recommend reading these two books by Edward de Bono, Serious Creativity and Six Thinking Hats, to learn more about the Six Hats.

Ira S. Wolfe is founder of Success Performance Solutions and the author of several books including the “Perfect Labor Storm 2.0: Workforce Trends That Will Change the Way You Do Business.” His particular expertise is a practical, down-to-earth “whole person approach” to employee selection and performance management. For more information about workforce trends and hiring the right people, contact Ira S Wolfe.