The Hidden Innovation Barrier

Within the first few months after starting my new position as an assistant professor at Wharton, I met with a group of vice presidents who worked for a large global company. For the sake of confidentiality, I'll refer to that business as Company Z.

The VPs had determined that their company was struggling with how to be more creative, and they asked me to present my perspective on why this might be the case. I was extremely excited about this meeting, in no small part because I knew the literature cold — backward and forward. So like any good academic, I presented a summary of the research about how hard it is to generate creative (novel and useful) ideas and then actually implement them.

I will never forget the look on the executives' faces after I finished my talk. I expected nodding heads, grunts of approval, or at least some expressions of curiosity.

What I saw instead in their eyes was confusion and disappointment. Finally, one executive looked at me with skepticism and said, "Yeah, but that isn't it."

Another executive was more patient with me. He explained in detail the problem Company Z was having with creativity, and it honestly had little to do with the material I had presented to the group. "I wouldn't say that we struggle with generating creative ideas, or that implementation is the problem," the executive explained. "We can buy our creativity. We buy companies with breakthrough products, but these products rarely get to the implementation phase — and not because we don't know how to efficiently bring a product to market. Our problem is that once we buy these companies and integrate them under our umbrella, over time, they aren't creative anymore. Their pipeline dwindles and so we sell them off. But suddenly, only a short time later, those same companies that were vanilla are now developing creative products again."

He concluded: "If you want to help us figure out how to be more creative, figure out how to solve this puzzle, because, as far as we are concerned, that is the billion-, no, trillion-dollar question."

After this comment, I was rendered speechless (which, I can tell you, is a rare situation for me). The executives didn't agree with my traditional academic account of why creativity was so uncommon — it just didn't mesh with what they were experiencing. But if generating creative ideas wasn't the bottleneck, and implementation concerns weren't relevant to their situation, what then was the problem? This company didn't appear to be resistant to change — they were investing billions of dollars in creative products. So why were they struggling?

I soon learned that Company Z was not unique. Other companies — large, small, and in between — were struggling to be creative as well. Executives called and asked me to provide their organizations with training on creative-idea generation. Senior managers would tell me that creativity was a strategic priority for the company, but that their employees just weren't coming up with creative solutions.

Time after time, I conducted these trainings only to discover that most of the participants had already received training on idea generation. I would hear story after story of how employees had developed terrific ideas — which management promptly ignored. One participant even showed me a large stack of white papers she had written to document her many ideas — now in the file drawer. When I asked her why the company rejected her ideas when corporate leaders told me they were desperate for more creativity, she told me something I found quite surprising. She said, "Executives here don't actually want creative ideas."

That didn't make sense to me. Why would top-level executives at the very companies that were hiring me to help them be more creative spend a ton of resources to cultivate internal creativity, only to reject their employees' creative ideas? At best, it seemed like a blatant waste of money and other resources. At worst, it seemed like the essence of hypocrisy. Maybe all this talk about creativity was just lip service? I thought back to my meeting with Company Z — there's no way those busy executives would waste their time listening to consultants and spending billions of dollars on new companies if they were just pretending to want creativity.

Would they?

One thing was certain — executives wanted real solutions, and academics like me had spent decades identifying solutions. A quick search on the ABI Informs database (a database of business articles) shows that roughly 30,000 articles on creative idea generation — and 150,000 articles on implementation — have been published since the 1990s. Why, if we have all these solutions for how to generate and implement creative ideas, were companies still having a difficult time being creative?

If our best solutions weren't solving the problem, then maybe we needed to redefine the problem we were trying to solve. Was there an invisible third barrier to innovation beyond idea generation and implementation? If so, it must be so big that it could harm innovation, even in companies that were great at generating ideas and incredibly efficient at implementing them. Not only that, but it would have to be invisible to the decision makers whose job it was to innovate new solutions and convert opportunities into wins. So what was this invisible barrier?

As I pondered this question, I again considered the case of Company Z. Executives there told me that generating and implementing ideas was not the bottleneck they faced — they were certain of that. Instead, they believed that the companies they acquired became less creative over time. If this was indeed the case, then one possibility was that Company Z bought companies and then squelched their ability to generate creative ideas, perhaps due to loads of bureaucracy and paperwork. The problem with this logic was that Company Z was buying small companies that made medical devices, products that typically develop very slowly. From the time these companies were acquired to the time they were sold off, their products probably didn't change much at all.

I was on my own. I didn't have any answers, but I had a problem I was passionate about solving. I wanted to isolate this hidden barrier to innovation. And I had a hunch: maybe the executives at Company Z perceived the companies they had acquired differently over time not because the products had changed, but because the way executives evaluated the products had changed.

Were all of us operating using a false assumption? That is, we assume that any expert in a specific industry can accurately assess...