Strategic creativity and decision making: a Strategic Leadership Forum road trip to Queen's University

Citation

Flynn, S. (2008), "Strategic creativity and decision making: a Strategic Leadership Forum road trip to Queen's University", Strategy & Leadership, Vol. 36 No. 1. https://doi.org/10.1108/sl.2008.26136aac.001

Strategic creativity and decision making: a Strategic Leadership Forum road trip to Queen's University

Strategic creativity and decision making: a Strategic Leadership Forum road trip to Queen’s University

Susan FlynnPresident of Tidewatch Consulting located in Toronto (seflynn@sympatico.ca). For information on Strategic Leadership Forum programs in 2008 contact Margo Street (slf-toronto@rogers.com).

This year, the Toronto-based Strategic Leadership Forum’s annual “Strategy on the Road” trip traveled to Queen’s University School of Business in Kingston Ontario to hear presentations on strategic creativity and decision making. Faculty members addressed the challenge of how leaders can stimulate innovation that is aligned with business goals, and use both rational thinking and intuition to make sound strategic decisions, especially in environments of uncertainty. Here are some highlights:

John Pliniussen, Associate Professor of Sales Management and E-marketing and Director, Queen’s Business Consulting

Professor Pliniussen’s thesis is that, although creativity and innovation are clearly the spark plugs and engine of growth, these concepts are misunderstood and underutilized in many firms. He contends that although creativity and innovation obviously go hand in hand and the terms are often used interchangeably, they are not the same. Unless you understand the difference, your efforts will be off target. Pliniussen suggested there are four steps for ramping-up innovative output to actually boost market share, brand or ROI.

Step 1. Results begin with imagination

Imagination involves the ability to form ideas and images of something never experienced before. Creativity is the ability to produce something novel from what is imagined. Innovation is the ability to create something useful and profitable. You may think it’s creativity that’s lacking in your organization when in fact, it’s more likely imagination or innovation, and the gap is often in the organization’s processes and structures.

If imagination opens the door to magical places of possibility then taking the first step requires developing professional skill in stimulating imagination and turning it into innovation. That includes recognizing the hurdles:

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  We’re always in a rush.

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  We don’t take time to relax and “incubate.”

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  Because we don’t understand the process, we focus on substance (such as the SWOT analysis) instead of spending time on the process of generating and exploring alternatives.

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  We have no clear incentive or disincentive to change these behaviors.

While managers always have multiple, clear business goals that are focused either on increasing a positive (such as ROI, vision or teamwork) or decreasing a negative (for example conflicts or costs), they typically don’t think through the precise end goal for the creativity that’s needed to reach those goals. To help find the impetus for innovation, Pliniussen suggested using a Net Marketing Contribution model. In this model, rather than a broad, vague mention of creativity in the mission statement, deliberate decisions about where new ideas are needed should be made in parallel with decisions about market strategies. Efforts to innovate are then purposeful and targeted based on their potential contribution to specific strategic goals, such as growing market share, increasing efficiency or lowering costs. This focus on a more precise end goal for innovation is critical. Pliniussen’s research shows that what you aspire to is the biggest influencer of new ideas, and understanding why you need to be more creative is ultimately what fuels real innovation.

Step 2. Learn methods and metrics from the best innovators

According to Pliniussen, there are many ways to measure innovativeness. One non-traditional way, he suggested is revenue per employee. To illustrate, he compared Google and Microsoft. Although revenue per sales person is not significantly higher at Google, revenue per employee is almost double that of Microsoft.

So what does Google do differently? In addition to living by formal innovation rules, which include the belief that “the world is Google’s R&D lab” and a “user is in charge” philosophy, Google’s real commitment is evident in its innovation mantras. Along with the predictable “learn from failure” advice and a focus on hiring risk-takers and stars, the most powerful mantra is “attack everything that gets in the way of innovation.”

Step 3. Tools you can use

Building on the principle that imagination should be purposefully stimulated, Pliniussen suggested several techniques. A disciplined Sacred Cow Exercise ruthlessly and rationally eliminates this-is-how-we’ve-always-done-it thinking. The RACERS brainstorming tool provides a framework for discovering how you can Rearrange, Adapt, Combine, Eliminate, Reverse or Substitute ideas, resources, processes or products to come up with something fresh.

Step 4. The Innovation Table helps you reach your goal

Pliniussen’s list of essentials goes beyond conventional thinking about what it takes to fuel innovation. While the Innovation Table predictably includes R&D, structured processes and measures, and systems for screening, tracking and rewarding ideas, it also includes direct support for individual creativity – time to read, quality conversations, “you” time and overall life balance. As counterintuitive as slowing down seems to an action-focused, solution-driven mindset, the more time, freedom and conversations people have, the more likely imagination is active. There are many simple things leaders can do to stimulate new thinking. Pliniussen cited this example of how to enrich an organization’s thinking: in one firm, just as a result of increasing business magazine subscriptions and encouraging the purchase of business books, the average length of time spent in meetings went down, while time spent on new ideas in those meetings went up. As well, hits on a Fix-it forum increased, and implementation of new ideas went from zero to 3 per quarter.

While the final measures of successful innovation are competitive strength and growth in the business, it is possible to track signs of progress along the way. The more new ideas, new targets, new teams, new training and new buzz you hear, the better.

The leader’s job is to foster innovation by integrating it into organizational practice

This means systematically putting the infrastructures in place to stimulate all of this new energy, steering creativity toward your specific strategic goals, and rewarding it. Leaders who want more productive imagination, must set that as a goal and let it be known it’s part of the routine performance review. Most importantly, leaders must make sure they work to improve their own creativity.

Salmon Mufti, Assistant Professor of Management Information Systems

As part of his exploration of how decisions are made, Professor Mufti challenged the fundamental assumption that a quality process increases the odds of a quality outcome – the premise behind Total Quality Management, Business Process Engineering and Strategic Planning. When asked how they make decisions, managers typically describe a structured process: define the problem, diagnose causes, design alternatives, select and implement the best option. Mufti’s observations reveal something quite different. While managers may in fact have gone through the analytical process they describe, at the end of the day, in Mufti’s words, “some mystical metaphysical thing takes place.” Successful decision makers he said, use a pragmatic process that blends both analysis and intuition – because used alone both have their perils.

One of the biggest factors influencing decision mode is the context. When time, resources and information are available, analysis is the logical, systematic process for solving problems. But globalization, communications and deregulation are creating a “perfect storm” environment in which analytical decision makers must regularly cope with ambiguity. Mufti cited research that suggests that although 70 percent of decisions about strategy occur in the context of a clear enough future, a predictable set of alternate futures or range of possible outcomes, 30 percent occur in environments of true ambiguity with no reliable data to forecast the future. As uncertainty increases, good decision-making begins to rely more on analogies, pattern recognition and non-linear models.

When the future is unpredictable, rational decision-making can contribute to failure

Mufti points out that in decisions about whether to enter high risk emerging markets for example, there is simply no basis to forecast the future. While traditional tools help analyze the problems, they are inadequate to analyze new solutions. To make things worse, in such situations, managers tend to become product focused instead of customer focused. In sum, exhaustive analysis during fast paced change is likely to be disastrous, and this is where Intuition comes into play.

Management intuition is actually grounded in management expertise. Mufti referred to research by Gary Klein to explain how experts look at situations differently than other people and how analysis and intuition combine to produce expert performance. Whether or not they have all the information, experts simply focus on a few key factors and match those against a reservoir of experience. These cues help in recognizing patterns, which then activate various mental simulations that can be run until you find something that fits based on your experience. It may not be the complete solution, but it will be good enough to move forward.

Managers must rely more on intuition in environments of uncertainty

Entrepreneurs who confront problems on a daily basis that would overwhelm most corporate managers routinely rely on intuition to make decisions where there is simply no time or resources for analysis. As an example of the effectiveness of intuition, experienced nurses in neo-natal intensive care units frequently have saved babies’ lives because of their intuitive sense that somehow the baby “just didn’t look right.” However, without experience a decision is not intuition. It’s a wild guess. And intuition alone is not the answer.

Reaching conclusions solely on instinct without conscious thought involves dangerous traps

From Anchoring (giving disproportionate weight to the first information we receive) to the subconscious tendency to avoid risk by perpetuating the Status Quo, to the Sunk Cost trap of making decisions that justify and try to get some return on past choices, cognitive biases interfere with the quality of intuitive decisions. You might expect that knowing these biases exist we could mitigate them, but Steinberg’s Fallacies of Decision-making explain why we don’t. His Fallacies posit that, not only are we unrealistically optimistic, we overestimate our own capability, influence and power.

The challenging paradox is that the more complex and unknowable the future, the less adequate and possible pure analysis is. At the same time, Mufti quoted Bonabeau’s premise that “the more options you’re evaluating, the more complex and unfamiliar the challenges, the less you should emphasize instinct over reason.” According to Mufti, sometimes a third tool is needed. If analysis and intuition are the science and the art, then action is the craft. With something you haven’t seen before, you may simply have to do a pilot, and then connect what you learn with your analysis and your intuition.