How To Smash The Psychological Barriers To Innovation

Innovation should be a team sport, but in many organizations it’s still an elitist game— reserved for R&D, the executive suite, or those with highly specialized skills. After all, how many people can put a third camera on an iPhone, extend the battery life of a Tesla, or discover a vaccine for COVID-19?

No wonder so many employees are afraid of innovation. They think it’s the exclusive preserve of geniuses or those with power. While it’s easy to say that innovation is everybody’s job, the reality is that few organizations have actually learned how to democratize it. 

Culture is the Obstacle

The biggest obstacle to innovation is top-down, hierarchical culture. It has a way of inducing fear and neutralizing curiosity. Consider the current context: In its most recent global report, Gallop indicates that only 15 percent of employees worldwide are engaged at work. Add to that the finding that a mere 30 percent of employees believe their opinions count. Finally, take into account the fact that most people don’t think of themselves as innovators. If this is the current state, we clearly begin the quest for innovation in a deficit position. 

But that’s not all. Think about the traditional career arc. You get a job and learn the ropes. If you’re constantly told what to do, you’re on the receiving end of a didactic socializing experience. Compliance becomes synonymous with performance. Even in organizations that cultivate critical thinking skills, the culture often withholds the right to challenge the status quo until you have paid your dues. You don’t debate issues on their merits; you debate issues based on power and seniority. In these settings, leaders act like benevolent helicopter parents, patting their employees on the head and telling them not to touch anything. Or they use fear and intimidation to marginalize them out of the process. Later, fearing the loss of competitive advantage but still withholding psychological safety, they tap those same employees on the shoulder and say, “Please innovate!”

Excuse me?

Most employees are naturally willing to participate in the innovation process. They just don’t have the confidence, permission rights, or experience. The culture that has locked them out now suddenly invites them in. “Innovation is embedded in every job description,” says the company. The problem is that employees are still scared to participate and the organization still carries the DNA of approaching it as an exclusive, mysterious art.

Type 1 Innovation: Incremental & Derivative

To further explain the challenge, let’s distinguish between two types of innovation. Type 1 innovation is “incremental & derivative.” It consists of small steps that build on what we already do or know. For example, you might be a home mortgage company with a high-friction process in which a loan processor walks a borrower through a 7-step loan application process. You reduce the process to six steps and gain speed and efficiency. It’s not a massive improvement, but it makes things better. That’s incremental and derivative improvement.

Type 2 Innovation: Radical & Disruptive

Type 2 innovation, on the other hand, is “radical & disruptive.” It consists of bigger steps that disrupt the status quo. Going back to our mortgage example, instead of continuing to tweak the old process, we automate it, put it online, and have the prospective borrower complete the steps without any human interface until the loan application goes to underwriting. Now one loan processor can handle ten times the volume and error rates fall dramatically. That’s radical and disruptive.

Self-Selecting Out

When employees think about innovation, they tend to think of type 2, associating the concept with the big stuff, the cutting edge stuff that catapults an organization beyond its rivals and upends the game. When employees see innovation this way, they tend to exclude themselves in that process because it appears to be something that only brilliant people can do. They say to themselves, “That’s not my job.” In many cases, that’s exactly what they have been taught.

In reality, 99 percent of innovation is type 1, consisting of small improvements. When leaders explain type 1 and type 2 innovation to employees and the 99-to-1 ratio, it can be a revelatory experience. That reframing demystifies the process and motivates self-described non-innovators to invite themselves into the process. It smashes the psychological barriers to participation by removing fear and the perception that innovation is a rarefied domain. 

Product, Process, & Business Model Innovation

In addition to the two types of innovation, there are three categories of innovation:

Product Innovation 

Product innovation relates to improvement in the features, capabilities, and benefits of products. For example, MAC cosmetics figured out how to create a matte finish for its Powder Kiss lipstick franchise. IKEA built a global furniture business around medium-density fiberboard (MDF). Certainly it took technical specialists to generate these innovations, but in case your people feel disqualified from product innovation, simply ask them why it took 2,000 years to put wheels on luggage. Did that require specialized training? No, it’s just good old type 1 innovation. 

In the innovation process, it can be a mighty fine line that separates ignorance from brilliance. Often just the mere fact that you’re an outsider or an objective third-party gives you an inherent advantage because you’re not a prisoner to the paradigm. You’re not constrained by patterns of groupthink. Instead you bring divergent thinking and the requisite variety of perspectives necessary to connect things that are not normally connected. 

Process Innovation

Process innovation relates to creating value by improving the way products and services are delivered, including new methods and technologies. Netflix avoided bricks and mortar and moved from mailed physical rentals to streaming. The airport security company, Clear, figured out how to create a touchless airport experience. And Amazon Prime bundled delivery and streaming into a paid subscription service. All clever process innovations. Type II innovation? Maybe. But what about DoorDash and test driving new cars that dealerships deliver to your house? What’s mystical about those innovations? Nothing. Straight type 1.

Business Model Innovation

Finally, business model innovation includes the other two categories and really about any other kind of improvement that captures value in new ways. For example, HubSpot, the inbound marketing company, has invested heavily in its training and customer success resources to get customers up and running quickly on its platform, transforming the business from a software company to an integrated software and marketing consulting company. Levi Strauss & Company went from being an asset-heavy, vertically integrated producer of denim jeans to an asset-light company that outsources nearly all production to developing countries. Apple, after sourcing processing chips for its Mac products from Intel for the last 15 years, has recently designed its own chip technology and will use a Taiwanese partner to produce the chips. 

Most business model innovations include decisions to start, stop, or continue things related to partnering, outsourcing, asset-sharing, bundling, embedding, licensing, pricing, distribution, customer experience, marketing, and market expansion—reconfiguring the way organizations allocate resources as they work with suppliers, vendors, partners, and customers in the supply chain and ecosystem. In case business model innovation seems intimidating, consider that even Chick-fil-A’s familiar, “My pleasure!” qualifies as a business model innovation because it enhances and standardizes the customer experience. Once again, type 1. 

The Innovation 6-Box

To demystify and democratize innovation, organizations must recruit more of the employee population to participate in the process. An effective way to do this is to make the process accessible. You can do this by introducing a simple matrix that combines the two types of innovation with the three categories of innovation. When employees understand the types and categories, it opens the black box we call innovation, giving them new-found confidence in their ability to contribute.

A final suggestion is to encourage your employees to focus on type 1 innovation. Invite them to think small and look for marginal gains. In fact, you may even want to run a type 1 innovation jam session to build confidence and capability in your people. As T.S. Eliot said, “When forced to work within a strict framework, the imagination is taxed to its utmost—and will produce its richest ideas.”

So if you want to smash the psychological barriers to innovation, culturally flatten the organization, invite everyone to the game, and focus on type 1.