INNOVATION
SPECIAL
Forecasting the Success of Innovations
Creators beat
managers at predicting an innovation’s success, unless they’re predicting the
success of their own work.
You probably know
someone who owns an Apple Watch, or maybe you own one yourself. Is it a
creative idea? Well, the multi-function watch was creative the first time it
appeared in science fiction, but that was a long time ago. Technologically a
watch with the Apple Watch functionality has been possible for a while, but
firms have waited because they were unsure if it could become a success. If
fewer and fewer people wear watches, because smartphones do the same job and
much more, why make a watch?
In fact, the
potential for success of the Apple Watch was in dispute as soon as it was
launched, and it is still not settled. This is an issue that surfaces again and
again – firms need to estimate the potential success of ideas, both creative
ones and more conventional ones. Innovative solutions are increasingly granting
a competitive edge, but managers cannot decide to invest in every novel idea an
organisation generates. At the same time, organisations can’t afford to miss
out on potentially transformational ideas. There are many examples of managers
rejecting novel ideas that go on to be huge successes.
How can organisations
make better decisions about which ideas to pursue? In a forthcoming paper in Administrative
Science Quarterly, Justin Berg, of the Stanford Graduate School of Business,
examines this question in the context of who in the organisation might be best
placed to decide what is most likely to be a creative success: creators,
managers or customers?
The question is
important because it reflects an ongoing tension in firms. Creators think that
managers don’t have the right kind of thinking to appreciate their work and
managers think that creators are poor decision makers, especially when
evaluating their own work. Theoretically the key difference is between the
divergent thinking that underlies creativity (generating ideas by exploring
many possible solutions), and the convergent thinking that underlies analysis
and decision making (giving “correct” answers to standard questions).
Creative circus
In his paper, Berg
turned to the circus industry and drew upon 339 circus professionals, spanning
creators, managers and people who occupied roles with both duties across 43
countries as well as 150 non-circus people. Participants were then asked to
watch online videos of circus acts and forecast how successful the videos would
be with the audience. Creators and those with dual roles also submitted videos
and were able to forecast the success of their own work as well as that of
others. Berg also surveyed the audience, asking them to rate the videos.
It turns out that the
creators are much better at assessing creative success than managers are.
Managers could be the worst – even laypeople outperform their predictions in
one measure of assessment accuracy.
But managers still
had an edge in some respects: creators are bad at assessing the success of
their own work (you get no points for guessing that they overestimate it). Even
more interesting, a creator with a strong track record of past successes is
especially bad at assessing the acts, probably due to overconfidence.
For organisations to better forecast the
success of creative ideas, this study gives a good rule of thumb for managers.
If a creator says, “I know this product idea will succeed/fail because [insert
own success story here]”, it would be worth considering whether they are
talking about their own creation or others and what their past record has
shown. It would also be useful for managers to ignore themselves occasionally
too. Having creators assess each other’s work could be the best way of
forecasting whether an idea will be a hit or not. If that’s not possible, ask
the audience.
Henrich Greve
Read more at
http://knowledge.insead.edu/blog/insead-blog/forecasting-the-success-of-innovations-4826?utm_source=INSEAD+Knowledge&utm_campaign=731e07d4f7-28_July_mailer7_28_2016&utm_medium=email&utm_term=0_e079141ebb-731e07d4f7-249840429#HdwS3GFeq51GUq7o.99
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