Prerequisite For Innovation: fear

Published at Innovation Excellence, June 10, 2015 (http://www.innovationexcellence.com/blog/2015/06/10/prerequisite-for-innovation-fear/) 

I recently sat down with Interphase’s CEO for a chat, and he reminded me that during my interview with him, four years ago, I asked him a question: “are you afraid for the future of your company?” He admitted that this question was unexpected and unorthodox. But there was a reason why I asked it.

Research showed that one of the most (if not the most) influential factors on employee creativity is autonomy. The more autonomy a company gives an employee—the more this employee becomes creative, and contributes to the company’s overall level of innovation.

At the same time, innovative companies are typically considered those who are willing to take risk. Innovative companies are willing to place bets that have a less-than-perfect probability of success. In fact, innovative companies are willing to take risk at “long shot” opportunities, where the risk is high, but the reward, if successful, is greater.

How are these two related? Simple. Two years ago I attended an evening reception held by the Texas-Israel Chamber of Commerce in Houston. I met someone, and to illustrate this point I asked him what kind of a car he drove. He answered: “a brand new Mercedes E350”. Perfect for this example. I asked him if I could get the keys to his car and test drive it. He looked at me, somewhat annoyed, and finally said “no!” I asked why, and he replied “because I don’t know you.” Makes sense. He doesn’t know me, and thus letting me drive his car is a risk that he had no reason to take. “Let me change the scenario a little,” I added: “what if you are hurt, needing to be taken to a hospital, and this is really not where you want to leave your car parked overnight. Would you give me the keys and let me drive it to your home then?” He didn’t think twice and immediately said “of course!” “How is that different?” I asked. He had to think about this one. He realized that he gave me two opposite answers to the same question in less than a minute. He finally replied, triumphantly: “Because I didn’t have a choice this time!”

Companies “think” the same way. When the company’s status, financials, and prospects are positive, protected, and safe (or, at least, are perceived to be so), it doesn’t take risks. It doesn’t have to trust its employees enough to let them make mistakes, mistakes that could cost the company dearly. However, when the company is fearful for its survival, when the company is one mistake away from bankruptcy, or when it is under attack by predatory competitors or changing market dynamics (or, at least, is perceived to be under those conditions)—its executives will feel that they have no choice. They have nothing to lose. Under this perception they will tend to take risks (what alternative do they really have?), and they will tend to trust their employees and provide them with the autonomy so needed for them to be creative.

Really, what I care about are the autonomy that the employees are given which will cause them to be more creative, and the risks (financial and otherwise) that the company is willing to take to fuel those new projects started by empowered, autonomous employees.

Those two are driven directly by the company’s (or its executives’) perception of fear for its survival.

But how could Apple, that has $25 of assets (of which $8.3 are in cash) for every person on this planet, and that two weeks before the US has reached its debt limit in 2011 had more money in the bank than the US government, be so innovative? Surely this company cannot be fearful for its survival enough to feel it “doesn’t have a choice”. The answer is that Steve Jobs, as described through several articles and books, perceived that the company was on the verge of bankruptcy many times during his two tenures as a CEO. It didn’t really matter whether the company was at risk or not. What matters only was that he thought it was.

Yes, in many cases when executives perceive that their company is at risk—it really is. In many cases when they perceived their company is safe—it really is. However, more often than not executives perceive that the future of the company is safe, when in fact it is at risk. A grave risk. Rarely, as in the Apple case, executives will fear for the future of their company, when in fact their company is in great shape. The perception here is more important than reality. This paranoia is helpful. It causes executives to take risks and trust employees with autonomy, and in result help their company be innovative. Executives that do not fear for the future of their company, whether justified or not, will prevent creativity.

That is why, during that lunch interview with the CEO of Interphase in the summer of 2008, I asked him “are you afraid about the future of your company?” I simply didn’t want to waste my time on a company that will not allow me to be creative.

image credit: Kevin B 3