Innovation Heuristics

I have a confession to make. Although I have been teaching business strategy and innovation management for over ten years there is always a doubt in my mind over the value of what I bring into the classroom. If you looked at my collection of PowerPoint slides and readings, you would see a bag of tools for analysis but I have never really believed that these tools, such as industry analysis, scenario planning and value chain analysis, were really very important.

My late grandfather was a self-taught businessman who created a large construction company. He was always amused by the idea that people could study business and often asked me when I was going to get a real job. Everything that the managers of the company knew was based on ‘rules of thumb’, learned from experience rather than studying ‘tools’ in a business school. What he was actually saying is that there is no shortcut to learning ‘rules of thumb’.

These rules of thumb are otherwise known as heuristics. In a complicated world, heuristics help us to process information and simplify decision making. We use heuristics every day in all sorts of ways. For example, I never go into an empty restaurant, or a full platform means that I need to run because the next train is coming soon. Malcolm Gladwell’s book, Blink, is an excellent read if you are skeptical about the importance of intuition and heuristics in rapid decision making.
Experienced innovation managers also use heuristics. Tim and I were talking to managers the other day who had worked out that they needed to quarantine innovation projects from other business activities. Now, there are a whole bunch of research results and theories which tell us why this is a good idea, but the company had arrived at this conclusion without any of these.

Experience can allow us to develop heuristics but this can be slow and sometimes very expensive (my grandfather’s business didn’t survive to learn from the effect of borrowing to fund big projects at the top of the business cycle). Is there an alternative and can we teach heuristics?

I think the answer is yes and I was provoked into thinking about this after Tim wrote his post about analysis and interpretation. Here he was questioning the emphasis that we place on tools for analysis at the expense of more expansive exploration of possibilities for innovation.

I agree that focusing on analysis will probably make us less innovative but what if we tried to emphasize the heuristic value of analytical tools? If we actually blended the tools with people’s experience and existing heuristics then possibly we can get past the tool as a thinking constraint to a point where the tool is a catalyst for thinking about new possibilities.

We can teach heuristics, but it means that the teaching style must be different from the old models based on simple content delivery (sadly, still very prevalent is most business schools). Rather than the educator being the conveyor for information, they become a facilitator of an interaction between the ‘tools’ and the experiential knowledge of the learner.

I run an executive education course in strategy and I think that one way to get the interaction going between tools and heuristics is to use a ‘live case’ teaching method where some of the managers bring strategy problems to the course that are worked through during the week with other participants in the course. The result is that preconceptions are challenged and tools are applied and adapted for purpose, with the result being a new set of heuristics and a new way of seeing business problems and opportunities.

We have a vast mountain of tools and frameworks from authors, academics and consultants. How many of these are genuinely valuable as heuristics that change the way we see the world?

Flickr photo from Mara under creative commons license

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3 thoughts on “Innovation Heuristics

  1. John Heuristics was not a term I was thinking of while reading your post – but now it does seem to make sense

    The word that I was thinking about while reading was absorptive capacity – which I personall define as you know what you are seeing or doing is valuable because of your past experiences in the topic.

    (and the actual authors define as having the “ability to recognize the value of new information, assimilate it, and apply it to commercial ends” Cohen and Levinthal (1990), “Absorptive capacity: A new perspective on learning and innovation”, Administrative Science Quarterly, Volume 35, Issue 1 pg. 128-152.)

    Forgive my lack of independent academic sourcing it’s late in Canada!

    I guess from my experience in the executive MBA programme at UPEI in Canada the benefit I see in the studies and research is that someone has independently gone out done the research and has reported the “best practices” per say.

    Ultimately I believe that there are few academics that would say definatively that something is 100% the case, 100% of the time (and particularly given the art and science of management & leadership in business – and particularly given the independent nature of one of the key variables that impact a majority of business decision are people who could blame them! After all we’re a funny lot!)

    Thus as an executive, I see the value in being able to stand on the shoulders of those who’ve come before me (paraphrasing Newton who paraphrased Bernard of Chartres – and that by doing so I have some confidence in the selection of and ability to use these tools.

    To me this is were the innovation comes in , sometimes even with those “best practices” managers will develop either hybrid tools and/or new practices that will ultimately replace the old standards…

    I would suggest that by applying the knowledge in a controlled environment – your managers and leaders will gain confidence in using the tools – ultimately only time will tell if the confidence was well founded given the particular challenges they face on the battlefields of business… and that to me is what makes business so exciting. I think that Henry Mintzberg might argue that we need less MBA’s and more managers! (which I’ve always interpreted as less thinking and more doing!)

    Ultimately at the end of the day you need to gather the data you can, given the time frames and resources you have available, and then make the best decision possible given te data available… sometimes as Gladwell argued in Blink – it can be made in the Blink of an Eye; and sometimes a more indepth analysis is needed (as is the case of Tims’ blog posting today – funnily enough Gladwell again citing the case of Howard Moskowitz’s spaghetti sauce innovation – )

    I apologize in advance for the length of my posting!

    Scott Wilson

  2. Hi Scott. Thanks for the comment. The link to the famous Cohen and Levinthal study is a good one. It’s been a while since I’ve read the paper but I think they found that firms who did R&D were able to absorb new technology, while those who didn’t do R&D were unable to apply the new technology inside the firm. This means that buying in technology cannot substitute for having your own technological capabilities. It’s not a big stretch to apply this to individuals and you make this argument very well. Business education is valuable because it enables managers to absorb new ideas beyond the content within the courses.
    Mintzberg is great! I saw him in a panel debate, a few years ago, with some very high profile US business school deans on the value of the MBA. Mintzberg didn’t take the debate in a knockout but he was well ahead on points by the end of the final round and he made the Dean of Dartmouth’s Tuck Business School look just a little bit foolish. One of Canada’s living treasures, I think.

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