Operations and the Bottleneck of Innovation

The Situation

Brad is a newly hired analyst for a mobile payments startup, Cash.io. He joined the startup ready to help conquer PayPal, Visa and anyone else in their way.

When talking about the company to friends, he gushed, and often referenced it as his company. To prepare for the role, he read books and articles about the importance of innovation and not being afraid to fail.

Brad vowed he would never let the fear of failure stand in the way of his creativity and his desire to innovate. Yet as the first quarter came and went, Brad had not found a chance to flex his creativity. He reassured himself with thoughts about the virtues of patience.

As the days wore on, he found himself spending a lot of time doing what his predecessor, Alan, now a senior analyst, did before him. He updated outdated Key Performance Indicators (KPI) and tweaked forecasting models.

Yet he turned this bland work into inspiring reports that touted new growth areas and added new KPIs that he thought could act as additional signals of product engagement. Unfortunately, Alan asked Brad to tone down the bold suggestions and colorful language.

The company didn’t need that; it already had priorities, goals and vision from the founders. They needed him to focus on his job and not the job of the founder and CEO.

After about three quarters, Brad felt assimilated (especially when wearing his Cash.io hoodie) and his ambitions tempered. But the fire in his belly rose again. In the fourth quarter, Apple announced new ApplePay functionality aiming straight for the growth area Brad had wrote about in his early reports.

This parable is perhaps recognizable to many young employees and new hires. The Brads of the world, new hires, are consistently denied the opportunity to be as innovative as their potential might allow them to be.

All businesses know that innovation is important. The best leaders read,write, and lecture about how failure is a key component of innovation. Yet new hires are not given the same opportunity to fail as their business-founding counterparts. So why has this attitude not moved down the chain to employees, especially new employees?

Outdated business structures and operations are causing the acceptance of failure to bottleneck at upper management. These bottlenecks originate at two different stages for a new hire — probationary and onboarding periods.

During the probationary period, creativity is discouraged. During the onboarding period, there is a failure to impart company values; at the same time as newness itself is treated as a weakness instead of a possible source of new eyes on a problem.

There is a need to create a culture for new hires that is tolerant of failure. One way this can be done is by updating and improving the business operations associated with the bottlenecks. These advances will create innovative new hires and businesses that benefit from their unlocked potential.

The Bottlenecks

(1) Putting new employees on probation is understandable from a Human Resources (HR) perspective — HR wants to reduce risk. But to an employee, this is perceived as fail and get fired.

And despite being on probation, new hires are expected to produce at the rate of a seasoned employee. The result is that new hires look to copy what has been successful before, meaning fewer risks taken and less innovation.

(2) Onboarding imparts the wrong values to employees despite its intention to do otherwise. This is because new hires are onboarded over the entire period in which they are becoming a part of the firm.

Becoming part of the firm includes learning its values, cultures and processes. This takes longer than the official period set fourth by most businesses. In fact, the experience of being a new employee can last months and, “if you’re coming into a challenging job from outside the company, it may take a year.[i]”

Official onboarding usually focuses on quickly getting employees onto company systems rather than educating them on the company’s values and culture. When official onboarding stops, new hires learn the culture from tenured employees.

Despite having an innovative culture, your tenured employees may not display this culture in times of pressure. Pressure can result in new hires being asked to quickly finish required but menial tasks, ones that often require copying what has been done before them.

This risks new hires learning a culture in which you only copy what has done before to be successful. This is a good strategy for a firm to find incremental success, but not to foster innovative individuals who take risks.

At my last job, snail mail letters were sent to users to induce behavior change. During onboarding, new hires were asked to set up logins, profiles and learn the processes behind the business.

Then the first tasks of new hires involved understanding the science behind the effectiveness of these letters and participating in meetings where the next iteration of letters were brainstormed. The iterations usually consisted of small graphical improvements and changes to the copy.

Despite consistent lack of success in creating the desired changes, the design was never significantly tweaked nor the concept behind the letters challenged. The team, bigger now with the new hires assimilated, continued to use the same basic design. Even brainstorming for large-scale changes was never seriously considered.

(3) Onboarding’s treatment of new hires newness creates employees who fear rather than embrace what they do not know. New hires are aware of their knowledge gap and its potential to affect their early success.

During official onboarding, there is no recognition of the likelihood of their failure. However, tenured employees recognize new hire’s inexperience and the likelihood of mistakes and, as a result, put forward fewer opportunities to work on critical projects.

This creates a situation where new hires are not given the opportunity to learn how to operate in the face of the unknown. The result of this treatment is that employees will not know how perform in the face of the unknown. The likely outcome is that employees will look to copy what has worked before rather than face potential failure by blazing a new trail.

At the same company mentioned above, unknowns were faced everyday. I was lucky to have learned to deal with ambiguity when working on my own startup. But others were not so lucky. When employees without the experience of dealing with ambiguity were put on projects, the projects were often riddled with hidden unknowns.

This is a situation where teams are not even aware they are dealing with a new situation. These projects often came to a point where an outsider would notice a completion gap and the time pressure required a quick fix solution. These quick fixes generally involved the unimaginative copying of an old solution. The equivalent of fitting a square peg in a round hole.

One might object to the idea that employees should be given the same privilege to fail as founders and executives. Could a valid strategy be to leave the innovation to the founders and upper management, while letting lower level employees focus on smaller more incremental successes?

While this is an interesting argument, innovation rarely comes solely from the top down, and reducing the ability of bottom up innovation is a poor strategy. Businesses know that bottom up innovation is important. This is clear as shown by the popularity of “ship it day”.

These are days where for 24 hours employees form teams to build whatever they want, or create something that they believe will help the business. The Post-It note was famously created on a day like this.

Another objection might be aimed specifically at the concept of giving new employees, those with the least knowledge of the business, the perception that failure is acceptable.

There are two issues with this perspective. The first, is that the newness of new hires gives them the unique advantage of an outsider’s perspective. This perspective should be capitalized. The ability of new hires to bring a new perspective to the table may erode as they become accustomed to the company culture.

The second issue is that new hires are learning the company’s culture that will influence them into the future. If there is a stigma around failure, they may take that culture with them throughout their tenure with your firm, and risk becoming senior employees who are less innovative.

The Solution

What can companies do to foster a culture for their new employees that is accepting of failure? Start at the onboarding process. Make sure to discuss failure and the importance of not hiding from it.

One way to go about this is to ask tenured employees to share a failure of theirs with the new hires. This will help enforce a “culture that counteracts the blame game and makes people feel both comfortable and responsible for surfacing and learning from failures[ii]”. The value of this shift will result in more innovation for the company and growth for the individual[iii].

Next, new employees should be put on critical projects right away and be asked to take advantage of their fresh perspective. The results of this approach are multiple; placing new hires on critical projects: can help tease out poor assumptions in projects, and help expose failures that are being unknowingly hidden.

Finally, this approach can help both the company, and the employee learn since most “companies are designed for performance rather than learning.[iv]”

Another option is to add failure as a section to new hires’ quarterly goals. By making the goal for failure explicit, and asking for a report, the result will be an increased awareness of failures and how they can happen.

Additionally, it will help employees deal with future failures. Experts in psychology understand that, “we can only learn to deal with failure by actually experiencing failure.“[v] Finally, asking new hires to deliberately fail can expose innovative approaches to old problems, thus accelerating competitiveness.

The famous advertiser, David Ogilvy, exemplified this by deliberately producing ads he thought would fail; the ones that worked resulted in innovative approaches that increased his firm’s competitiveness[vi].

A risk adverse culture is not one that any executive looks to build. They know that their company is only as innovative as its people. Thus, the bottleneck of a failure accepting culture at the executive level needs to be countered.

The ability to experiment without fear of failure at the employee level will improve company innovation and the employee experience. The strategies mentioned above and others (try and fail with a few!) will help negate the concept that success is the only option for new employees.

By creating this safety net and shifting early attitudes toward success and failure, firms can cultivate new hires that will add value faster, have more fun, and be more innovative. Finally, a culture that is accepting of failure will protect and foster the entrepreneurial spirit that firms are hiring for in the first place.

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Sources:

[i] Stibitz, S. (2015). How to Get a New Employee Up to Speed. Retrieved September 28, 2016, from https://hbr.org/2015/05/how-to-get-a-new-employee-up-to-speed

[ii] Edmondson, Amy C. “Strategies for Learning from Failure.” Harvard Business Review. 2014. Accessed September 15, 2016. https://hbr.org/2011/04/strategies-for-learning-from-failure

[iii] Achor, Shawn. The Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work. New York: Broadway Books, 2010. Pg. 109

[iv] Schoemaker, Paul J.H, and Robert E. Gunther. “The Wisdom of Deliberate Mistakes.” Harvard Business Review. 2014. Accessed September 15, 2016. https://hbr.org/2006/06/the-wisdom-of-deliberate-mistakes

[v] Achor, Shawn. The Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work. New York: Broadway Books, 2010. Pg. 112

[vi] Schoemaker, Paul J.H, and Robert E. Gunther. “The Wisdom of Deliberate Mistakes.” Harvard Business Review. 2014. Accessed September 15, 2016. https://hbr.org/2006/06/the-wisdom-of-deliberate-mistakes

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