False Negatives & False Positives

13 Dec 2007|Darrel Rhea

I attended an intimate event on innovation by I L O Institute (Innovation in Large Organizations) yesterday with several senior executives responsible for innovation in their organizations. Most of the day was dedicated to group discussion on the subject of innovation, but we also had Dr. Henry Chesbrough (the author of “Open Innovation”) speak at lunch.

Henry is a smart, articulate guy who has looked deeply at some specific aspects of innovation. He talked about the problem of getting “false negatives” from innovation processes (where commercially viable ideas wash out, only to be picked up by other organizations and made successful) and “false positives” (where bad ideas take on a life of their own and don’t get killed until too late). We have certainly seen a lot of examples of both instances happening to Cheskin’s clients, but what are the causes?…

False negatives are the most common disappointments in innovation. Viable product or service concepts get rejected often for the wrong reasons. While they might be on-strategy and meet many practical success criteria, they can be rejected simply because they are, in fact, innovative. Innovations are challenging, full of risk, and people have to commitment themselves with incomplete information. Decision making is a social process, and unless the group is aligned in their commitments, they just don’t tolerate risk well. Groups tend to retreat into the safety of the current paradigm.

False positives tend to happen as a result of the social process too. The passions of a leader or team can over shadow the clear data indicating that an idea will fail. Out of diffidence for the champions of the concept, the organization doesn’t push back to halt development. Not only do they have the loss associated with development, they also have the opportunity cost for not developing other more viable ideas. Again, it is the social decision making process that creates the outcome. It is often the fear of creating a false negative that inhibits groups from rational behavior, and is made worse by the myth that innovation only happens by when a visionary individual ignores all challenges and drives it through the culture by brute force.

The most important factor in preventing false positives and negatives is having alignment within the management group on the success criteria for new ideas. The stage gate process is great for controlling development, but weak in defining what the most appropriate criteria should be to drive decisions within the early-stage gates. The balanced score card approach is another structured way to deal with the group decision making process, but many times we don’t see the score card actually expressing an innovation strategy. It can obscure the need to have a portfolio of concepts that push the boundaries at different levels.

How does a group build alignment? Conversation. “Oh, come on,” you say. “We have endless meetings, presentations, and reviews.” No, I mean real conversation. The kind of sharing, substantive debate, creative exploration, and consensus building that gets groups of people to act together in an aligned way (rather than just react to each other).

When was the last time you participated in a meeting that left you inspired? How does Cheskin facilitate that level of communication within groups? Call me and I’ll tell you.

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