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How The Management Trap Hurts Innovation

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Learn to prevent it—and promote innovative behaviors instead.

Every year, the Drucker Institute, in partnership with The Wall Street Journalranks America’s largest publicly traded companies according to Peter Drucker’s principles of effectiveness—“doing the right things well.” In 2019, Amazon, Microsoft, and Apple took the top spots. Surprised? Probably not. Yet what is surprising is that the list also singles out something else: the companies that are not innovative.

This may seem counterintuitive, but in reality, it isn’t. The behaviors that drive management success are quite different from those needed for innovation. Management is about controlling resources to produce predictable results. Innovation, on the other hand, is about inspiring resources to create new and unpredictable outcomes.

Granted, top-ranking companies such as Amazon and Apple may also be considered innovative. Yet I would argue that as these organizations have become better managed, they have also become less innovative.

Amazon, for example, was incredibly innovative when it redefined the e-commerce business and upended conventional retail. Today, however, their success comes from the efficiency of their distribution centers, the loyalty of their Amazon Prime customers, and the profits they make from their cloud-computing platform Amazon Web Services. Accordingly, Amazon has built management processes to produce the predictable outcomes their customers demand. But here’s the rub: This also limits their ability to deliver something new—something outside those boundaries and conditions.

My point? As organizations implement the practices necessary to perfect execution, they sacrifice the behaviors required to innovate. To prevent this management trap and promote innovative behaviors instead, start with these three strategies.

1. Empower the rule breakers.

From an early age, most of us were taught to follow the rules. We were trained to exercise self-control, avoid mistakes, and minimize risk, sometimes at any cost. As a result, rather than learning from failure and building up resilience, we were conditioned to play it safe and, in essence, settle for the status quo.

Similarly, most managers operate by the book—prioritizing safety and predictability over taking risks and trying new things. They think, “If I screw up, I’ll get fired. But if I stay in line, I’ll get promoted.” The result is a team that executes well—and innovates poorly.

So how do you get people to innovate in a world that rewards predictability? Simple: Empower the rule breakers. You know the ones—the mavericks driven to do the right thing, not do things right. Rather than fall in line, they buck the system and prioritize success over any rules or norms. They aren’t afraid to be unpopular or, when the stakes are high, to even go rogue. They figure, “So what if I get fired?” In their mind, it’s a price worth paying to be able to create, innovate, and succeed.

2. Change your metrics.

The late Eliyahu Goldratt, an Israeli business management guru and the author of the best-selling business novel The Goal, said: “Tell me how you measure me, and I will tell you how I will behave.” Today, this paradigm applies to teams and organizations, too. That is, what they measure is how they behave.

So ask yourself, in a workplace setting, which one of these two options would most people be likely to choose: 1) commit to 3 percent growth and deliver 5 percent; or 2) commit to 20 percent growth and deliver 10 percent.

In most companies, Option 1 would be considered the “better” choice. After all, people who top their target are regarded as more effective. But the problem is that the business would actually be better off with Option 2.

To incentivize innovative behaviors, you need to change your metrics. You have to inspire people to choose Option 2 because people rarely accomplish something great unless they set out to do it in the first place. And if they miss such a stretch goal? Evaluate them according to what they actually accomplished—not a given metric. 

One reason that startups tend to take on stretch goals is that their primary metric is the company’s success. Likewise, their employees commonly accept a lower salary combined with a potential future upside, such as equity. This creates a real incentive for people to go all in and work to achieve something really big as opposed to just small, incremental goals.

3. Optimize the most critical functions.

In almost any organization, there is an unspoken chart that dictates which functional areas have the most power. On top is the CEO and, after that, come the functions that control the resources or set the rules. More often than not, this leads to over-empowered finance, legal, and HR teams, and worse, a palpable management bias that limits innovation.

To really innovate, you have to optimize the functional areas most critical to developing new ideas, solving customer problems, and creating value—not sitting in meetings, writing reports, or crunching numbers. These resources are the constraint in an innovation organization, so maximize them by putting R&D at the top and, right on its heels, sales and marketing, as well as manufacturing. 

Everyone else in the organization—yes, even the CEO—ranks lower in priority since they exist to support and optimize these other, more critical functions. This way, innovation doesn’t take a back seat as it typically does in the traditional org chart.

Inevitably, the management trap will stall the innovation engine that allowed a team or organization to be successful in the first place. But by empowering the rule breakers, changing your metrics, and optimizing the most critical functions, you will prevent the trap—and promote innovative behaviors instead.

**Originally published at Forbes

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