Innovation = reducing errors + increasing insights

Improving Performance

From Farnamstreet:

Via Seeing What Others Don’t: The Remarkable Ways We Gain Insights (Kindle):

To improve performance, we need to do two things. The down arrow is what we have to reduce, errors. The up arrow is what we have to increase, insights. Performance improvement depends on doing both of these things.

We tend to look for ways to eliminate errors. That’s the down arrow. But if we eliminate all errors we haven’t created any insights. …

Ideally, reducing mistakes would at least help us gain insights but I don’t believe that’s how it works. I suspect the relation between the arrows runs the other way. When we put too much energy into eliminating mistakes, we’re less likely to gain insights. Having insights is a different matter from preventing mistakes.

When I showed this slide in my seminars, I got a lot of head nods. The participants agreed that their organizations were all about the down arrow. They felt frustrated by organizations that stifled their attempts to do a good job. Their organizations hammered home the message of reducing mistakes, perhaps because it is easier for managers to cut down on mistakes than to encourage insights. Mistakes are visible, costly, and embarrassing.

This is the innovation dilemma most organization face, manage the present while also creating the future: exploitation vs discovery.

Most organizations are good at efficiency, aka “reducing errors”, but not so good at discovering the future. Indeed, by only focusing on reducing errors, organizations hinder discovering the new. To innovate, this is the type of inertia that organizations need to be overcome.