As former CIO of Google--arguably one of the most innovative companies on the planet--Douglas Merrill knows a thing or two about operating on the leading edge. Currently founder and CEO of ZestFinance, a big data startup that uses more than 100,000 data points about an individual to figure out if someone with bad credit will pay back a loan, Merrill has some unique perspectives on innovation. Here's what he says you need to know about what it is, and isn't.

Myth: Innovation is inherently good.

Truth: You innovate to win.

Innovation for its own sake is a waste of time. "Oftentimes innovation is required to win, because markets and customers develop and change," he says. "But if you lose sight of [the fact] that you're trying to win, you end up with innovative organizations, which makes it very hard, if not impossible, to actually use that innovation to do anything."

Myth: Innovation is the fruit of cooperative brainstorming.

Truth: Conflict through diversity fosters true innovation.

Sometime before joining Google, Merrill found himself at the Rand Corporation, a think tank that conducts research for the U.S. government. There, he worked on a team that studied military war strategies that had been more successful than anticipated. What Merrill's team discovered: Success didn't depend on adept leaders, but a devil's advocate whose job it was to argue. While the process was less efficient than using traditional military maneuvers out of the book, the results were more effective.

For companies, it means forcing conflict through diversity--something that's remarkably difficult to actually pull off. With a Ph.D. in psychology from Princeton, Merrill explains that while the notion of diversity is multifaceted, ultimately it means putting people together who have different backgrounds, experiences and ways of seeing and reacting to the world. However, when it comes to hiring, people are naturally attracted to those who are similar to themselves, which means that given two resumes, you're going to prefer the one that looks more like you. Over time, this means your company becomes less diverse, not more so.

Instead, be intentional about hiring for diversity, knowing that interacting with people unlike yourself will at times be annoying. "Particularly now when we all talk about no-jerk cultures, people don't want to hire for things that include conflict. They think that's bad. They think if they have conflict people than they're a jerk," he says. "I think that's actually a really important niche, you have to have that conflict. You have to trade that efficiency for effectiveness."

Myth: Innovating on the leading edge involves making tough decisions.

Truth: Very few decisions are critical in the grand scheme of things.

While having people depend on your company--whether it's employees, customers or anyone else--can be stressful, unless a decision is going to hurt someone, it's not worth sweating blood over. However, keeping a laid-back perspective can be difficult when you see your market moving and you want to make changes and innovate.

"Instead of focusing all your energy on painfully driving this decision to 100 percent, drive it to 80 percent and take the time back to go mentor somebody [or] to make sure you've hired somebody who's very different," he says. "Go devote your leadership energies to setting up a circumstance such that your organization can win, as opposed to trying to optimize this particular decision which probably ultimately doesn't make any difference."

Published on: May 4, 2015
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