"You don't understand out business..."

In an executive breakfast at Stanford University, Professor and  Strategy Consultant Gary Hamel once described arriving at a  hotel earlier than check-in time. Does this ever happen to you? Of course it does! He was told to wait for the "official" check-in time (typically 2 or 3 pm) for his room to be ready. As he was waiting, he asked the hotel manager why wouldn't the hotel adopt the same business model used by  rental car agencies. You get your car whenever you get there, and you are charged for 24-hour periods starting that moment. If you get your car at 11:20, you will be charged for one day until tomorrow at 11:19. Why can't the same thing be implemented in the hotel industry?

"You don't understand our business," said the hotel manager, to which Hamel responded: "maybe that's my competitive advantage."

I've seen companies try to be innovative by putting several people from the same business unit and with the same discipline (typically, engineering) in one room and expecting new ideas to emerge. However, people who are so deeply involved in a certain market, technology, or discipline are starting to feel bound by restrictions that don't really exist. This is when outsiders' ideas will be faced with "you don't understand our business."

On the other hand, I've seen companies try to be disruptively innovative by bringing ideas far away from the industry, missing some basic facts that, if were known to them, would explain why nobody has done it before. At least not that way. That's another way to fail.

You need insiders and outsiders

However, building  cross-functional teams with people who bring depth of experience in the market and technology to be disrupted on one hand (the "insiders"), and people who have very little knowledge of "the rules of the game" in this market or technology on the other hand (the "outsiders"), will assure creative ideas and solutions. The "outsiders" will bring crazy ideas, which the "insiders" will ground in the realities of the target market and technology. Just like you need both  introverts and extroverts, you need both insiders and outsiders.

Prerequisite #1: Trust

While this dynamic has the potential of increasing the flow of creative ideas, there are two prerequisites for success. The first is that there is trust already built within the team. Without trust, the insiders will treat the outsiders' ideas as completely irrelevant, unfeasible, radical (not in a good way), and even dangerous, and use everything in their power to stop them. At the same time, the outsiders will think of the insiders as blockers and lacking vision, and thus will discount all objections they bring. If trust already exists within the team, built on respect for mutual competence and shared values, ideas will be considered more seriously, and so will objections to those. How do you know if trust exists? If team members feel comfortable enough to bring humor and sarcasm to the discussion.

Prerequisite #2: Constructivism

The second prerequisite is that both "sides" will be constructive and share the same goal. The insiders should not play the role of antibiotics, and the outsiders should not play the role of bacteria. When an insider sees a problem with an outsider's idea, he should point it out, and think about how to overcome it. At the same time, when an insider brings an objection, or points the problem with a new idea, the outsider should not discount it, and think about ways around the problem.

This is one more reason why diversity is so important to  build creative teams.

This article is adapted from my upcoming book, Un-Kill Creativity: How Corporate America can out-innovate startups.

Published on: Jul 12, 2016