The Paradox of Effective Management: Inhibitors of Innovation and Progress

Innovation can be considered the lifeblood of progress. Companies that fail to innovate risk obsolescence. Surprisingly, research suggests that good managers, often seen as assets to organisations and are the ones who receive the most plaudits, sometimes, inadvertently stifle innovation. This paradox highlights the need for a nuanced understanding of management's role in promoting creativity, change, and in other words - progress.

According to a report by McKinsey & Company, 84% of CEOs believe that innovation is critical to growth. Innovation is seen as a key driver for growth, especially as business cycles continue to speed up. It’s also noted that the most successful CEOs embed insight-based innovation in their company’s culture, in its ways of working, in its organisational design, and in its leadership model.

While the trends has been to push innovation further out to the frontline across the business, empowering these teams to identify and remove sources of friction for customers, so too will organisations empower management that can be trusted to run with this. While this highlights the importance of innovation in maintaining a competitive edge and achieving sustainable growth, the concept of good vs. right management for innovation must be considered.

There are arguably five reasons good managers struggle to innovate, and I have tabled some of them below.

1. The "Comfort Zone" Effect:

Good managers excel at maintaining stability and order. This desire for stability can inadvertently create a comfort zone for employees. A recent study by PWC reveals how 35% of employees felt that their companies' systems and procedures stifled innovation by tolerating failure and associated to this, dissent and debate.

This suggests that an overemphasis on managerial control can discourage employees from taking risks or suggesting new ideas.

• Encourage managers to seek out innovative ideas from employees
• Establish cross-functional teams to promote collaboration and idea sharing, with support from the top
• Create a reward system that recognises and celebrates innovative contributions, particularly well thought out, relevant and applicable ones

2. The Fear of Failure:

Good managers, while ensuring efficiency and minimisation of risk, inadvertently cultivate a culture of risk aversion and this can be exacerbated by the industry people find themselves in. A 2023 Forbes article titled: Overcoming Four Factors That Can Stifle Workplace Innovation, cites that 50% of employees fear speaking out, hence challenging norms or admitting to failure. This aversion to failure can hinder the experimentation and bold thinking often essential for innovation.

• Managers can promote a "learning from failure" mindset or as some say "failing forward", where mistakes are seen as opportunities for growth either through learning or taking on aspects that worked
• Businesses can establish innovation incubators or sandboxes where employees can experiment without fear of repercussions, often there might not be concrete outcomes from these, but there are lessons and cultural benefits to these that are great for learning, should they get the relevant support from top-management
• Leadership can communicate a clear commitment to innovation and its acceptance of associated risks, here - boundaries, funding, and appetite for risk are critical to limit unrealistic ideas, while giving best chances of adoption of winning ideas

3. The "Expertise" Trap:

Managers who are experts in their fields can unintentionally limit innovation by imposing their own expertise on subordinates. I am sure we have often heard seasoned professionals state: "This is how we..." or "This is how they...". A study by the Journal of Business Venturing found that when managers were highly knowledgeable, employees were less likely to voice their innovative ideas.

This suggests that a manager's expertise, while valuable, can inadvertently discourage diverse perspectives and fresh ideas. This is not a major problem in my view and with some subtle tweaks, that expert can become a force of change.

• Managers should actively seek input and ideas from employees, regardless of their expertise level - clear feedback on why or why not an idea is considered are critical
• Organisations can provide training and resources for managers to enhance their coaching and mentoring skills, fostering an environment where employee ideas are valued.
• Encourage managers to rotate between roles or departments to gain fresh perspectives.

4. The Bureaucracy Barrier:

I don't think we need reports that showcase to what extend bureaucracy limits innovation; I have seen how this can be used as an inhibitor or catalyst for change and innovation - the main variance here, is culture. Good managers, while striving to maintain order, can inadvertently introduce layers of red tape and decision-making processes that slow down innovative projects, making them less agile and responsive to market changes.

• Streamline decision-making processes and reduce unnecessary layers of bureaucracy, this can be pre-agreeing scorecards with management or planning ahead on new ideas and sharing funding and operational support requirements
• Implement agile project management methodologies to increase responsiveness to market changes, but ensure the adherence to agile does not become another process to manage, rather than an agile mindset; I wrote about that here: here (To an Agile State of Mind)
• Encourage open communication channels that allow employees to voice concerns about bureaucratic obstacles

5. The Innovator’s Dilemma and Beyond

Clayton Christensen, a renowned management thinker and author of "The Innovator's Dilemma," has contributed significantly to the discussion on innovation and management. His work focused on the concept of disruptive innovation, where he argued that established companies fail to innovate because they are too focused on their existing products and customers.

Christensen's perspective aligns with the idea that good managers, in their pursuit of efficiency and profitability, can inadvertently hinder disruptive innovation. He suggests that managers tend to prioritise sustaining innovations (improving existing products or services for current customers) over disruptive innovations (creating entirely new products or services for new markets).

• Organisations should allocate a portion of their resources specifically for exploring disruptive ideas, these need not be financial, they can be human resources, partnerships, and various approaches to existing problems
• Create a separate innovation unit with its own budget and leadership to focus on disruptive projects; ideally, these ideas should not be in dark corners, but be communicated and shared to avoid an "us" and "them" aspect when these ideas are integrated
• Establish clear metrics for evaluating both sustaining and disruptive innovations, ensuring a balanced approach - ensuring what works is not maligned to more human error or "good" management :)

The road ahead with good managers

Clayton Christensen's work underscores the idea that good managers can become inhibitors to innovation when they overly prioritise the status quo and established markets, neglecting the potential of disruptive innovations that may drive future growth.

While good managers undoubtedly play a crucial role in maintaining operational efficiency and stability, it is essential to strike a balance between managerial control and innovation. Given the rate of change of technology, and the already complex state of fit for purpose skills, organisations must recognise this paradox and implement strategies that encourage a culture of innovation without undermining the essential functions of good management.

The answer, in short is that bridging the paradox is largely cultural, and where culture is harder to change, allowing innovation to flourish outside of the the eye of good managers doing their job well.