Sunday, February 24, 2013

5 Principles of Creativity - Why it Works - Part 5: Hedging Bets

This is the next post looking at why the 5 principles of creativity work as they do. This post examines hedging your bets.

What this is trying to say in the nicest possible teams is expect failure. What we tend to regard as the result of creative efforts is major innovations and changes, What we don't notice is those innovations that didn't quite have the same impact or those that failed. We may also fail to notice that what seems like one big change is actually the result of a series of small changes.

When being creative you need to expect that not all ideas will pan out. This is the major concept behind portfolio management in the field of new product development. Mix a number of low risk low return projects along with higher risk, higher return projects. Overall the portfolio should balance out and you have the possibility of some major payoff if some of the high risk projects are successful. The alternative (when trying to minimize risk) is a string of projects that are low risk but also now return and that lead to very little change.

For leaders and decision makers in organisations, this has to be the key lesson. Find a way to hedge bets so that you can take the odd risk on a creative idea. The alternative is at best a stable of creative ideas but no innovation or change as a result.

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