Irrational Decisions About Investment in Ideas.
In moving ideas towards realization, people are even more likely to fall prey to the sunk cost fallacy than they are in economics. Bob Sutton’s post on “Why Specialists are Grumpy and Generalists are Happy” suggests two things:
- people who are deeply invested in a single idea are likely to be touchy when the idea is attacked, and
- this may, by extension, explain why generalists are happier than specialists.
This certainly rings true to my experience. Leaving aside specialists and generalists (about which I commented on Sutton’s blog), I think it applies to innovation processes in organizations as well. A company that has a regular and monitored innovation process is likely to have a healthy attitude toward ideas. It knows how to let a thousand flowers bloom and how to let nine-hundred-ninety-one of them die. Pathological emotional attachment to a single idea is unlikely in a true idea factory.
But when a company unused to innovating finds itself in need of a new idea, say because growth is stalled or a market is disappearing, it may only know how to work with one idea at a time. It can then invest far too much in that one idea, and ride it all the way to disaster.
I saw this at work in one of the consultancies I worked for in the 90s. We decided we needed a “signature analytical model” as part of our thrust into new practice areas. In two tormented brainstorming sessions, I was the only person who had come up with a viable idea, and I’d had only one, which I’ll call The Widget-Gadget Matrix. It wasn’t an earthshaking idea, but it might have worked. But only one day after the second session, I was shocked to hear one of the consultants say “We’re locked into the Widget-Gadget Matrix.”
Of course I was pleased that my idea had been accepted. But I was also dismayed that the company saw any need to lock itself into the idea. Maybe in a year or two, after we had published our book on Industry Analysis Using the W-G Matrix, we might have been locked in, in the sense that to recant or demote the idea might make us look silly. But before the idea had even appeared in a single article? We weren’t locked in nor should we have been.
I’d only been at the firm a short time, and I was pretty sure that with a bit more experience I’d come up with better ideas than the WGM, and probably several ideas, not just one. This was why I was personally so un-locked-in to my own idea. Not just because I wanted to leave room for better idea, but simply because I was confident there were more where that one had come from. I didn’t feel I’d invested much in it. The rest of the firm, though, was exhausted by the brainstorming sessions and felt that it had shot its creative wad. All its eggs were in that one basket.
Make no mistake, I liked my idea. Ten years later it still looks to me like an idea that could become a successful brand for a consultancy. But even if I had felt strongly attached to it, I would have felt a caution against the attachment, because to be locked into it would have been just the recipe for shutting off the flow of new ideas.