Innovation Beyond the Average: the challenges of delusions of grandeur and the Dunning-Kruger effect

Ignorance more frequently begets confidence than does knowledge.
- Charles Darwin

Innovation is not necessarily a size game. Bigger is not necessarily better. Large organizations keenly focused on innovation benefit from being able to exploit resources, processes, systems, and human intellect in a way that’s beyond the scope of a smaller enterprise or sole entrepreneur. Access to a breadth of elements means the possibility of widely divergent outcomes. Unfortunately, with size comes inertia, and one of its causes is the degree to which stable systems create immovable patterns and a certainty that comes with having “seen it all before.”

This kind of organization knows itself. It has a pool of clients it knows well and for whom it meets well-defined, long-term needs. It has access to resources via supply chains it has developed over time, offering little in the way of surprises. You could call this organization “fat, dumb, and happy.” And you would be right. The truth is that it has created a cultural delusion of grandeur, which makes it struggle to innovate.

Dangerous self-satisfaction
There is nothing more frightful than ignorance in action.
- Johann Wolfgang von Goethe

Howard Johnson’s, MCI, Enron, Pan American World Airways, Digital Equipment Corporation, Marshall Field’s, and the litany of the half-forgotten could continue. Whether willful victims of their own misbehavior or ignorance of the changing needs of their customers and markets, these former market leaders have died the most tragic of unnecessary deaths. They thought they were at the far right of their market’s respective performance bell curves, living in gloriously smug self-satisfaction, and they were punished for it.

The problem with that kind of delusion is that the most obvious contrary data will be ignored until it is too late. I’ve seen clients, thinking that they were indestructible, behave in ways that were completely contrary to their best interests because they refused to believe their previously unassailable market position was not only in jeopardy, it had evaporated. They stuck to their old product lines, offering the same levels of distracted customer service, while their industry competitors passed them by, embracing innovations at all levels of their organizations.

There are some in venture capital circles who will tell you, “If you are not growing, you are dying.” They refer specifically to revenues more often than not. For the adage to be true, a more expansive view of growth is required. Growth need not only be found in revenues, it may also manifest in broader service sets, expanded ranges of customers, and wider social impact, among other factors. The self-satisfaction that comes from past success gets in the way of this pursuit because it usually means we don’t seek out those innovations we need to survive and thrive.

Applied ignorance
No one is satisfied with his fortune, nor dissatisfied with his intellect.
- Antoinette Deshoulieres

Self-satisfaction is not the only path to innovation entropy. Success also reinforces a mindset of superiority. Each success reinforces a belief across an organization that the collective choices made and actions taken are the result of superior intellect and application. Which is fine, except the psychological tendency is to ascribe all success to our direct efforts, regardless of actual impact. We all think we’re above average and smarter than the next person in the room, or our competitors, or worse yet, our customers. (Good grief.)

There is a great saying in the USA: “Even the blind squirrel will eventually find a nut,” which highlights how arbitrary and capricious success may sometimes be. Especially if we are not vigilantly seeking ways to improve and extend our success through innovation.

Proctor and Gamble, under its previous CEO A.G. Laffley, recognized the flaw in perceiving that all success could be derived from within the company. P&G had, for many years, actively practiced ignoring ideas from outside the company, literally living the phrase “not invented here.” They refused to consider the possibility of good ideas existing elsewhere. Under Laffley they defeated this mindset by embracing the idea of “proudly found elsewhere,” which meant that they were willing to use the best ideas no matter where they came from.

The self-awareness of the limits existing within a company were neatly expressed by a CEO who, when talking to his staff, said, “The smartest people in the world are not working for us.” The implication being that if you want smart, look beyond the limits implied by the company’s legal and operational boundaries and the intellect it contains. To innovate at home, look elsewhere. (Open innovation, anyone?)

Certain incompetence
One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision.
- Bertrand Russell

Perhaps the most brutal self-deception that undercuts our ability to innovate both at an individual and collaborative level is represented in the Dunning-Kruger Effect. Justin Kruger and David Dunning proposed that, for a given skill, incompetent people will see themselves as heroes in their own story. They tend to overestimate their own level of skill while failing to recognize genuine skill in others. When faced with the extremity of their inadequacy, they also fail to recognize it, often explaining it away due to circumstances beyond their control.

There is relief from this delusion. If a person is able to recognize and acknowledge their own previous lack of skill, they can be trained to substantially improve, provided they have the will to address their shortcomings. This is hard work. Faced with this level of effort, is it any wonder that most people prefer to not change, instead continuing their certain incompetence by ignoring it altogether? At this point a passing reference to the Peter Principle might be warranted, but a trip down that path will only lead us to despair.

Don’t despair. Andy Grove popularized one approach to the vigilance necessary to maintain a posture of innovation-driven success. His book Only the Paranoid Survive offers a reminder of what it takes to be successful. To overcome self-satisfaction, and the over-estimation of our abilities, keep striving to be better, to improve, to transform. In the application of consistent efforts toward renewal, not only might you beat your averages, but you might find that innovation becomes the foundation for your enduring success.

How do you prevent yourself or your organization from becoming too self-satisfied?