Innovative companies often grow rapidly, dazzling customers with creative ideas. The bottom line begins to reflect that success, and the organization’s teams receive a jolt of confidence.
Then, it happens.
The creativity starts to wane. The profits are less robust.
What’s going wrong?
Surprisingly, a new study reveals the problem may be self-confidence and growth.
Specifically, when teams become successful, they have a tendency to hang onto ideas that have worked in the past, repeating the actions that they have seen bring about success. They don’t explore new ideas or methods or tap into creativity that might lead to more innovations or breakthroughs.
“When you’re highly self-confident, you don’t pay much attention to evidence to the contrary,” says Stanford Graduate School of Business Professor Emeritus James G. March, who did the study with Andrew W. Marshall and Mie Augier of the Naval Postgraduate School.
The subject of the study, RAND Corp., is cited as an innovative company that grew from 225 employees with a $3.5 million annual budget in 1948 to 1,100 employees with a more than $20 million annual budget in 1962. Over time, employees started hanging around only with people they knew. By not mingling freely, they weren’t exposed to new ideas, researchers say.
At the same time, the research finds that RAND – like many other big organizations — felll into the habit of hiring those who conform to their conventional methods and don’t (read more here)
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