Overcoming the Innovator’s Paradox

Although many people say they like radical ideas, the greater the risk and uncertainty, the more skittish potential supporters become. Fortunately, there are strategies for breaking through.

Reading Time: 22 min 

Topics

Buy
Already a member?
Not a member?
Sign up today
Member
Free

5 Free Articles per month, $6.95/article thereafter. Free newsletter.

Subscribe
$75/Year

Unlimited digital content, quaterly magazine, free newsletter, entire archive.

Sign me up

Image courtesy of Brian Stauffer/theispot.com

Having a great idea is essential to innovation, but that’s only half of what’s needed. Securing the resources to implement the idea is just as important — and potentially more difficult. The inventor Nikola Tesla, for example, came up with several transformative ideas — for electric induction motors, wireless telegraphy, radios, and remote control — but he died penniless because he couldn’t line up the resources to commercialize them. In contrast, Thomas Edison, arguably less brilliant, died wealthy and famous because he was good at both coming up with ideas and winning the necessary support to turn them into reality.

Every innovator faces what we call the innovator’s paradox.1 Quite simply, the more novel, radical, or risky the idea, the bigger the challenge in acquiring the necessary resources. Although many people say they like radical ideas, the greater the risk and uncertainty, the more skittish would-be supporters (investors, bosses, partners, and so on) become. Many great ideas die on the drawing room floor because entrepreneurs fail to persuade others of their potential. Before jumping in, potential backers want ideas to be proven or the uncertainty reduced in some meaningful way. The ability to overcome the innovator’s paradox is key to becoming a successful innovator, whether you work inside a company or are trying to launch a new venture.

How can you prove an idea can work if you lack the resources to start developing it? Even the leanest of lean startups needs a basic level of resources to test its ideas, and truly big ideas need more. In a world where more ideas than ever are competing for resources — whether that’s financial backing, good team members, permission to pursue an idea, or customers — innovators who learn how to win support are the ones who gain traction.

To understand how successful innovators and entrepreneurs go about winning critical support, we conducted more than 100 interviews. We spoke with well-known innovative leaders such as Jeff Bezos (Amazon), Elon Musk (Tesla and SpaceX), Marc Benioff (Salesforce.com), Shantanu Narayen (Adobe), Indra Nooyi (PepsiCo), Mark Parker (Nike), and Jeff Weiner (LinkedIn), as well as less-well-known innovators. The good news is that the capacity to win support for your ideas isn’t something you have to be born with.

Read the Full Article

Topics

References

1. The term “innovator’s paradox” is inspired by Nobel Prize-winning economist Kenneth Arrow’s description of the information paradox, in which the seller of information can convince the buyer of its value only after it has been fully disclosed, at which point the information has already been transferred to the buyer, who hasn’t paid for it. In an analogous manner, we argue that innovators struggle to convince the buyer (investors, customers, supporters) to support a new idea before the uncertainty associated with the idea has been resolved, at which point it is no longer a risk and thus support would be easy to come by.

2. For additional information on innovation capital, see J. Dyer, N. Furr, and C. Lefrandt, “Innovation Capital: How to Compete — and Win — Like the World’s Most Innovative Leaders” (Boston: Harvard Business Review Press, 2019).

3. M.L. Martens, J.E. Jennings, and P.D. Jennings, “Do the Stories They Tell Get Them the Money They Need? The Role of Entrepreneurial Narratives in Resource Acquisition,” Academy of Management Journal 50, no. 5 (October 2007): 1107-1132; and J.P. Cornelissen, J.S. Clarke, and A. Cienki, “Sensegiving in Entrepreneurial Contexts: The Use of Metaphors in Speech and Gesture to Gain and Sustain Support for Novel Business Ventures,” International Small Business Journal 30, no. 3 (April 2012): 213-241.

4. C. Davenport, “The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos” (New York: PublicAffairs, 2018).

5. M.A. McDaniel and G.O. Einstein, “Bizarre Imagery as an Effective Memory Aid: The Importance of Distinctiveness,” Journal of Experimental Psychology: Learning, Memory, and Cognition 12, no. 1 (January 1986): 54-65.

6. J. Bigelow and A. Poremba, “Achilles’ Ear? Inferior Human Short-Term and Recognition Memory in the Auditory Modality,” PloS One 9, no. 2 (Feb. 26, 2014).

7. V.P. Seidel and S. O’Mahony, “Managing the Repertoire: Stories, Metaphors, Prototypes, and Concept Coherence in Product Innovation,” Organization Science 25, no. 3 (May-June 2014): 691-712.

8. K. Weill, “Elon Musk Hyperloop Dreams Slam Into Cold Hard Reality,” The Daily Beast, March 29, 2019, www.dailybeast.com.

9. G.J. Stephens, L.J. Silbert, and U. Hasson, “Speaker-Listener Neural Coupling Underlies Successful Communication,” Proceedings of the National Academy of Sciences 107, no. 32 (Aug. 10, 2010): 14425-14430; U. Hasson, Y. Nir, I. Levy, et al., “Intersubject Synchronization of Cortical Activity During Natural Vision,” Science 303, no. 5664 (March 12, 2004): 1634-1640; and T. Sharot, “The Influential Mind: What the Brain Reveals About Our Power to Change Others” (New York: Henry Holt, 2017).

10. P.J. Zak, “How Stories Change the Brain,” Greater Good, Dec. 17, 2018, https://greatergood.berkeley.edu.

11. D. Clark, “Alibaba: The House That Jack Ma Built” (New York: HarperCollins, 2016).

12. R. Garud, H.A. Schildt, and T.K. Lant, “Entrepreneurial Storytelling, Future Expectations, and the Paradox of Legitimacy,” Organization Science 25, no. 5 (September-October 2014): 1479-1492.

13. L.A. Plummer, T.H. Allison, and B.L. Connelly, “Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital,” Academy of Management Journal 59, no. 5 (October 2016): 1585-1604.

14. B.L. Hallen, “The Causes and Consequences of the Initial Network Positions of New Organizations: From Whom Do Entrepreneurs Receive Investments?” Administrative Science Quarterly 53, no. 4 (December 2008): 685-718.

15. R.B. Cialdini, “Scarcity: The Rule of the Few,” ch. 7 in “Influence: The Psychology of Persuasion” (New York: HarperCollins, 2006).

16. B.L. Hallen and K.M. Eisenhardt, “Catalyzing Strategies and Efficient Tie Formation: How Entrepreneurial Firms Obtain Investment Ties,” Academy of Management Journal 55, no. 1 (February 2012): 35-70.

17. Ibid.

18. D. Kahneman and A. Tversky, “Choices, Values, and Frames,” American Psychologist 39, no. 4 (April 1984): 341-350.

Reprint #:

62117

More Like This

Add a comment

You must to post a comment.

First time here? Sign up for a free account: Comment on articles and get access to many more articles.