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Why Managing Innovation Is Key To Organizational Success

Analogies are tricky. They can suddenly illuminate a hidden facet and bring to light new insights, new ideas and new solutions. But just as often, they push you to think in a single direction, that when taken too far, causes more harm than good. 

One analogy that is surfacing again is that of wartime and peacetime CEOs. Now that many companies are facing existential crises, there are calls to move away from a peacetime mode and bring a more wartime mentality to doing business. But this is a false choice. Companies are not at war (yes, they have to compete but that’s different) or at peace – instead, their primary task is to continuously innovate and stay relevant. 

The reason that this particular analogy is dangerous is that a warlike approach – think of a general directing orders, employing (mostly) sticks and (sometimes) carrots to get his troops to perform – is the exact opposite of what is needed for true innovation to take place on a regular basis. To be fair, the analogy works at times because it has some truth to it. But every analogy has its limitations. A wartime approach works in narrow situations for short periods of time, but making it the default mode of operation in an environment where high levels of innovation are the only solution to stay alive can only cause long-term damage.

The Two Beasts: Innovation and Productivity

Every company has to do innovative work as well as routine or productive work. For example, deciding what new product or feature to release that is both novel and solves an important customer problem is innovative work. With the innovative idea finalized and the workability of the novel aspect determined, implementing it becomes more of a routine/productive work. Even though both kinds of work require problem solving (barring some of the most mundane routine tasks), they are of very different nature. While most people think of creativity as a fun, relaxing activity, in reality it is more cognitively demanding compared to critical or logical thinking.  

Productive work is much more linear and therefore predictable in nature, making it easier to plan and track. In contrast, innovative work is much more non-linear, it requires multiple iterations and carries larger risks. While project management tools can handle productive work well, innovation management needs a very different type of tool to capture its underlying risk and complexity. 

Incentives also work differently for the two kinds of work. External motivators (like monetary rewards or threat of layoffs) can improve performance of routine tasks but can backfire for creative work in some situations. When people are nudged to adopt an extrinsic orientation or expect to be rewarded for a task, they produce less creative work. 

And finally, even though both kinds of work require collaboration, the nature of collaboration is different. For routine/productive work, collaboration is primarily coordination of tasks – tracking individual tasks and dependencies between different tasks and people. Creative work, on the other hand, requires collaboration of ideas – different ideas clashing together to create something much more interesting. In other words, even the day to day work that people engage in, including the kinds of things people talk about in meetings, is vastly different for innovative and productive work. 

Innovative and productive work are both equally essential for a company. However, they are two very different beasts and the real challenge comes in managing both without compromising either. 

When productivity metrics are applied to innovative work, as often happens in the corporate environment, a natural and predictable consequence is for innovation levels to drop. If you are tasked with a feature and your success is tracked through completion deadlines, there really is no option for you other than to pick the safest and simplest implementation that allows you to show up “green” on the project dashboard. Risk averseness starts to creep in at every level from padding estimates to reducing complexity, and innovation, which by its very nature involves high risk, is suppressed. 

Or, when companies implement some form of “rank and yank” system, idea collaboration among employees drops. If you are forced to compete with the person sitting next to you, it doesn’t make sense for you to collaborate and share credit if you believe you have a winning idea. An idea that could have bloomed with new perspectives, remains stunted. People become more focused on protecting their turf, leading to more politics and again, less innovation. 

If you think that hiring the smartest people would circumvent this problem, you would be mistaken. The underlying currents of human motivation and self-preservation are far too strong for things to go any other way. Most people eventually learn to adapt to the system and those who can’t or don’t want to, get frustrated and leave. 

The challenge for any company is to manage both these processes successfully, and neither the wartime nor peacetime approach is adequate. 

How The Manhattan Project Managed Radical Innovation

One of the most interesting examples to have successfully tamed the two beasts to produce groundbreaking work was the Manhattan Project, which produced the first nuclear weapons. To understand how impressive this accomplishment was consider the following:  

  • The Manhattan project started modestly but grew to about 130,000 people in just a few  years, spread across multiple locations.
  • The team faced huge scientific and technical challenges – prior research on producing fissionable was very preliminary and had many gaps. Processes that were eventually adopted, either did not exist before the project or had never been used with radioactive materials before. 
  • Fears that the German nuclear research team would produce the first atomic bomb created a strong time pressure. Fundamental research, and the design and building of the plant had to be done concurrently, something that had never been done before. 

These and other issues placed considerable management stress from scaling the team to shipping a challenging product on an accelerated schedule. So, how did the Manhattan project pull off such a feat?

To start, Leslie Richard Groves, the general in charge of the overall project, had the foresight to recognize that the typical command-and-control management style would not yield the required levels of innovation and there was no existing playbook to go by. Despite being in the middle of an actual war, he took a decidedly “un-wartime” approach to management. He first hired J. Robert Oppenheimer, a well respected theoretical physicist at UC Berkeley, as his counterpart to work with the scientists and researchers. Effectively working as co-CEOs, they found new ways of managing people and work in order to accomplish their audacious goals. 

And they faced massive challenges from the get go. For example, when Groves asked scientists how much fissionable material would be needed for each bomb, he expected an estimate within 20%-50% and was horrified when he got a factor of ten! He quipped, “My position could well be compared with that of a caterer who is told he must be prepared to serve anywhere between ten and a thousand guests. But after extensive discussion of this point, I concluded that it simply was not possible then to arrive at a more precise answer.”

Faced with such high levels of uncertainties, Oppenheimer and Groves realized that they will have to pursue multiple solutions at the same time. Given the time constraint, they decided to explore all options in parallel both for producing fissionable material and for gun design. They spun off multiple teams to explore different alternatives, and plant design proceeded under the assumption that any or all of these approaches would be needed. As research progressed, Oppenheimer realized that some of the processes could be combined for higher efficiency, a lucky turn of events that wouldn’t have happened without the parallel approach! 

Managing Innovation

Groves and Oppenheimer showed that it is possible to create an environment where there is a balance between urgency and innovation, structure and flexibility, hierarchy and egalitarianism. 

Innovation is fundamentally about managing uncertainty and risk, and the more radical the innovation the higher the uncertainty to manage. Using a top-down, highly directive leadership style doesn’t work because it increases risk (one person’s judgment is more error prone for complex problems) and reduces intrinsic motivation among employees which is essential for innovative problem solving. 

Despite the fact that Groves and Oppenheimer were both highly competent in their own ways, they did not push down any directive that would interfere with problem solving. Instead they did the opposite – by really listening to the people doing the work, they were able to clearly understand the inherent limitations in the project. They did several other things that led to  a creative climate. For example, Oppenheimer insisted early on that scientists have full access to the compound so they could observe all aspects of the project, leading to free flow of ideas. He was also known to take good care of his people, so compensations were generous and equitable. Teams also didn’t shy away from conflicts – vigorous debates were common but they were focused on problem solving. Intentionally or intuitively, they made sure that none of the factors that harm creativity and problem solving were accidentally introduced in their management approach. By enabling the scientists and engineers, they allowed more creative solutions to emerge for the myriad of challenges that kept popping up.  

Groves and Oppenheimer were successful, not by following any pre-existing playbook, but by systematically removing any barriers that came in the way of innovation. 

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Address Unfinished Learning Using Creativity And Arts  

During the Covid-19 pandemic, students all over the world faced one of the largest disruptors of education in history. School closures across more than 190 countries impacted the routine and learning outcomes of 1.6 Billion students. By August 2020, 93% of households in the US reported the use of remote learning. Despite things returning to normal for over a year, we continue to see the ripple effect of this massive disruption. 

A number of organizations and researchers have tried to estimate the loss in learning due to the pandemic. A report by Stanford University estimated that during Spring 2020, students lost between 57 to 183 days of learning in Reading and from 136 to 232 days of learning in Math. A study in the Netherlands, which had a relatively lockdown period and is known for its equitable and well-funded schools, showed that students made little to no progress in learning from home. 

One of the challenges with the analyses on learning loss thus far, is that they focus narrowly on a few subjects, primarily math and reading. Finding an effective set of solutions to address unfinished learning is not an easy task. However, there is a wrong solution – solely relying on standardized tests. A myopic focus on test scores leads to sub-par teaching (“teaching to the test”) and pushes out more holistic interventions. We have seen this play out before when the No Child Left Behind Act was implemented in 2002. The Act converted testing as an informational mechanism to an accountability mechanism, changing teaching patterns inside classrooms. Teachers spent less time on subjects that were not being tested, like the arts, and spent less time on open-ended exploratory work like project based learning. 

What we need are more holistic approaches that build student enthusiasm, curiosity and engagement towards learning. Here are three strategies to incorporate when designing intervention programs to address unfinished learning, without falling into the trap of standardized testing. 

Teach For Creativity

Incorporating creative thinking into regular subjects, like math, reading or science, deepens learning. Paradoxically, this approach ends up improving standardized test scores despite test results not being an explicit goal. Creative thinking encourages students to think about a concept from multiple perspectives, question assumptions they might be making and synthesize solutions from multiple strands. These cognitive processes help students deepen their understanding of the subject matter and retain information for longer. More importantly, they help students become better thinkers and problem solvers in the long run. 

For teachers to incorporate creativity into the classroom, they need to be mindful of the distinction between “teaching creatively” and “teaching for creativity.” When educators find a clever way to introduce a concept in the classroom, say using Bitmoji classrooms, they are teaching creatively. Their own creativity is at play in designing the lesson plan for the concept. This by itself is a good thing if it makes the lesson more engaging and helps students learn the concept more easily. However, “teaching for creativity” goes a step further – it allows students to build and exercise their own creativity. 

Well designed project-based learning modules are one way to encourage students to be more creative. However, it’s not hard to incorporate creative thinking in smaller doses by substituting a couple of traditional assignment questions with more creative ones. With this approach neither the students or the teachers are burdened with extra work. Key elements to keep in mind when incorporating creativity, in big or small doses, are:

  • Open-ended problems where multiple solutions are valid.
  • Problems are designed so that one more creative cognitive processes, like associative or analogical thinking, are engaged. 
  • An ability to share their work with their peers and learn from them.  

Integrate Arts

High quality arts programs, especially visual arts and music, have a strong correlation with academic success. Arts provides an avenue for students to build confidence to try new things in a safe environment. Incorporating arts increases both children’s self-efficacy and original thinking, according to a research study. As the authors noted, “Self-efficacious children believe they can be agents in creating their own futures and are more optimistic about what the world has in store for them.”

A randomized controlled trial with over ten thousand K-12 students in Texas, found that arts-learning experiences led to fewer disciplinary issues, higher student engagement and improved writing achievements. 

Reevaluate Evaluations

While standardized tests are a useful way to track student progress, they should be a small part of broader evaluations. Teachers should balance graded work with non-graded work that rely on constructive feedback. Quantitative scores orient students away from their own intrinsic motivation to extrinsic motivation, which leads to higher anxiety and lower interest in the subject matter. Providing opportunities to students to share their projects or other original work with their peers and get their feedback is another low-pressure way for students to learn from each other. Finally, teachers should also encourage frequent self-evaluations to build student capacity to critically analyze their own work. When students find their own areas of improvement, they are much more intrinsically motivated to improve and learn. 

The learning loss created by the pandemic is significant and real, but we need to approach it cautiously. Prioritizing standardized test scores instead of more holistic approaches can lead to disastrous consequences in the long-term. Instead we need to double down on tried and tested methods – incorporating creative thinking and arts, and toning down the performance pressure.  

This article first appeared on edCircuit.

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3 Reasons Why Innovation Is The Best Organizational Strategy

As we start the new year, events and challenges from the last few years are continuing to shape our lives and the way we do business. Companies have had to make peace with remote/hybrid work being the new normal, adjust their cost structures to deal with economic uncertainties and redesign employee experiences to keep people engaged – all while fighting to stay ahead of the competition. If we needed an example of what a VUCA (volatile, uncertain, complex and ambiguous) world would look like, the last few years have clearly shown us that. 

How can companies successfully navigate such challenges going forward? We believe that the best way forward is to focus on innovation, first and foremost. By doing so, companies create the right kind of people-oriented cultures that not only boost revenue, but also improve other metrics like DEI or engagement. When viewed through the lens of innovation, cognitive-social-emotional skills like empathy or active listening take on a different flavor which make them far more effective in the workplace. 

Three trends show why an innovation-first strategy can be beneficial to organizations. 

Artificial Intelligence

ChatGPT showed that AI is advanced enough to do better than humans at certain tasks – even those that are more cognitively demanding tasks like writing essays or code. Let’s drill down a bit into one of the best paying jobs currently – software development. Using AI to help with coding is significantly improving developer productivity. Tasks that took several hours earlier, now can be done in a few minutes with a quality that is at par with the best programmers. That creates new  implications for technology-focused companies. 

Companies no longer need to hire as many people to do the work they need. Well funded companies spend tons of money recruiting talent from the most reputable colleges. With AI in the picture, this approach will no longer provide them with competitive advantage over smaller companies or scrappy startups who don’t have the resources to go after top talent in the same way. With AI that offloads most of the coding tasks, the difference between a talented developer and a mediocre one reduces sharply. 

Competitive advantage will shift to abilities that AI can’t handle well, creative thinking being an obvious area. Creativity requires the production of novel responses, which by definition implies the lack of existing data for algorithms to learn from. This is not to say that AI can’t do limited forms of incremental creativity, but they tend to be more “within-the-box” as opposed to more transformational “out-of-box” creativity. In other words, AI can rearrange existing content in new ways which may or may not turn out to be creative, but it can’t really synthesize new concepts.   

We recently tested OpenAI’s ChatGPT for several different creative prompts and our analysis shows that ChatGPT’s creativity is nowhere close to that of humans, including elementary aged children. It lacks the fundamental ability to do abstract thinking, so when posed with a challenge to invent something from two random objects, it tends to follow the simplest strategy of putting the two objects together. Or when asked to generate alternate endings to stories given a twist, it simply bails out. 

The obvious implication of the rise of AI, is that companies need to build their creative capacity in order to stay competitive. Companies that prioritize building creative thinking skills (like associative or reverse thinking), creating channels to harness employee innovation and most importantly foster an innovation-focused culture will emerge as the leaders of the next wave. 

Global Threats

Covid19 showed the extent to which a global threat can impact lives of people all over the world. With the world being more connected and more interdependent, a local event can have major consequences. Just in the last few years, companies have had to deal not only with the pandemic and its consequences, but also geopolitical issues like wars, unforeseen natural disasters and economic recessions. Such global threats are only expected to become more frequent. Needless to say, companies that can respond to such threats in a flexible and agile manner have a much greater chance of survival. 

However, the ability to be flexible and respond to changing environments in real time requires the ability to improvise and find novel solutions, to reconfigure existing resources and capabilities in new ways to solve problems, to collaborate in an open-minded way with others, to iterate when things don’t go as planned. In short, it requires the full arsenal of creative thinking capabilities deployed towards the crisis at hand. This ability to be innovative in the face of threats builds organizational resilience which significantly improves survival odds for any organization. 

To build a resilient organization, innovation has to become part of the company’s DNA. Building a culture of innovation involves deliberately building core cognitive capabilities, allowing ad-hoc collaborations to take place without unnecessary friction and creating formal structures for capturing employee creativity. 

Management Complexity

Managing a large workforce today is complex with many initiatives like employee engagement, talent retention and DEI (diversity, equity and inclusion) taking up valuable time and energy. However, when organizations look at these as separated, isolated aspects they can inadvertently create conflicting processes and norms. This affects not just leaders but also employees, who feel like they are being pulled in different directions while having to maintain high levels of productivity. 

One possible solution is to view such initiatives through the lens of innovation, which is the primary goal for any company, and identify ways to streamline and simplify. As an example, we conducted a study recently to understand the impact of gender bias on innovation within the technology industry. We found that by adopting a few universal strategies, like enhanced group decision making processes, companies can improve overall innovation while reducing the impact of bias. The advantage of using innovation as a means to reduce bias is that it removes the salience of gender or race. One of the key reasons diversity programs are ineffective is that they bring race or gender sharply into focus, thereby reinforcing the stereotype even more. Ironically, the most effective diversity programs aren’t specifically designed for diversity. This is not to say that all DEI initiatives can be made redundant, but by finding synergies it is possible to do more with less.  

Using An Innovation-First Approach 

An Innovation-First approach is a way to streamline and consolidate multiple goals in a way that optimizes the primary goal of innovation and productivity. It’s a way to refactor company cultures to remove redundant, conflicting or ineffective processes and orient the entire  organization towards a common purpose. As a result, companies create healthier organizations where both employee engagement and profitability is high. 

For the last several decades companies have focused narrowly on employee productivity, which works for linear and predictable workloads. However, with the current trends in AI, automation and globalization, this is no longer enough. Companies that can successfully adopt innovation will gain a significant competitive advantage over their rivals.

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ChatGPT Is Smart But It’s Not Creative

Since its recent launch, ChatGPT, a large language model AI, has caused quite a stir in the technology industry and the broader community at large. Its capabilities have sparked both awe and alarm – an AI that is so good at what it does that it has real potential of displacing people at work. But how worried should we be?

Let’s first get the obvious stuff out of the way. ChatGPT is an incredible tool and exceptionally good at some tasks like producing code, compiling essays and even writing poetry. However, when it comes to creative thinking, it misses the mark. 

To understand if it can produce creative ideas, we asked ChatGPT a few brain teasers that we routinely use in our workshops, even with early elementary age kids. They are typically used as 5-minute warm-up group activities that help to illustrate the underlying cognitive mechanism. 

At a fundamental level, we know that AI tools have limited creativity because AI relies on using massive amounts of prior data to learn. But creativity requires you to think of novel ideas that don’t yet exist and therefore don’t have any data to learn from. Nevertheless, it’s still possible to generate somewhat of a creative output in some areas like art as we have already seen with tools like Midjourney. So, let’s take a deep dive at how ChatGPT fared with these exercises. 

Associative Thinking

To test ChatGPT’s ability for associative thinking, we tried the Wacky Inventions brain teaser. The idea behind this brain teaser is to use our brain’s natural associative processes to combine unrelated objects and make a new invention. One can argue that this associative ability is perhaps the most fundamental aspect of creativity. A real world example of associative thinking is Google’s PageRank algorithm that completely transformed what search engines could do. It combined the concept of academic citations (articles that are cited more indicate more authoritative sources) with websites – two completely unrelated domains – to create an automated way to assess the quality of a website. 

We posed random combinations of objects that we have encountered in our sessions to make it easier to compare ChatGPT to human performance. Here are two examples:

Example 1

Q: What new invention idea can you come up with using a table and a scarf?

A: A portable table with a built-in scarf storage system. The table has a small drawer or compartment on the side that is specifically designed to hold scarves. The scarves can be easily rolled up and stored in the compartment, allowing users to keep their scarves organized and easily accessible. The table also has a built-in hook or hanger on the side, allowing users to hang their scarves on the table for easy access and display. This invention would be especially useful for people who have a large collection of scarves and need a convenient way to store and access them. It would also be useful for people who need a portable and versatile table for various activities, such as crafting, sewing, or organizing.

Q: That’s a good idea! Can you find a way to use an attribute of the scarf to make a new kind of table?

A: A table with a built-in scarf-covered surface. The table has a removable and interchangeable scarf that covers the top surface of the table. The scarf can be easily swapped out for different styles and colors, allowing users to customize the look of their table. The scarf can also be used as a protective layer for the table, preventing scratches or damage to the surface. This table would be especially useful for people who want a versatile and customizable piece of furniture for their home. It would also be useful for people who want a protective and stylish table for activities such as crafting or sewing. Additionally, the scarf-covered surface would add a cozy and comfortable feel to the table, making it a great addition to any room.

Q: That’s great! What property of the scarf are you using in your invention idea?

A: The property of the scarf that I am using in my invention idea is its ability to be easily removed and swapped out for different styles and colors. This property allows users to customize the look of the table and create a unique and personalized piece of furniture. It also allows users to easily update the look of the table by swapping out the scarf for a different color or pattern. Additionally, the property of the scarf being removable and interchangeable allows for easy cleaning and maintenance of the table surface.

Example 2

Q: What new invention idea can you come up with using a football and a water bottle?

A: A portable football water dispenser that attaches to the top of a water bottle. It has a small spout on the side that allows players to easily hydrate during a game without having to stop and open the water bottle. The dispenser is designed to fit snugly on the top of the bottle, with a secure fastening mechanism to prevent it from falling off during use. It also has a built-in straw that allows players to easily drink from the bottle without removing it from the dispenser. This invention would be especially useful for athletes who need to stay hydrated during long and intense games.

Q: So is this a water bottle with a football shaped dispenser on top? 

A: An error occurred. If this issue persists please contact us through our help center at help.openai.com.

Example 3

Q: What new invention idea can you come up with using an umbrella and a jump rope? 

A: An error occurred. If this issue persists please contact us through our help center at help.openai.com.

We gave a few other combinations and found that a common theme in ChatGPT’s responses, purely from an outcome perspective, is that it combines the two objects physically – attaching the two together for increased functionality. This, in general, is a reflection of a low level of creativity similar to very young children. However, as children get better at abstract thinking, they naturally start using the objects as starting points and zero in on a couple attributes that they can seamlessly integrate in the invention. Explicitly nudging children to use an attribute of the object is also effective in helping them to get more sophisticated solutions, and in general improves their abstract thinking skills. Unfortunately, ChatGPT wasn’t able to find the right property to work with as was evident in the first example. “Removability” isn’t really a property of the scarf. What it did instead is used instances on the internet where the two object names appear together (you can google “table scarf” to see some results) and cobbled together a reasonable sounding paragraph. But it doesn’t really understand what it created. In the second example, when asked a clarifying question it ends up bailing out with an error message. 

The problem is that ChatGPT isn’t really equipped to do abstract thinking. Think about how humans build a model of the world around them. Babies and toddlers spend hours interacting with objects around them – they touch them, taste them (much to our frustration), hit them, shake them and toss them. These adorable, uncoordinated actions serve a very useful function – they help children create an internal representation of the object. This step is crucial for their development because without building these internal models, children have a harder time imagining and creating new combinations in their heads as they grow older. It’s the primary reason why play is essential for long-term creativity. 

But that’s not all. We don’t just build standalone models but also much more extensive associative networks where different concepts are connected to each other through different properties. For example, the concept of “strawberry” in your brain might be connected to “red” by a thing-to-property link or connected to a “rash” by a cause-effect link if you are allergic to strawberries. Every new thing a baby learns is continually being mapped into this giant associative network of different objects, concepts and ideas. This extensive and rich associative network is what allows us to make abstractions, hop from one concept to another, and make novel connections. 

We use this rich implicit knowledge built over many years extensively when we come up with novel ideas. Even when we see new ideas from others, we can quickly adapt them to our situation, because of this underlying layer of implicit knowledge that we don’t pay conscious attention to. The challenge with scouring the internet is that a lot of this implicit knowledge doesn’t exist there. On the internet it’s assumed that when someone talks about a scarf people know what that is – you won’t necessarily find places where attributes of a scarf are listed that allow it to be connected to other concepts that are further away.  

This is of course a logical model and not a physical one inside our brains. We know very little about how association takes place inside our heads but the logical model gives a good approximation. Most creativity techniques leverage this and simply provide triggers to the brain (where the real magic happens) to get new ideas in a somewhat reliable fashion. 

In the third example, the associative distance between the two objects (umbrella, jumprope) is high meaning that you typically don’t see them mentioned together, so ChatGPT simply bails out again. In contrast, using the same two objects, a group of 4th-5th graders came up with the idea of an umbrella shaped water ski where you can sit and relax, while being pulled by a rope.

Additional Creative Thinking Triggers

We also tried a few other kinds of brainteasers like Opposite Day and Twist-a-Story to see how ChatGPT handles them. The idea behind Opposite Day is to reverse a well known assumption which can lead to radically new insights. For example, the designers of the portable toddler chair that attaches to any table, came up with that idea by asking themselves “What if a chair didn’t have any legs and why would that be useful?”. In Twist-a-story, the idea is to find an alternate ending to an existing story by changing some element of the story. 

Here is how ChatGPT answered these brain teasers.

Example 4

Q: What if libraries didn’t carry books? What would they have instead and why would it be useful?

A: If libraries didn’t carry books, they would likely carry a wider variety of media such as e-books, audiobooks, and digital media. This would be useful because it would allow users to access a wider range of content, including both fiction and non-fiction, in a variety of formats. It would also allow libraries to provide access to more up-to-date and current content, as e-books and digital media are often released more quickly than traditional print books. Additionally, it would save space and resources, as digital media can be stored and accessed more efficiently than physical books.

Example 5

Q: Have you heard the three little pigs story?

A: Yes, I have heard the story of the three little pigs. It is a popular fairytale about three pigs who each build a house to protect themselves from a wolf. The first pig builds his house out of straw, the second pig builds his house out of sticks, and the third pig builds his house out of bricks. The wolf is able to blow down the first two houses, but the third pig’s brick house is strong enough to withstand the wolf’s huffing and puffing. In the end, the third pig is able to outsmart the wolf and keep him out of the brick house.

Q: What if the third pig runs out of bricks while making his house and the wolf shows up? How would the story end then?

A: I’m sorry, but I am not able to browse the internet to provide you with an alternate ending to the story of the three little pigs. As a large language model trained by OpenAI, my knowledge is limited to what I have been trained on, and I do not have the ability to browse the internet or access new information. My knowledge cutoff is set to 2021, so I do not have information on events or stories that may have happened after that date.

Let’s briefly dissect ChatGPT’s responses to these additional brainteasers. 

In example 4, ChatGPT gives us a rather unimpressive answer about using a wider variety of media, which most libraries already do. Once again, it’s not able to extract the more general feature of a library – allowing people to borrow things. When the same challenge is posed to people, they quickly arrive at this insight and start thinking of additional items that aren’t used often, or are cumbersome to own, and would make good candidates for borrowing. Using this kind of analogical thinking they come up with ideas like libraries for power tools, folding tables and chairs, or formal clothes. 

Finally, the last example clearly highlights ChatGPT’s limitation when it comes to thinking of original solutions. In all fairness, ChatGPT was never designed for creative work so this is not surprising. 

Humans Vs. Bots

So should we be worried about AI taking over jobs? Yes, absolutely! There is no doubt that AI is going to start taking over more and more tasks that depend on linear thinking models, where lots of training data exists. Even for white collar jobs like software development, ChatGPT is proving to be valuable in improving developer productivity. So companies will soon need to hire fewer people for the same workload. 

However, ChatGPT currently can’t handle creative work and come up with novel ideas. It is theoretically possible for AI models to build richer data and limited abstract reasoning capabilities, so we should expect next generation tools to display more creativity than currently possible. In the short term however, we can safely assume that creative thinking is going to be a strictly human capability. 

So, where does this lead us? 

The natural solution (and one that’s been around for a long time) is that humans work together with technology to leverage each other’s strengths. In this ideal scenario, AI takes care of time-consuming tasks to improve the productivity of humans, freeing them up for creative tasks that only humans can do. If we accept that premise, then it follows that a sustainable long-term advantage, both for individuals and organizations, will be their creativity and innovation. In reality, this won’t happen without deliberate effort, and the short term will almost certainly be a lot messier with job disruptions. Creativity among students has been declining for some time now which makes them unsuitable for changing work, and companies are not necessarily ideal places to harness employee innovation. Without improving both of those aspects, our journey towards the ideal scenario can end up becoming needlessly rocky.

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The Most Essential Organizational Capability For Crisis Management

With the terrorist attack of 9/11, US airlines were suddenly faced with a black swan crisis. The entire airspaces of US and Canada were shut down for 48 hours by federal order, and when civilian air traffic resumed it was significantly limited. Despite billions of dollars in federal assistance to cover for lost revenue the airline industry continued to lose millions of dollars per day. To curb this loss, major airlines cut their flights by an average of 20% and laid off an average of 16% of their workforce. 

Two airlines – Southwest and US Airways – that both focused on short-haul flights and therefore faced disproportionately higher travel disruptions, adopted very different strategies during the crisis. US Airways had the highest level of layoffs in the industry at 24%, while Southwest went the other extreme and did not lay off any employees. Four years after the crisis event, their performance couldn’t be more different. Southwest Airlines had the fastest performance recovery and regained 92% of its stock price pre-911 while US Airways could only achieve 23%. 

So why did Southwest rebound back so strongly after the crisis?

The key, as researchers discovered, was organizational resilience. Southwest by retaining all their employees had the right combination of resources to find creative ways to reduce costs and improve productivity. When organizations lay off people purely by numbers, they not only lose individual expertise, they also lose intelligence that emerges from the relational networks that employees were part of. These networks are hard to rebuild even when they hire new people at a later time. 

One way to think about this is that people build both strong and weak relationships at work. Within their immediate groups they go through the forming, storming and norming, to finally reach the performing phase. In the process they build a deeper understanding of each other and their respective strengths. Beyond their current and past teams, they also build weaker relationships with others in the company over time. So they might know that Joe over in marketing has great relationships with client companies or Jane in accounting is a spreadsheet wizard. In a crisis situation these insights and information end up being especially valuable, as people reorganize themselves and try creative approaches to meet the challenge. Disrupting these relationships harms the ability to innovate and problem solve in an emergency. As the research paper explains, “Paradoxically, a common organizational response to crisis–i.e., layoffs–tends to undermine the very relationships that help organizations cope during periods of crisis.”

Organizational resilience is the ability to bounce back from a crisis to achieve a new stable point. The ability to withstand disturbances can be viewed as a spectrum with fragile at one end and antifragile at another. A fragile system is one that is unable to handle the challenge, much like US Airways that eventually went through two bankruptcies before finally merging with American Airlines. The next step up is a robust system that can absorb a set of known disturbances and comes back to the original stable point. A resilient system goes a step further – it can absorb unknown stresses by landing at a different desirable point of stability. Finally, an antifragile system is one that bounces back to a new stable point which is better than the previous one. In other words, an antifragile system takes the chaos created by the crisis and emerges stronger than before. 

Resilient and antifragile systems allow one to thrive in uncertain conditions, which is becoming increasingly important. As companies face more volatile environments with frequent natural, geopolitical and other disruptions, building organizational resilience is becoming essential. 

So how does one consciously build a resilient and antifragile organization? There are three main areas to consider – creative thinking, group coordination and organizational mindset.  

Creative Thinking

An unexpected crisis requires new ways of thinking and doing things since the crisis brings a new environment and constraints with it. So, the foremost principle is bricolage – the ability to improvise and find creative solutions. Organizations become less vulnerable if they are able to recombine existing resources, processes and expertise to create novel solutions. Ducheck, who researches organizational resilience, captured this essence with “What first sounds counterintuitive—to improvise in already chaotic situations—can help to prevent catastrophe.”

However, you can’t turn on a faucet and expect creativity to flow if the underlying plumbing was never installed. Creativity has to be in the company’s DNA – a core part of its culture. Without a creative culture, companies might occasionally get lucky with dealing effectively with a crisis, but it’s not a long-term sustainable solution. Instead what  organizations need to build is strategic resilience – the capacity to continuously anticipate and adjust practices in order to meet incoming challenges. And one way to do that is through well-integrated innovation programs that tap employee creativity. Such programs surface ideas from frontline employees that are valuable but often ignored. Taleb, who coined the term antifragility, goes a step further with, “If about everything top-down fragilizes and blocks antifragility and growth, everything bottom-up thrives under the right amount of stress and disorder.”

In their HBR article, The Quest for Resilience, Hamel and Välikangas point out two mistakes that companies often make when they build employee innovation programs. 

First, companies often focus on a few big bets instead of funding many small bets. The problem with that approach is many high potential ideas get stymied early on, so companies don’t capture the full benefits of employee innovation. Additionally, the lack of variety in ideas makes companies less resilient in the long-run. Equally importantly, big bets leave rank and file employees out of the innovation cycle depriving them of opportunities to practice creative thinking. The authors recommend that “a reasonably large company or business unit—having $5 billion to $10 billion in revenues, say— should generate at least 100 groundbreaking experiments every year, with each one absorbing between $10,000 and $20,000 in first-stage investment funds.”

Second, when companies do introduce formal innovation programs they create innovation ghettos, separate from the regular day to day work. For example, hackathons or incubators where people work on ideas (sometimes for a very short time) that are outside the core and don’t really change the company bottom line. What companies need, instead, is an innovation pipeline that is integral to the work people are doing like what Whirlpool is doing. In the 1990s, Whirlpool made innovation a core competency and recruited a big part of their workforce to search for breakthrough ideas. By training people and creating tools to track innovative ideas, they institutionalized the process of innovation for their company.   

Collaboration

To successfully deal with crises, teams often have to self-organize into ad-hoc networks that pull in the right set of expertise and skills. Organizations that allow easy collaborations across groups on a regular basis are more adaptable to challenges than organizations that are siloed. Collaborations across immediate groups or divisions, expand resources that can be used and improve the capacity to respond to the event. 

But getting the right people together is not enough to solve complex problems if people lack the cognitive and interpersonal skills to take each others’ ideas and synthesize a novel solution from them. Breakthrough ideas emerge from egalitarian groups where people actively listen to each other’s ideas and consciously make an effort to integrate different perspectives. 

Reducing bureaucracy towards inter-group collaboration and building the right teaming skills (both cognitive and social-emotional) make organizations flexible and nimble when unexpected events shake things up. 

Mindset

Most people assume that resilience is fueled by optimism. However, optimism by itself can be dangerous – it leads to toxic positivity, hubris and blind spots. Instead, resilient organizations display hopefulness which can be described as simultaneously holding two beliefs – that their systems are not infallible and that they have the competency to find solutions when things do fail. Vagus and Sutcliff define this hope as “a confidence grounded in a realistic appraisal of the challenges in one’s environment and one’s capabilities for navigating around them.”

This mindset at the organizational level is driven by leaders and filters down to rest. It requires a culture of humility that takes its prior successes lightly. It requires people to continually question their products and environment, and proactively address things before they become issues. Fragile organizations, on the other hand, place a low priority on such proactive work (e.g. “if it’s not broken don’t fix it” or “convince me this is an issue”). 

Building the right mindset within an organization goes hand in hand with building creative thinking and collaborative skills. People need to personally experience their collective ability to manage disruptions, without which leadership’s assertion of internal capability will sound hollow. 

Conclusion

No one could have predicted the Covid19 pandemic and the disruption it would create a few years ago. As the world continues to get more connected and more complex, unexpected threats continue to rise. While we can’t predict a specific threat, we can expect to face some crisis in the near future. Whether a company crumbles under the pressure of unanticipated threats or emerges stronger than before depends on its level of organizational resilience. Unfortunately, many companies inadvertently do things that reduce their resilience – they undervalue people’s creativity and relationships, they push down directives from the top instead of encouraging bottom-up problem solving, they reduce communication which thwarts collaboration and they fail to deploy the right kind of resources. Resilient organizations flip traditional organizational theory on its head and deploy cognitive, relational and financial resources instead of restricting them. They create cultures where employee creativity is valued, because unexpected threats require unexpected solutions. They recognize that much like marathons, organizational resilience depends on training before the crisis event.  As Herb Kelleher, the founder of Southwest Airlines, said, “If you create an environment where the people truly participate, you don’t need control. They know what needs to be done and they do it.“