Risky business: why sparks must fly to innovate

Smart leaders love business creativity. It has produced every breakthrough since the dawn of time. From the Model T Ford and Facebook to the smartphone, everything began with a spark of creativity. That spark changes the rules of the game while increasing profit. 

Business creativity delivers 100% of revenues from innovative new products, and all the cost savings and quality improvements from more effective processes. But despite the evidence of the commercial power of creativity and innovation, many companies are risk-averse and uncreative. 

Branding guru Wally Olins, one of the team that came up with the identity for the mobile phone company Orange, provides this explanation: “They have a defensive mentality. All they do is listen to what focus groups tell them.” 

Being boring

The risk of failing to foster a creative business culture is significant, yet business creativity is often overlooked because the pitfalls seem to lie somewhere over the horizon. But sooner or later, the economic reality of ‘creative destruction’ annihilates those businesses that fail to adapt fast enough and instead stay wedded to the safe familiarity of old ways. Business creativity is the only response to a commercial world of accelerating change. It helps firms avoid ‘Kodak moments’. Kodak invented digital camera technology, but then refused to cannibalise its lucrative film-based business model. The company went bankrupt in 2012 – suicide by complacency. 

Another risk is losing the global war for talent. Year in, year out, the majority of people report that they are unengaged by work. One of the best ways to persuade talent to flock to your gates is by offering a creative working environment. This is especially true for the younger generation, who are demanding an unprecedented level of freedom at work. A recent survey by London Business School found that almost 40% of Generation Y employees start a new role already planning their next career move and are rarely dissuaded by promotion prospects, which now take third place to work/life balance and organisational culture.

The fear hurdle 

The biggest single barrier to developing a creative organisational culture is managerial risk aversion. A journalist once asked Formula 1 driver James Hunt, a legendary risk-taker: “James, what’s the secret to winning?” Hunt paused for effect, and then deadpanned back to the startled reporter: “Big balls.” 

The creative process is painful, messy and risky. Like Hunt, it doesn’t race along in nice, neat lines – it’s unpredictable. During the development and launch phase of a new initiative, it is unclear how things will work out. You need to have ‘big balls’ to stake your reputation and hard-earned money on what will often amount to hunches. As Einstein said: “If we knew what we were doing, it wouldn’t be research.” 

Living with creative risk

Part of the challenge of leading a creative, entrepreneurial culture is living with risk. If the leader doesn’t show bravery and stand up for new ideas, who will? 

A tongue-in-cheek staff handbook from the global creative agency Ogilvy & Mather amusingly illustrates what happens when teams seek to lower the risk of a new advertising campaign to zero: “The creative director thought it was funny. The managing director thought it was funny. The chairman thought it was funny. The tea lady thought it was funny. The client thought it was funny. The client’s wife thought it was funny. The client’s butcher thought it was funny. OK now, let’s research it to see if it’s funny.”

Fail fast

To foster a creative culture, business leaders need to ensure that staff feel safe to fail. John Herlihy, who heads Google’s European operations centre in Ireland, says: “Part of our culture is that we celebrate failure. It’s OK to fail. If you are not failing enough, you are not taking enough risks. So what we do here is fail, and fail fast.” 

Sir Richard Branson, founder of the Virgin empire, points out the value in failure: “You don’t learn to walk by following rules. You learn by doing and by falling over.” A skilled leader must accept failure and point out what the team has learnt. Of course, they must not flinch from assessing why things have gone wrong. Where required, though, leaders must vigorously protect the people behind the failed product. The same mistakes should never be made twice, but failure is part of the creative business model and the buck stops with management. 

Rapid recovery 

Bravery sometimes means introducing a little chaos. After all, creative tension starts from the top. 

The media streaming company Netflix tells its staff they must be careful not to cause an irrevocable financial disaster or a catastrophic legal issue. That aside, “Rapid recovery is the right model. Just fix problems quickly. We’re in a creative-inventive market, not a safety-critical market like medicine or nuclear power. You may have heard preventing error is cheaper than fixing it. Yes, in manufacturing or medicine. Not so in creative environments.” 

Use your intelligence 

Of course, even in creative businesses, risk still needs to be managed. Part of the risk-assessment process – gathering insight and intelligence – is key to successful creativity. 

In 1999, the whisky brand Johnny Walker was in decline. It challenged the advertising agency Bartle Bogle Hegarty (BBH) to come up with a novel, enduring brand idea that could transcend borders and appeal to global markets. 

At that point, any campaign about whisky featured one of two schools of clichéd imagery: either traditional heather and kilts to represent Scottish heritage or the conceit that whisky equals success, rammed home by footage of a prosperous businessmen sipping from a glass while staring into the middle distance on the back of a yacht. 

BBH realised Johnny Walker needed new and younger customers. Research into the attitudes of younger consumers sparked creative thinking. From this came a big idea. For the younger generation, success is not a place, it’s a journey – you never arrive. 

From the idea of personal progress, the ‘Keep Walking’ solution was born. The campaign featured younger people’s down-to-earth personal progress stories. It has since been adopted by 120 countries, where Johnnie Walker’s sales value has risen by 48%, while the whisky market has declined by 8%. BBH’s founder and creative director Sir John Hegarty told me: “That’s how intelligence, insight and strategy give you the confidence to jump further with an idea. They lead you to better creative execution.” 

Innovation requires creative cultures, backed up by leaders prepared to accept calculated risks. Management teams need to gather the data, generate insights and assess risk. But they must also take creative leaps or flirt with the biggest risk of all: being left behind by braver, more creative competitors. 

Greg Orme (gregorme.org) is an associate programme director of executive education programmes at London Business School. He is the author of The Spark – How to Ignite and Lead Business Creativity (FT Publishing, 2014)