Innovation, bad ideas and behavioral economics

By Paolo Barbesino, PhD

Innovation, bad ideas and behavioral economics

Life is too short for bad ideas.  But why do we hang onto them? If you work in the innovation space you have two main problems. First, how do you generate new ideas with the requisite variety that will allow innovation to surface? Or to put it differently, how do you diverge from your usual way of thinking that repackages the same ideas all over again across different domains?
Second, how do you decide an idea doesn’t deserve any further consideration, and you kill it. Or to put it in the gentler form some of my Indian colleagues made me familiar with in Dubai, when is the time ripe to ‘sunset’ it?

Behavioral economics shed a light on a few biases that can cripple innovators or defy their ambition altogether.

1. Confirmation Bias: This is the tendency to search for, interpret, and remember information in a way that confirms one’s preconceptions. If someone is deeply attached to a particular idea, they might see its applicability everywhere.
2. Availability Heuristic: This is when people rely on immediate examples that come to mind. If someone has recently encountered or is particularly familiar with an idea, they might be more likely to apply it across various contexts.
3. Overconfidence Bias: People tend to overestimate their own knowledge and abilities. Someone might believe their idea is universally applicable because they overestimate its validity.
4. Functional Fixedness: This is a cognitive bias that limits a person to use an object (or idea, in this case) only in the way it is traditionally used. Someone might be so fixed on an idea that they fail to see other solutions or applications.

Innovators are both brash and humble. How they strike this balance this is still a mystery to me.