In the Mood: Exploring Managerial Creativity and Intuition as Sources of Competitive AdvantagePublished: September 11, 2008 in Knowledge@Emory
How do the dynamics of an entrepreneurial team shape the outcome of the creative process? Group attributes that enhance the generation of ideas may not be the same as attributes that favor the selection of a great idea, according to the authors of “Navigating a Darwinian Process of Entrepreneurial Creativity: How Optimal Group Mood Differs for Generating and Selecting Creative Business Ideas.” In this paper, presented in June at the fifth annual Atlanta Competitive Advantage Conference (ACAC) at Emory University’s Goizueta Business School, Jill Perry-Smith and Russell Coff, both professors of organization and management at Goizueta, evaluate the impact of group mood on the originality of ideas generated by test groups of business students, as well as on the novelty and viability of those ideas.
The authors found that ideas rated high in novelty were selected by groups describing their mood as calm, a so-called unactivated state that Coff says has received only a small amount of attention in the literature on mood. On the other hand, ideas rated high in viability were selected by groups with a different prevailing mood: a combination of cheerful enthusiasm and distressed irritability. “Viability requires a critical element, a negative energy, that novelty doesn’t,” Coff says. Cheerful enthusiasm alone appeared to be the team mood most associated with generating unique ideas in the brainstorming phase.
The brainstorming phase also proved to be affected by group density, i.e., the closeness of the relationships within the group. High group density, Coff explains, “tends to facilitate convergent thinking; people bring similar things to the table, and that is actually not what you want, typically, in the idea generation phase. The more weak ties you have in a group,” he says, “the more likely you are to have a broader solution set to work with.”
With high group density in the idea selection phase, Coff notes, a group is more likely to select a more novel solution. “They’ll reach a consensus fairly quickly with less analysis than a less dense group,” he says, “whereas a less dense group is likely to select something that’s more viable.”
The authors analyzed the performance and group dynamics of 38 self-selected groups of undergraduate and masters business students in a classroom creativity exercise involving a business plan for some use of Georgia clay. Participants noted immediately following the exercise the extent to which their mood could be described by 21 different adjectives and their degree of closeness with each of the other group members. These rankings provided the raw scores for mathematical assessments of group mood and group density. Mathematical analysis of the novelty and viability of ideas began with the scores of two graduate students blind to the study’s objectives.
“It is really important to separate out these dimensions of creativity,” Coff explains, “because they are factors that are going to push your solution perhaps in different directions.” He says the findings may help explain “performance heterogeneity among firms, because some firms, or teams, are able to navigate this and others are not, and that becomes of great strategic significance.”
In their paper, Perry-Smith and Coff suggest that managers could perhaps promote more competitive outcomes by assigning different individuals to the two stages of the creative process, and by adjusting organizational routines to promote task-appropriate group mood.
This process of generating and selecting creative solutions, notes Coff, “is sufficiently difficult that it may be rare for a single executive to be able to navigate the process consistently.” Because of this, the development of creative solutions is not easily copied and thus provides a competitive advantage that rivals may find difficult to erode.
Coff presented his and Perry-Smith’s findings at a session on “Psychology of Strategy Formulation” held during the ACAC conference, which was attended by more than 100 academics from around the world. Following the theme of creativity and competitive advantage, a second paper, presented by Michael Shayne Gary, senior lecturer of general management at the Australian Graduate School of Management, University of New South Wales (AGSM), examined decision making at the micro level, exploring the impact of managerial mental models on performance.
Gary’s paper, “Mental Models, Decision Rules, Strategies, and Performance Heterogeneity,” coauthored with Robert E. Wood, professor of organisation and management at AGSM, identifies and discusses intuition and perception in the context of ambiguity. According to the authors, the two most critical errors in managers’ mental models: superstitious beliefs, in which causal relationships are inferred where none exist, and causal blind spots, in which real causal relationships are omitted from the decision making process. “Inaccurate mental models did undermine performance, and more accurate mental models did lead to superior performance,” says Gary of the results of their study. In contrast, he notes, cognitive ability, as measured by GMAT scores of study participants, did not appear to be a significant factor in level of performance achieved.
The authors applied mathematical analysis to the performance and decision strategies of 63 second-year MBA students who completed a sequence of computer-based, new product launch simulations. Following a set of learning simulations, participants received feedback on their performance, completed questionnaires on their beliefs about the decision environment, and then engaged in another set of decision trials. Fifteen weeks later the participants completed a third phase of simulations.
Gary and Wood identify a wide range of distinctive strategies participants applied to pricing decisions and to target capacity decisions. They observe that the more successful of these strategies were associated with more accurate mental models. “To our knowledge,” the authors write in their paper, “this is the first study to empirically test the relationship between mental model accuracy and decision rules in a complex decision environment.”
The researchers’ findings have a distinct application for business managers. Specifically, firms with managers who can intuitively and tacitly untangle casual relationships, can make better decisions to capture opportunities. In this scenario, intuition provides a competitive advantage in that the heuristics may not be apparent or fully developed and thus not able to be copied.
Like Perry-Smith and Coff, Gary and Wood see their work as contributing new potential explanations for performance heterogeneity among firms.
The moderator of the “Psychology of Strategy Formulation” session, Karynne Turner, assistant professor of management at Georgia State University, wonders if there could be competitive advantage in organizations assessing individuals’ mental models prior to making hiring decisions. In addition, she asks, “Should there be training emphasizing the development of particular types of mental models? What about mood management?”Gary and Wood say intervention can help executives develop more accurate mental models of the competitive environment. Coff suggests that while group mood may be manageable for an executive, group density often is not. “From a strategy standpoint,” Coff says, “the structure of relationships is the thing that is the hardest to change.”