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Kill Your Cost of Creativity

The Problem: Let’s assume you are an executive in a large, bureaucratic company. Your problem is that you have an innovative idea or creative proposal, but it requires a lot of political capital to even test the concept at your company, let alone to fully implement it. Your boss or the CTO or the CEO just shrugs their shoulders and views this (anti-creative) bureaucracy as “life in a mature organization.”

What you’re suffering under is an organization which has a very high Cost of Creativity - essentially, the amount of pain you have to go through to do anything innovative in your firm. How destructive is this? Well, imagine if Van Gogh had to wait one week between brushstrokes. Or what if he had to get a gallery owner’s approval to change colors? His creative output would drop precipitously. In other words, the more painful to innovate, the more likely you are to just say “screw it” to the whole thing. This can happen in many non-visible ways. If you are the CEO or a senior leader, there may be many proposals for innovation that never even rise to your awareness, because a high Cost of Creativity has discouraged them from ever occurring in the first place.

Compared to hiring innovation consultants, reducing the Cost of Creativity is a very different approach to increasing a company's innovation potential. It is not based on the idea of "injecting in" creativity. In fact, you make your company inherently more creative by simply getting the hell out of the way of the natural creativity of your employees that has been struggling to emerge. In fact, reducing the Cost of Creativity may be one of the easiest, cheapest ways to unleash suppressed creativity throughout your organization - even in places where you may not have expected to find suppressed innovation. Why?

As we know from Economics 101, if you increase the cost of something, the demand for it will go down. Creativity is no different. However, people often overlook the *emotional* costs of creativity. Getting committee approval or having to wait 10 weeks for a budget sucks the life out of any creative process. This is why IDEO charges a lot to cram executives into a room for a few days of creativity. It’s not just that IDEO has magical exercises and workshops. A large part of IDEO, Frog, and other creative agencies’ advantage is they bring in your executives to operate in a very low to no Cost of Creativity environment. And, surprise, Creativity explodes!

In fact, many executives find that they have created innovative solutions in such consulting or offsite settings, but they later struggle to realize or implement them because of a high Cost of Creativity in their firms. In other words, Cost of Creativity is especially important in the implementation stage, once ideation has occurred. If you have no shortage of good ideas, but difficulty implementing them, you may have a Cost of Creativity issue.

By measuring the Cost of Creativity, you are essentially creating a new KPI (Key Performance Indicator) for your company’s innovation efficiency. The best part of this is that you *don’t* need to "be a creative" to reduce the Cost of Creativity in your organization!

Why This Happens: It may not seem like there is a direct correlation between “pain in neck” and quantity of creative output, but let’s try to make it more real based on an informal study I did below. Most of you know that it takes much longer to create and upload a video to Youtube versus the time it takes to type out a tweet on Twitter. Based on the average length Youtube video (around 4 minutes), I found that creating and uploading a video to Youtube took 346 seconds - versus the nine seconds to write a tweet. In other words, as measured in time, the Cost of Creativity on Youtube was 38x higher than the Cost of Creativity on Twitter. I then looked at the number of daily Youtube videos versus tweets. At the time, Twitter was getting approximately 100x more posts that Youtube did, every day. Finally, I compared these to taking a photo and uploading it to Facebook, which took about 29 seconds when I ran the experiment. You can see the results below. As the Cost of Creativity goes up, the quantity of creative output goes down.

Here is an alternate way to look at it.

This is a very crude, three-data-point experiment, but a simple linear regression shows that every additional second of creative effort decreased creative output by over 1 million posts per day. Now imagine that you had to go through your boss and several other department heads, get 5 signatures, do 7 conference calls, and get your whole team to approve a video, just in order to post it to Youtube. What would *that* Cost of Creativity do to the volume of your creative output?

To give a more practical example, years ago the automated hedge fund of which I was President cited their low Cost of Creativity as one of their main competitive advantages. Whereas other funds typically labored under computer platforms that required days or weeks to test complex trading ideas, we had built a platform that could allow a user to test an idea in seconds. By being able to test an idea in 2-3 seconds, we massively compressed the creative process. Our Cost of Creativity plummeted and our creative output soared. This low Cost of Creativity became one of the main reasons we were selected as a global case study by Andy Jassy, head of AWS, at their annual conference, re:Invent. Here is me on stage talking about this exact Cost of Creativity issue.

“Find a truly original idea. It is the only way I will ever distinguish myself. It is the only way I will ever matter.” —John Nash

The Solution: There are many ways to measure the Cost of Creativity. A related measure, the Bureaucracy Mass Index, was developed by researchers and put into this HBR article. Calculating this index, however, can be a lengthy process and is not specifically targeted at creativity. Instead, I suggest that you consider two very simple metrics:

  1. How many people’s approval you need in order for a creative or innovative project to get started (Approval Cost) and

  2. How much delay is present from time of ideation to day 1 of the creative work (Delay Cost).

I would say that if you need more than 2 Approvals to launch any creative project or incur more than 2 weeks of Delay Cost, then you have room to optimize your Cost of Creativity.

Of course, you can add any metric you like to measuring your Cost of Creativity, including number of emails, budget, conference calls, etc. What is most important is that the metrics you use are (i) measurable; (ii) reflect a pain in the neck which impedes innovative change.

Once you have your Cost of Creativity measurement, you can examine case studies in your organizational history in which this Cost has reduced or impeded output. The more examples you can provide of an innovation slowdown, the better you can argue for a change in corporate processes to reduce the Cost of Creativity. In other words, it helps to point to the impact on creative output.

Ideally, at this point, you can argue for streamlining of approvals and delays. If 6 signoffs are needed, can you get to 2? If it took 16 weeks to get an approval, can you reduce that to 4? Consider how this may increase your company's innovation output. Isn't that worth it? If you are the CEO, you may have significant leverage over this.

If your company resists major change, you may want to petition for an experimentation zone, internal prototyping garage, or innovation day to create a small "sandbox for creativity" where the Cost of Creativity is extraordinarily low for a limited time. This would mean you get a predetermined budget, allocated staff, pre-approved resources, and permission to experiment. Although many companies try to do this via Hackathons or other offsite events, pushing to create an internal vehicle for experimentation may be a bigger win in the long run. That's because internal processes may be more easily replicated in the future - and can reduce the entire company’s Cost of Creativity, not just those who went to the offsite. Once the Cost of Creativity is reduced for the entire organization, everyone stands to benefit.

Actual Steps: We can keep this really simple. Find a few examples of successful and unsuccessful attempts at innovation across your company. For each:

  1. Count the number of approvals that were required to get the idea approved/rejected (Approval Cost).

  2. Count the delay from idea creation to getting idea finally kicked off or rejected (Delay Cost).

  3. See if you notice any patterns between groups that have higher creative output and lower Approval / Delay Costs.

  4. Brainstorm ways in which these Costs could be reduced or approved ahead of time, including the creation of “creative zones” where these Costs are completely avoided.

Anything that can reduce the number of Approvals or duration of Delay (or whatever you choose to measure) will help reduce your company’s emotional Cost of Creativity!

Where You May Get Stuck: Getting enough buy in to look at your internal Cost of Creativity may itself seem like too costly or impossible a task. To that end, you may want to look at how to create a Persuasive Argument (see here) or how to ask for a Risk Budget for experimentation (article pending). Finally, if you’re convinced that a failure to reduce your Cost of Creativity could truly jeopardize your firm’s competitive future, you may want to speak to the Organizational Shadow and channel the power of fear (see here).

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