CU leaders need to know how to help risk-averse employees try new things.
To foster innovation, credit union industry leaders not only need to be good at making decisions that involve risk, but also at helping staffers who would prefer not taking any chances to explore new opportunities.
At CUES’ inaugural Strategic Innovation Institute II this summer at Stanford University, Baba Shiv described two mindsets that have a direct impact on a company’s ability to innovate:
- The Type 1 mindset seeks comfort, according to Shiv, professor of marketing at the Stanford Graduate School of Business. When people have this mindset, they don’t tolerate failure and fear making a mistake. This mindset hinders innovation.
- In contrast, the Type 2 mindset seeks excitement. People with this mindset think failure is a challenge, fear missing out on an opportunity and tend to be poised to innovate.
Most businesses start out with a Type 2 mindset, Shiv explained. But over time, through systems and processes and hires, many change to a Type 1 mindset.
Success also breeds a Type 1 mindset, which causes companies to stick to the familiar and creates a state of indecision in which employees set up a committee and have more meetings rather than innovating.
| If You’re Attending MIT in 2016 … Participants in the first-ever Strategic Innovation Institute II were asked to give advice to credit union leaders starting the program with Strategic Innovation Institute I at MIT in 2016. Here are some of their words of wisdom:
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When organizations have a Type 1 mindset, they are vulnerable, Shiv added, citing the example of Blockbuster. The company was comfortable in its niche of renting physical videos and didn’t react to the threat from Netflix’s digital delivery. Its own stasis put Blockbuster out of business.
Organizations will have employees with each mindset and some who have a mindset that mixes the two types, Shiv said. To foster innovation, leaders will need to craft several approaches to helping people innovate.
For example, employees with a Type 1 mindset might be more comfortable innovating if you show them the safety nets that you’ve built to catch them if they fail. Employees with a Type 2 mindset will innovate when you create excitement by showing them novelty and variety in their work. People who have a hybrid mindset will respond to a mix of reassurance and excitement.
Shiv noted that mindsets are also influenced by age, time of day, sleep, fitness and diet. It’s not surprising that getting enough sleep, exercise and healthy food supports a person’s readiness to innovate.
Shiv said leaders can also use “co-creation” to support innovation. “If you build a polished prototype, others will see flaws,” he said. “If you build a rough prototype, others will see potential.”
Karin Sand, CIE, is CUES’ VP/supplier relations, and considers Strategic Innovation Institute the top education opportunity she’s ever had.
