Video: Wednesday, 17 October 2018

In order to stay competitive, companies need to keep innovating, and one of the best ways to do that is to encourage employees to develop ideas. The usual way is to form teams to develop ideas, but given a choice, many people would choose to generate ideas alone. Assistant professor Dirk Deichmann of Rotterdam School of Management, Erasmus University (RSM) together with Michael Jensen of University of Michigan’s Ross School of Business wanted to know why people do that, and which is more effective – alone, or in teams? In their study, they discovered that teams generate ideas more effectively, but some individuals still want to work on their ideas alone because they feel that the costs of working in teams are too high. What’s more, they don’t want to share any potential rewards.

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Teams generate better ideas than individuals

“Ideas volunteered by employees are potentially important sources of competitive advantage for firms,” says Deichmann. Earlier research shows that teams are more effective at generating successful ideas than individuals. In general, teams have more expertise and knowledge and are therefore better at addressing potential weaknesses. A team also has more power of persuasion to overcome resistance to new ideas. Deichmann says: “Although the advantages of working with a team to develop an idea are well established, we know surprisingly little about why some people ignore these advantages and develop their ideas alone.” 

Ideas volunteered by employees are potentially important sources of competitive advantage for firms.

Even tiny teams work better

To find answers, Deichmann and Jensen accessed a company’s innovation database containing 2,532 ideas, belonging to a large energy company in the Netherlands. The ideas had been gathered over 12 years. Deichmann and his colleague also interviewed the company’s employees and innovation managers. Deichmann: “We found that working in a team is very beneficial for the success of an idea. Even a tiny team of two – an individual working with just one other person – increases the likelihood of the idea being adopted by the company.”

So, it’s established that generating ideas in teams is more effective than doing it alone. Next, Deichmann and Jensen looked at why people chose to work in teams – or not. Deichmann: “We found that people are more willing to work in teams if they develop a very radical idea that requires access to more resources, knowledge, and skills. For less radical ideas, people generating ideas are more likely to develop them alone because working in teams means increased co-ordination and more effort, which is a disadvantage.”

Success breeds success

Deichmann and Jensen also found that people are more open to teamwork if they have been successful with an earlier idea that they developed alone. Deichmann: “They’ve proved themselves and got the rewards for that. It also makes them a more attractive partner for others, which increases the probability that the idea creator will develop the next idea with a team.” However, if individuals weren’t successful with an earlier idea, they will often go it alone for their next idea. 

Deichmann: “Based on these findings, we conclude that people who generate ideas consider the pros and cons of teamwork very carefully. When the perceived costs of teamwork are high, these people are more likely to develop their ideas alone. But this can be a costly mistake because working without a team decreases the likelihood of developing a successful idea – no matter what type of idea is being developed.”

What should companies do?

Based on their findings, Dirk Deichmann offers this advice to companies: “There are three things companies can do. 

1. Encouragement

“First, they should encourage employees to form teams to generate ideas."

2. Awareness

“Second, companies should know that working in teams increases the chance of success by at least three times."

3. Matchmaking

“And third, companies can act as matchmakers by helping people who generate ideas to find others with whom they can form teams.”

Dr. D. (Dirk) Deichmann
Associate Professor
Rotterdam School of Management (RSM)
Erasmus University Rotterdam
Dirk Deichmann
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