Study finds shifting mindset increases managers’ willingness to invest in new technology

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Forget the 30,000-foot, big-picture view. When confronted with a cutting-edge technological thought, enterprise leaders who method the thought in extra concrete “how” phrases—reasonably than in summary “why” phrases—are much less probably to be deterred by its novelty and extra probably to acknowledge its utility, which increases their propensity to invest, in accordance to new analysis from the Olin Business School at Washington University in St. Louis.

This technique of knowledge processing, generally known as a low-level construal, is very helpful for leaders who lack technological experience.

In immediately’s quickly altering world, firms which might be keen to embrace new applied sciences usually have an edge over the competitors. Yet decision-makers who’re out of their depth with a novel technology usually reject it as a result of they lack the experience to make sense of the technology, ensuing in a way of uncertainty and common unease with the thought.

“The further removed decision-makers are intellectually from an idea, the less likely they are to invest in it,” stated Markus Baer, professor of organizational habits and examine co-author. “Keeping up with the rapid pace of technology can be especially challenging. But missed opportunities and failing to keep up, technologically speaking, is a recipe for failure.”

What’s a enterprise chief to do?

“Research suggests that managers tend to undervalue ideas that fall outside their area of expertise and overvalue ideas that are squarely in their wheelhouse,” Baer stated.

“And it gets worse. The further removed they are intellectually from the idea, the more likely they are to view it as too ‘out-there’ and as less useful, both of which make it less likely that decision-makers will financially commit to the idea.”

To overcome this experience hole, earlier analysis has urged managers ought to have interaction in a sort of deliberate cognition that includes drawing on prior expertise with comparable concepts to consider new technological concepts. However, that is not attainable when the thought is really novel.

Baer—together with Matthew P. Mount of Deakin University and Matthew J. Lupoli of Monash University, each in Australia—wished to higher perceive the methods in which managers course of details about novel technological concepts and the way that influences their interpretation and probability to invest.

Their analysis findings, forthcoming in Strategic Management Journal, provide a means for enterprise leaders to overcome organizational inertia and acknowledge new technological alternatives.

Abstract vs concrete?

Baer, Mount and Lupoli performed two experiments to examine how experience distance and information-processing model affect perceptions of novel technological concepts and probability to invest.

The first experiment came about “in the field” and concerned 300 senior R&D and innovation funding decision-makers who work for organizations that had been exploring Quantum Key Distribution (QKD) as a novel cybersecurity technology. QKD is a safe communication technique that depends on cryptographic protocol involving parts of quantum mechanics. Participants got details about the technology after which had been requested to price how novel and helpful the technology was. Finally, they had been requested to specify the proportion of their annual disposable earnings they might be keen to invest to convey QKD to market.

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The second experiment, a web-based survey, included practically 500 middle- and upper-level managers. Participants assumed the function of a senior government of a fictitious, application-based taxi firm “AppCab” confronted with the prospect of investing in a fleet of self-driving automobiles. They had been randomly assigned to one of many 4 situations—professional/concrete considering, professional/summary considering, non-expert/concrete considering or non-expert/summary considering.

Respondents in the professional teams got detailed details about the self-driving automobiles, whereas respondents in the non-expert group got common background details about the taxi trade. Respondents in the high-level construal teams had been requested numerous “why” questions to change their considering to an summary mode, whereas respondents in the low-level construal teams had been requested “how” questions to shift their considering to a extra concrete mode. They additionally had been requested questions in regards to the perceived novelty and usefulness of the technology. Finally, they had been requested to price how probably they had been to invest in the fleet of self-driving automobiles.

“Across our two studies, we show that decision-makers who are distant from a highly novel technological idea in terms of domain expertise are less likely to invest in it. However, our results also show that the effect of expertise distance is entirely dependent on how abstractly vs. concretely they approach the idea,” the authors wrote.

Shifting managers’ views

As the present analysis demonstrates, how decision-makers course of data influences their interpretation of novel technological concepts, which finally shapes their funding choices.

“Highly novel ideas, when evaluated by decision-makers who have no expertise in the relevant domain, are perceived as too uncertain and too risky,” Baer stated. “Changing how they approach the idea can help managers mitigate the negative effect of expertise distance.”

Many leaders imagine they want to deal with the large image and depart the day-to-day duties and small particulars to lower-level managers and staff. Indeed, there might be advantages to this high-level perspective. Decision-makers engaged in high-level considering are future-oriented and have a tendency to focus their consideration on summary, broad data associated to distant objectives.

However, when it comes to evaluating novel technology, this sort of high-level construal considering can maintain leaders again.

“Most decision-makers have a preference for rationality and predictive accuracy over the uncertainty inherent in novel technological ideas,” Baer stated. “When leaders focus solely on the high-level, summary options of the technology, they have a tendency to over-emphasize the novelty and dangers of the thought, which, in flip, decreases their probability to invest.

“Our research shows this type of thinking can compound the negative effects of decision-makers’ expertise distance on the propensity to invest in novel ideas.”

In distinction, decision-makers utilizing low-level construal are present-oriented and have a tendency to focus their consideration on concrete, slender data associated to the advantages and feasibility of adopting the novel technology. By specializing in the idiosyncratic, technical particulars of extremely novel concepts and facets of feasibility, decision-makers could also be extra inclined to understand the thought as being helpful and, by extension, much less novel and dangerous, Baer stated.

Ultimately, the analysis highlights the distinctive worth of adopting a extra concrete mind-set when confronted with radical technological change.

“By shifting the way in which they evaluate novel ideas—from abstract to concrete—managers will improve their ability to recognize the potential value of groundbreaking ideas, maintaining a technological edge on the competition,” Baer stated.


Why your best idea may be your second favorite


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Washington University in St. Louis


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Study finds shifting mindset increases managers’ willingness to invest in new technology (2021, April 19)
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