Have You Lost Your Nerve?

By Steve McKee

McKinsey recently released the results of a study demonstrating that creative companies outperform competitors in multiple financial metrics, including organic revenue growth and total return to shareholders. Evaluating 16 years of data from the Cannes Lions Awards (arguably the most prestigious awards in advertising), McKinsey calculated what it called an “Award Creativity Score,” or ACS, then compared the financial results of companies with high ACS scores versus those with lower rankings. The most consistently creative companies outperformed their less-creative peers.

McKinsey’s analysis was correlative, not causal, but it lines up with research my firm completed that led to similar findings. We found that companies whose advertising had won industry awards of any kind were more likely to have generated consistent revenue growth than those whose advertising had not. Our findings were also only correlative, but whether creativity leads to growth or growth leads to creativity, I’ll take both.

Given the relationship between creativity and results (which has been demonstrated in many other studies as well), why don’t more companies work to better foster it?

In a recent musing about creative destruction, I suggested that every organization embrace “creative” to avoid “destruction.” I also noted how difficult it is for established firms to continually break new ground. Having a vested interest in the status quo is the rational explanation, but I also believe their struggles are related to the psychology of new ideas.

New ideas are, after all, different. Different is unexpected. Unexpected is risky. Risk leads to fear. Fear stimulates adrenaline. And adrenaline activates reflexes, usually of the fight-or-flight variety. That’s why so many new ideas die in the crib; they barely get a chance to breathe.

Unfortunately, it’s not just ideas that die but also the budgets that fund them. McKinsey’s study indicated that marketing spending as a percentage of total revenue is significantly higher in high-ACS companies compared to low-ACS companies, even (perhaps especially) during difficult economic times.

Creativity is like a muscle — you can’t expect it to grow if you don’t work it out and keep it nourished.

McKinsey partner Jason Heller offered insight into the reason why: “Seventy percent [of the best-performing organizations] view marketing as an investment versus an expense — and that’s a huge difference between high ACS and low ACS companies.”

That, too, squares with my company’s research. Loss of nerve is one of four destructive internal dynamics I first laid out in “When Growth Stalls,” which together create a vicious cycle that can ground even the highest-flying companies. A reluctance to take creative risks betrays a phobia that can become self-fulfilling.

If you’re unwilling to stand out from the crowd and unwilling to raise your (share of) voice, your brand is unlikely to get noticed. If/as that leads to continued underperformance, that will only reinforce your fears. If you don’t recognize what’s happening, you could avoid risk all the way to bankruptcy.

Creativity is like a muscle — you can’t expect it to grow if you don’t work it out and keep it nourished. Keep in mind that even low-ACS companies in McKinsey’s study were regularly participating in the Cannes Advertising Awards, meaning they have a higher-than-average commitment to ingenuity.

Imagine how their performance would compare to corporate-creativity couch potatoes.

That’s something you don’t want to be. To prevent your creativity (and your company) from atrophying, begin by recognizing your tendency to reflexively reject new ideas. The next time one comes across your desk, walk it around the block and consider the possibilities. Focus first on what’s right about it. Be honest about its real risks. Don’t overstate the downside. If it’s not ridiculously out of bounds, give it a shot and see that you’ll survive, and perhaps even thrive. Then do it again.

As with exercise, it’s OK to start slowly, as long as you’re willing to work at it. The more you do, the stronger you’ll feel, and the more natural it will become. You may not be able to conquer a loss of nerve all at once, but don’t give up. If you don’t overcome it, it may overcome you.

Originally published on SmartBrief on Leadership

Steve McKee

Co-founder and author, Steve specializes in addressing the most meaningful problems. Call Steve when you want to change the world. He’ll have a thought (and some research) on that.

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