Study Finds that Helping Business Leaders Shift Their Mindset Will Heighten Chances of an Investment in New, Novel Technologies

When faced with a cutting-edge technological idea, business leaders who are presented with idea in more concrete “how” terms — rather than in abstract “why” terms — are more likely to recognize its utility, which increases their propensity to invest.

This conclusion was gleaned from new research from the Olin Business School at Washington University in St. Louis.

This method of information processing, known as a low-level construal, is especially useful when dealing with leaders who lack technological expertise. Without this approach, decision-makers who are out of their depth with a novel technology often reject it because they lack the expertise to make sense of the technology, resulting in a sense of uncertainty and general unease with the idea.

“Research suggests that managers tend to undervalue ideas that fall outside their area of expertise and overvalue ideas that are squarely in their wheelhouse,” said Markus Baer, professor of organizational behavior and study co-author.

“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.”

Baer — along with Matthew P. Mount of Deakin University and Matthew J. Lupoli of Monash University, both in Australia — wanted to better understand the ways in which managers process information about novel technological ideas and how that influences their interpretation and likelihood to invest.

To do this, they conducted two experiments to study how expertise distance and information-processing style influence perceptions of novel technological ideas and likelihood to invest.

The first experiment took place “in the field” and involved 300 senior R&D and innovation investment decision-makers who work for organizations that were exploring Quantum Key Distribution (QKD) as a novel cybersecurity technology. QKD is a secure communication method that relies on cryptographic protocol involving components of quantum mechanics. Participants were given information about the technology and then were asked to rate how novel and useful the technology was. Finally, they were asked to specify the proportion of their annual disposable income they would be willing to invest to bring QKD to market.

The second experiment, an online survey, included nearly 500 middle- and upper-level managers. Participants assumed the role of a senior executive of a fictitious, application-based taxi company “AppCab” faced with the prospect of investing in a fleet of self-driving cars. They were randomly assigned to one of the four conditions — expert/concrete thinking, expert/abstract thinking, non-expert/concrete thinking, or non-expert/abstract thinking.

Respondents in the expert groups were given detailed information about the self-driving cars, while respondents in the non-expert group were given general background information about the taxi industry. Respondents in the high-level construal groups were asked a number of “why” questions to switch their thinking to an abstract mode, while respondents in the low-level construal groups were asked “how” questions to shift their thinking to a more concrete mode. They also were asked questions about the perceived novelty and usefulness of the technology. Finally, they were asked to rate how likely they were to invest in the fleet of self-driving cars.

Specifically, the research showed that by shifting the way in which business leaders evaluate novel ideas — from abstract to concrete — technologists seeking approval from managers will improve the decision maker’s ability to recognize the potential value of groundbreaking ideas and maintaining a technological edge on the competition.