UCL School of Management is delighted to welcome Jeremy Hutchison-Krupat, University of Cambridge Judge Business School, to host a research seminar discussing “Changing course: How analogies direct pivots.”

Authors: Jeremy Hutchison-Krupat (University of Cambridge Judge Business School) and Panos Markou (University of Virginia Darden School of Business)

Abstract:

Innovation is often compared to a journey through poorly charted territory. There is excitement over the possibility to reach a new destination, even if the destination may not be fully specified. Likewise, there are many potential paths, though, not all of them are known, and none have been fully traversed. Despite this uncertainty, a strategic plan must be established, and a path chosen. It is no surprise, then, that successful innovation is associated with an ability to adapt. Adaptation occurs on multiple levels: iterative experimentation happens within a strategic plan, while a pivot involves a change to the strategic plan itself. To pivot effectively, an individual faces two key challenges. They must: (i) abandon their current strategy, and (ii) select a new, more effective strategy. We conduct two controlled lab experiments to examine whether experience in analogous settings enhances an individual’s ability to pivot effectively. Our experimental design enables us to distinguish between adaptation within a plan and adaptation of a strategy itself. The experiments require individuals to achieve a multi-dimensional objective through the adoption of an initial strategy and subsequent iterative experimentation, which allows them to achieve progress. Individuals then receive additional, more specific, information on the multidimensional objective. The revised objective cannot be achieved through the initial strategy; it requires a pivot. Our results show that experience with analogous problems significantly improves an individual’s ability to pivot, though the effectiveness of the analogy depends on its specific characteristics. We identify which properties of analogous settings are most likely to prompt a successful pivot. Our results indicate that while analogies increase the likelihood an individual pivots, some analogies can lead individuals to pivot ineffectively.