Where do cool new ideas come from and how do you turn them into a business?

The influential German sociologist Max Weber was the first to formally study bureaucracy. He loved its precision and speed, its hierarchical structure, and its written rules. In his view, it was the most efficient way to organize government and business.

Franz Kafka’s novel, The Castle, depicts bureaucracy rather differently. After arriving in a new village, a land surveyor tries to contact the castle official who summoned him, only to find himself continually frustrated by opaque layers of local bureaucracy. By the time the unfinished novel stops mid-sentence, our protagonist is no closer to his goal.

Most modern readers would find it easier to identify with Kafka’s portrayal. Too many large organizations stifle individual initiative with endless processes, meetings, and paperwork. Creativity does not come in a bottle, it needs time and space to flow freely.

Structured approaches such as six-sigma, stage-gate, and total quality management are a tried and tested way to prevent creativity. What we need is idleness, connectivity, and the room to enable happy coincidences. Companies can create such innovation cultures if they follow three simple steps and keep the bureaucratic monster at bay.

Step 1: It’s all about recombination

Let’s start by reminding ourselves where new ideas actually come from. An outdated but persistent myth romanticizes ‘the Eureka moment’. In reality, few creative ideas result from a sudden spark of genius. Almost all are a recombination of existing ideas.

Take Henry Ford’s mass production of cars as an example. “I invented nothing new,” Ford said, “I simply assembled the discoveries of other men, behind whom were centuries of work.” The first discovery he assembled came from Eli Whitney, who used relatively unskilled workers to produce parts for muskets. Taking this to heart, Ford started to think of a car manufactured from parts that could more easily be produced in bulk instead of custom making each car. The second discovery was borrowed from the tobacco industry, which had started to divide cigarette production into a sequence of steps. Finally, he adopted assembly lines from the Chicago meatpacking industry.

If recombination sits at the heart of creativity, companies need to ensure that staff have access to a wide set of ideas. Expertise is useful but not if it comes at the price of silo-thinking. What you are looking for are jacks of all trades who are also masters of one.

An additional complication is that solutions often lie elsewhere. When the epidemiologist Gary Slutkin retired he took an interest in neighborhood violence. He was an expert in infectious disease, having spent his career battling cholera, tuberculosis and AIDS. Statistically, he noted, violence spread in a similar manner to contagious diseases. With this insight, he developed a new method that mimicked the battle against pandemics. The results were phenomenal, reducing violence between 41 and 73 percent in targeted neighborhoods.

If new ideas are the product of recombination, often emerging from fields less obviously connected to the issue at hand, the next question is how companies can create an environment where this is more likely to happen.

Step 2: Create room for serendipity

The Persian fairytale, The Three Princes of Serendip, tells the story of a powerful king who sends his sons on a quest. On their travels they encounter a number of happy coincidences. Smart companies create the space needed for such coincidences to occur.

In 1968 Spence Silver, a scientist at 3M, accidently developed an adhesive that did not stick properly. For five years he shared his “solution without a problem” with anybody who was prepared to listen. Eventually he stumbled across Art Fry, a chemical engineer in the company’s tape division, who had the idea of using it to prevent his bookmarks falling out of his hymn book as he sang. To develop the idea further, Fry was able to utilize a 3M policy that gave employees permission to spend 15%of their time on whatever project they chose. The Post-It note was born: if you want happy coincidences to happen, create opportunities for people to meet and idle in a similar manner!

You can further enhance the chances of serendipity by using imagination games. As Martin Reeves and Jack Fuller explain in their new book, The Imagination Machine, play frees the mind of the usual constraints we have in a corporate setting. It gives us the license to do unusual things. Rather than looking for a carefully thought through solution, we just try things. We might come up with ideas that have no immediate use but as we know from Silver and Fry’s encounter, there is a chance that someone else has the problem we are looking for.

Step 3: Use the power of the crowd to turn your ideas into businesses

Knowing that new ideas are the product of recombination and that is more likely to happen serendipitously, we also need to rethink the way we turn creative ideas into successful new businesses.

Some products will neatly fit into the current production and distribution system, but don’t be surprised if truly creative ideas require an entirely new business model. The chances that you are able to develop such a business model on your own are pretty slim. Your own experience holds you back, as you will instinctively opt for familiar solutions.

In a new book, Open Strategy, which I co-authored with Julia Hautz, Kurt Matzler, and Stephan Friedrich von den Eichen, we offer a more fruitful method. Why not set up a workshop that brings together an equal number of people from your own company and outsiders? Those from inside the firm should represent different departments of the company. Those from outside will be from entirely different industries, bringing with them a diverse portfolio of experiences. Make sure the external participants sign a document to ensure intellectual property rights are not turned into an issue afterwards.

First, you introduce the participants to the new technology you would like to find a business model for. Next, you ask them to note down as many business ideas they can think of, with this technology in mind. They write them down on a Post-It Note and stick it on a wall. Once they are done, everyone picks an idea, before joining different groups you set up. Each group will have an equal number of your employees and external participants. This connects outside thinking with inside knowledge of what’s actually achievable. Every group decides which of the ideas brought by the different members is the most promising and develops a short pitch for this business idea.

Each group then presents their idea and a vote is taken. Half the teams will be eliminated and their members distributed among the surviving groups. These teams develop a full-fledged business model, presenting it once again. This time senior executives will be present and a final vote is taken. This process facilitates the emergence of entirely new business models by leveraging the wisdom of the crowd.

Never forget: Bureaucracy must die

The three steps will help you to find creative ideas and turn them into viable new businesses. Bureaucracy, however, still has the power to kill any creative spark. Leaders should not shut themselves away in their castle, fortified against innovative ideas by layers of hierarchy and rigid process. They need to embrace the unconventional and protect those who take risks by not adhering to the norm. They are the unsung heroes of creativity.