The management of creative vision and the economics of creative cycles

This paper proposes a new theory of variability in innovation performance in managerial firms that contract 'creative vision'. We argue that such firms are prone to 'creative cycles' that arise from uncertainty-induced systemic overshooting that can threaten the firm's financial viability, requiring managers to shift control back to risk-averse financial controllers. But this creates opportunities for competing firms to engage in bold creative visions, threatening the firm's market viability and inducing control to shift back to newly contracted suppliers of 'creative vision'. We discuss how this 'principal-agent-agent' mechanism plays out, the types of uncertainty that drive it, and consider the industry-level externalities it induces. Copyright © 2015 John Wiley & Sons, Ltd.