Innovation and the Peter Principle

The Peter Principle states that every employee rises to their level of incompetence in a hierarchy. This can hinder innovation in managers and executives as they climb the corporate ladder and become too focused on short-term goals rather than the long-term picture. The scholastic system teaches us to succeed by giving the right answers and coloring within the lines, which can stifle creativity and risk-taking. As we climb the ladder, the risks of innovation may seem too great and executives may become too focused on what Wall Street thinks rather than the needs and challenges of the market. Active leadership and participation in innovation from executives may be crucial to overcoming this phenomenon.