Ask a leadership team about innovation today and, within three sentences, you will hear about Artificial Intelligence. So, allow me a provocation: what if innovation has little to do with AI – and everything to do with human ingenuity? After all, how people use AI depends on their ingenuity.

Why ‘ingenuity’ rather than ‘creativity’? Creativity is new ideas under ideal conditions. Blue sky, unlimited budget. Ingenuity is useful solutions under pressure, in the real world. Give a team unlimited time and money and they will be creative. Give them a tight deadline and a limited budget, and they must be ingenious.

The good news: humans are ingenious. The bad news: organisations are bad at managing human ingenuity. Which may be why we prefer talking about AI.

Peter Drucker saw the problem in 1969. In The Age of Discontinuity, he distinguished the managerial organisation, where top people sit in judgement of ideas, from the innovative organisation, where their job is to encourage ideas, however unripe. Half a century on, I find four things determine whether ingenuity flourishes or withers. All four have to do with stories. Because if you want to change the culture, you have to change the stories. 

1. Belief comes before behaviour

Your organisation says it wants innovation. But as an employee, do I believe you?

An Australian defence research organisation wanting to become more innovative commissioned a cultural audit. While leaders said they wanted innovation, employees could point to more occasions when it was punished than rewarded. One story kept surfacing. During the Iraq War, Australian troops were getting pinned down in urban fighting because they couldn’t see around corners. A young engineer, on his own initiative, designed a rifle scope that solved exactly that problem. His manager told him they were too busy. He pushed again and was told to drop it. Only a chance encounter with the chief scientist got the scope to the army top brass. It went into production and made a real difference in the field. And the engineer? He won a public service medal. His managers were embarrassed. His career never recovered.

Inside the organisation, that story became a warning: innovation may be celebrated publicly, but pushing it will cost you privately. Every organisation sends two signals about innovation: the one it intends, and the one people actually learn from. That is what the saying “culture eats strategy for breakfast” means in practice. Which stories are circulating in your organisation – and are they building belief, or sabotaging it?

2. Stories surface potential

Suppose people do believe you. Where do you start? Drucker argued that the market is the most potent source of ideas for innovation. The trouble is that data can only answer the questions we thought to ask. Stories are a deep listening device, surfacing weak signals data doesn’t know to look for.

Take Clayton Christensen’s famous milkshake. McDonald’s discovered that commuters weren’t buying breakfast; they were ‘hiring’ a milkshake to make a boring drive bearable, one-handed, and filling until lunch. A thicker shake boosted sales sevenfold. That is a customer insight story: a moment we learned to understand our customer better. Collect them deliberately.

3. Protect ideas from the corporate antibodies

Most organisations are not short of ideas. They are short of attention and permission. Once a business model works, companies optimise. They become hyper-efficient – and the existing processes spew out corporate antibodies that attack anything that looks different. Fragile ideas need champions, or the antibodies win.

When Singapore’s DBS learned that residents rated dealing with their bank as more painful than visiting the dentist, that insight became a vision: make banking joyful. When Singapore’s DBS bank learned that people found banking more painful than visiting the dentist, it set an audacious goal: make banking joyful. But how could a traditional bank become innovative? Its leaders decided to stop benchmarking themselves against other banks and start thinking like technology companies. They coined GANDALF: Google, Amazon, Netflix, **DBS**, Apple, LinkedIn and Facebook. The ambition was to become the ‘D’ among the tech giants. Employees began asking, ‘What would Jeff Bezos do?’ This shared story challenged established thinking, gave teams permission to experiment, and helped transform DBS into a multiple winner of the World’s Best Bank award.

4. Let insights travel sideways

Most breakthroughs are not inventions but recombinations: an existing idea applied in a new context. A study comparing Nobel Prize-winning scientists with their peers found the laureates were twice as likely to be musicians, seven times as likely to practise the arts – and 12 times as likely to write. Breadth ignites depth. If your team lacks broad experience, borrow it: an edge story carries something from the fringe – another function, another industry – into the mainstream.

Ingenuity isn’t about having smarter people. It’s about creating belief that ingenuity is safe, listening for insight, protecting fragile ideas, and letting them recombine. You can do all of it with stories. Cheap. Immediate. Deeply human.

When dealing with familiar terrain, leaders can use abstract terms (like ‘innovation’). But when these terms cannot be clearly pictured, they are not actionable. When dealing with the unfamiliar, leaders must be concrete. Stories are both concrete and contextual. To succeed at any of the four dimensions above, organisations must therefore make abstract concepts visible, overcoming what I call abstraction bias. That is why I am on a mission to drive mission-critical change by helping leaders unlock the most overlooked dimension of leadership: narrative. 

Narrative is the human operating system. AI will keep getting better at solving well-defined problems. Defining the right problems – and believing they are worth solving – remains stubbornly, wonderfully human. That is next gen innovation.

About the author:

Jyoti Guptara is the author of Business Storytelling from Hype to Hack, and a pioneer of ‘narrative leadership’. He is managing director for Europe at performance management firm Momenta Group.