Why Innovators Get Better With Age

By TOM AGAN

“WE need some gray hair” once referred to needing someone with more experience. But I haven’t heard that expression in a very long time.

In fact, many companies are intentionally reducing the average age of their work forces in an effort to save money. Younger employees are generally paid less and have lower health care expenses and retirement costs. As one executive remarked to me recently, “I don’t think anyone really likes this — we all know our own 50-year-old moment will be coming, too.” 

There is a surprising downside, however, to encouraging older workers to leave or, at some companies, pushing them out: Less gray hair sharply reduces an organization’s innovation potential, which over the long term can greatly outweigh short-term gains. 

The most common image of an innovator is that of a kid developing a great idea in a garage, a dorm room or a makeshift office. This is the story of Mark Zuckerberg of Facebook, Bill Gates of Microsoft, and Steve Jobs and Steve Wozniak of Apple. Last week, Yahoo announced that it had bought a news-reading app developed by Nick D’Aloisio, who is all of 17. 

In reality, though, these examples are the exception and not the rule. Consider this: The directors of the five top-grossing films of 2012 are all in their 40s or 50s. And two of the biggest-selling authors of fiction for 2012 — Suzanne Collins and E. L. James — are around 50. 

According to research, the age of eventual Nobel Prize winners when making a discovery, and of inventors when making a significant breakthrough, averaged around 38 in 2000, an increase of about six years since 1900. 

But there is another reason to keep innovators around longer: the time it takes between the birth of an idea and when its implications are broadly understood and acted upon. This education process is typically driven by the innovators themselves. 

For Nobel Prize winners, this process usually takes about 20 years — meaning that someone who is 38 at the time of discovery will most likely be nearly 60 when he or she receives the prize. For most eventual laureates, that interval is spent attending and making presentations at conferences, networking with colleagues, writing additional papers, editing academic journals and talking with the press. 

Let’s assume that with company resources, it will take a corporate innovator 10 years instead of 20 to educate others about the nature, implications and applications of a new idea. If that’s true, a reasonable target retention age for attaining an average level of innovation would be at least 50. 

YET despite the overall aging of the work force, many organizations are heading in the opposite direction. One executive at a major investment bank remarked with concern that the average age at his firm was 32. This phenomenon is not unique to corporations. Many medical institutions and universities  have also shifted to younger workforces. But according to research by Benjamin Jones of Northwestern University, a 55-year-old and even a 65-year-old have significantly more innovation potential than a 25-year-old. 

If an organization wants innovation to flourish, the conversation needs to change from severance packages to retention bonuses. Instead of managing the average age downward, companies should be managing it upward. 

We can act within our own organizations to make a difference. For example, we can end policies that limit the time people are allowed to stay at a certain level in a given position. And we can stop rotating high-potential managers across different businesses. Instead, we need to encourage the best performers to stay put, giving them the years — perhaps even decades — to support and lead major innovations from inception to commercial launch. 

And to encourage innovation, we must provide economic incentives to C.E.O.’s, boards of directors and investors through changes in the tax code and elsewhere that favor long-term returns driven by innovation over shortsighted pressure to reduce costs.

The journalist A. J. Jacobs has perfectly described our current situation when it comes to the relationship between age and innovation. In his book “The Year of Living Biblically,” he writes: “I’m 38, which means I’m a few years from my first angioplasty, but — at least in the media business — I’m considered a doddering old man. I just hope the 26-year-old editors out there have mercy on me.” 

Relax, A. J., you still have a few more years to hit it out of the ballpark with a mega-best seller.

Tom Agan, 51, is a co-founder and the managing partner of Rivia, an innovation and brand consulting firm.