Introduction
WeWork, once the darling of the new economy and valued at $47 billion, positioned itself as a breeding ground for innovation and creativity. With trendy co-working spaces, a strong community culture, and a mission to “raise global awareness,” the company invested hundreds of millions of dollars in innovation programs such as WeWork Labs (a global startup incubator) and the Creator Awards (an international awards program for entrepreneurs and creatives). These initiatives were intended to nurture the company’s innovative spirit and unlock new growth opportunities. Yet WeWork’s spectacular fall, which culminated in a failed IPO and ultimately bankruptcy, proved to be a lesson in the importance of cultural change and cognitive diversity.
This blog article discusses the spectacular rise and fall of WeWork, focusing on the failure of the company’s innovation initiatives. Although WeWork positioned itself as an innovative and creative organization, the article reveals how a top-down culture and a lack of cognitive diversity undermined the company’s innovative power. Initiatives such as WeWork Labs and the Creator Awards, intended to stimulate new ideas, proved to be disconnected from the core business and functioned more as marketing tools than as sustainable innovation strategies. The article highlights how the disconnect between innovation and the day-to-day reality of the company, combined with an obsession with rapid growth, led to an unsustainable business model.
In addition, the article explains how a lack of cognitive diversity and psychological safety within the organization contributed significantly to WeWork’s failure. It emphasizes that effective innovation cultures thrive on a variety of perspectives, open debate, and room for critical reflection. By referring to scientific insights and practical examples, the article offers valuable lessons for organizations that want to prevent their innovation investments from failing. It concludes with a call for companies to invest in a cultural change that sustainably supports diversity and innovation.
The illusion of innovation: a top-down culture
Although WeWork presented itself as an open, creative organization, the internal culture was in reality highly top-down and autocratic. Founder Adam Neumann’s vision was all-determining; dissent, critical reflection, or alternative perspectives were discouraged or even actively suppressed. The organization was steeped in a charismatic, almost cult-like leadership style, where loyalty to the founder was more important than bringing in different ways of thinking or asking critical questions.
This monoculture was at odds with the principles of effective innovation, which thrive on a variety of perspectives and approaches. Innovation initiatives such as WeWork Labs and the Creator Awards, although on paper aimed at stimulating new ideas, often operated as separate entities, detached from the company’s core activities and strategic direction. In practice, they functioned more as marketing tools than as an integral part of a sustainable innovation strategy.
The disconnect: innovation detached from reality
One of the biggest problems was that these innovation initiatives did not align with the actual needs of users, employees, or the complex reality of real estate management. While WeWork Labs supported thousands of startups worldwide and the Creator Awards distributed millions of dollars in prize money, the organization failed to bridge the gap between these innovative ideas and the day-to-day operations of the company. The focus on rapid, often unrealistic growth and the obsession with ‘community’ overshadowed the need for sound operational processes and a realistic value proposition.
This lack of integration and the unwillingness to embrace critical feedback meant that promising ideas could not take root within the organization. The disconnect between innovation and execution became painfully clear when the company’s financial vulnerability came to light during preparations for its IPO in 2019.
The role of cognitive diversity and innovation culture
Research by Reynolds and Lewis (2017) emphasizes that teams with high cognitive diversity—differences in how people process information and deal with new, uncertain situations—solve complex problems significantly faster. At WeWork, this cognitive diversity was lacking at crucial levels. The dominant thinking style was focused on expansion and disruption (typical preferred behavior of Explorers, see …), without sufficient attention to financial sustainability or operational excellence (which is the preferred style of Developers). There was insufficient room for ‘consolidating’ thinkers who wanted to apply and refine existing knowledge, or for thinkers who wanted to integrate and structure the ideas of others.
This lack of diverse perspectives contributed to the continuation of an unsustainable business model, despite signals from within and outside the organization that a change of course was needed. The organizational culture, which valued loyalty and conformity above all else, suppressed the psychological safety necessary for dissenting opinions and critical reflection to flourish (Edmondson, 1999).
Scientists such as Scott Isaksen and Göran Ekvall have spent decades researching the crucial role of innovation culture. Ekvall (1996) identified dimensions of a creative organizational climate, including challenge, freedom, idea support, and debate. A culture that does not support these dimensions will struggle with innovation, regardless of technological investments. Isaksen and Ekvall (2010) emphasize that an innovation culture does not arise spontaneously, but must be actively managed and nurtured. Isaksen and Puccio (2011) also demonstrate that utilizing different problem-solving styles—a core aspect of cognitive diversity—is essential for creating a climate in which innovation can flourish.
These insights are supported by meta-analyses by Milliken and Martins (1996) and Page (2007), which show that cognitive diversity leads to more creative solutions and better decision-making, provided that the organization succeeds in utilizing these differences constructively. Ekvall’s work also shows that psychological safety, openness, and room for debate are indispensable for realizing the benefits of diversity.
The consequences: an expensive failure.
After the failed IPO in 2019, which painfully exposed the company’s financial vulnerability and governance issues, most innovation programs were drastically scaled back or discontinued. WeWork’s eventual bankruptcy filing in 2023 was the direct result of years of losses, mismanagement, and a culture that failed to integrate innovation in a sustainable way.
Analyses consistently point to the lack of a culture that values cognitive diversity and critical reflection as one of the main causes of this costly failure. The case of WeWork serves as a powerful reminder that investments in innovation technology and programs are fruitless without a fundamental cultural change that accommodates diverse thinking styles and creates a psychologically safe environment for dissent and experimentation.
The role of cognitive diversity and innovation culture
Research by Reynolds and Lewis (2017) underscores that teams with high cognitive diversity—differences in how people process information and deal with new, uncertain situations—solve complex problems significantly faster. At WeWork, this cognitive diversity was lacking at crucial levels.
The dominant thinking style was focused on expansion and disruption (typical preferred behavior of Explorers, see …), without sufficient attention to financial sustainability or operational excellence (which is the preferred style of Developers). There was insufficient room for ‘consolidating’ thinkers who wanted to apply and refine existing knowledge, or for thinkers who wanted to integrate and structure the ideas of others.
This lack of diverse perspectives contributed to the continuation of an unsustainable business model, despite signals from within and outside the organization that a change of course was needed. The organizational culture, which valued loyalty and conformity above all else, suppressed the psychological safety necessary for dissenting opinions and critical reflection to flourish (Edmondson, 1999).
Why facilitative leadership is a must
Facilitative leadership is no longer a ‘nice-to-have’, but an essential skill for leaders in the 21st century. In a world characterized by complexity and rapid change, organizations need leaders who are able to catalyze collaboration, creativity, and innovation.
By taking a process-oriented approach, managing individual and group dynamics, and effectively deploying tools such as CPS, facilitating leaders can guide teams to exceptional performance. The result? Not only more and better ideas, but also an organizational culture that is resilient and future-proof.
What can we do for your organization?
Scientists such as Scott Isaksen and Göran Ekvall have spent decades researching the crucial role of innovation culture. Ekvall (1996) identified dimensions of a creative organizational climate, including challenge, freedom, idea support, and debate. A culture that does not support these dimensions will struggle with innovation, regardless of technological investments. Isaksen and Ekvall (2010) emphasize that an innovation culture does not arise spontaneously, but must be actively managed and nurtured. Isaksen and Puccio (2011) also demonstrate that utilizing different problem-solving styles—a core aspect of cognitive diversity—is essential for creating a climate in which innovation can flourish.
These insights are supported by meta-analyses by Milliken and Martins (1996) and Page (2007), which show that cognitive diversity leads to more creative solutions and better decision-making, provided that the organization succeeds in utilizing these differences constructively. Ekvall’s work also shows that psychological safety, openness, and room for debate are indispensable for realizing the benefits of diversity.
Do you want to prevent your innovation investments from getting bogged down in a culture that offers no room for diversity and critical reflection?
We support organizations in developing a fruitful innovation culture based on the latest scientific insights and validated tools. With our expertise in measuring and developing cognitive diversity, creating psychological safety, and guiding cultural change, we ensure that innovation does not remain just an ambition, but becomes a daily reality. Contact us and discover how we can guide your organization towards sustainable innovation power. We offer certification courses on managing diversity of thought, creating an organizational climate in which trust prevails, and leading innovation processes with groups. We develop specific in-house programs based on your needs but you can send also send colleagues (to tekst what we have to offer) to one of our open possibilities.
Want to dive deeper? Here is a reference list.
Edmondson, A. C. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44(2), 350-383.
Ekvall, G. (1996). Organizational climate for creativity and innovation. European Journal of Work and Organizational Psychology, 5(1), 105-123.
Galloway, S. (2020). Post Corona: From Crisis to Opportunity. Portfolio.
Isaksen, S. G., & Ekvall, G. (2010). Managing for innovation: The new leadership. In J. C. Kaufman & R. J. Sternberg (Eds.), The Cambridge handbook of creativity (pp. 360-377). Cambridge University Press.
Isaksen, S. G., & Puccio, G. J. (2011). Linking problem-solving style and creative organizational climate: An exploratory interactionist study. International Journal of Creativity and Problem Solving, 21(2), 19-40.
Milliken, F. J., & Martins, L. L. (1996). Searching for common threads: Understanding the multiple effects of diversity in organizational groups. Academy of Management Review, 21(2), 402-433.
Page, S. E. (2007). The difference: How the power of diversity creates better groups, firms, schools, and societies. Princeton University Press.
Reynolds, A., & Lewis, D. (2017). Teams solve problems faster when they’re more cognitively diverse. Harvard Business Review. https://hbr.org/2017/03/teams-solve-problems-faster-when-theyre-more-cognitively-diverse
Wiedeman, R. (2020, February 10). The Rise and Fall of WeWork. New York Magazine. https://nymag.com/intelligencer/2020/02/wework-adam-neumann.html