November 15, 2012 min read

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In today's rapidly changing market, small businesses that innovate survive. But, that's no easy task for a leader. You're expected to be open to risky ideas while protecting your company and evaluating what will work. Openness and skepticism often seem at odds, and finding a successful balance can be tough.

"Innovation pulls leaders in multiple directions," says Sam Hunter, a psychologist studying innovation at Penn State University. Learning when and how to employ each mindset will help you manage the innovation process effectively.

Related: 3 Ways to Think Outside the Box

These four tips can help you encourage creative ideas while keeping your business safe.

1. Accept all ideas at first. At the beginning of a creative process, while you're generating ideas, you want to be open to any and all suggestions. "For truly creative thought to occur, team members must believe it is okay to put forth different -- often strange -- ideas," Hunter says. Cultivating an environment of openness will create a sense of safety.

Assume that every idea has the potential to be great. "A leader must serve as a champion of novel thinking in early stages," Hunter says. A terrible idea could inspire a great one, so encourage people to take risks and give them a safe space to do that.

2. Aim to improve ideas, not criticize. Encourage a lively debate and strive to make ideas better. The original idea might seem outlandish, but you can raise specific concerns and solutions that help your team hone the idea. It's an iterative process. With each improvement, the idea becomes stronger and more feasible.

Be wary if you find yourself nixing ideas as soon as they're spoken. "Criticism too early is a sign that someone is resisting simply because change is difficult to manage and it may be more work for them," Hunter says. Improve an idea as much as you can before you pass any judgment.

Related: The Biggest Mistake Small Businesses Make in Brainstorming

3. Create low-cost sketches or prototypes. After the initial brainstorm phase, pick out several ideas that are most exciting to your team. Choose a mix, including some that seem risky, and find low cost ways to test them out. "Spend some time letting that idea come to life," Hunter says. "It has to be far enough along in development that a proper evaluation can be made."

The key here is to test ideas quickly and cheaply. You might work on a low-cost prototype, sketch out a plan, or run it by a few focus groups. An idea that seems silly on paper may be highly effective in practice.

4. Be skeptical before you spend. Once you have a sketch or prototype, be as critical as you can. "The skepticism lens should be brought out when cost is about to incur," Hunter says. The creative process is over at this point (or temporarily stalled) and practical concerns take precedence.

Gather all the information you have about each idea and judge how well each of them will help you reach your goals. Now is the time to be ruthless -- a fun idea is not necessarily good business.