Friday, July 20, 2012

Culture - a powerful innovation barrier

I was talking with a client recently who understands the value of "innovation culture" but who so far hasn't been able to quantify the impact or outcome of working to shift the existing culture from status quo or "business as usual" to innovation.  I think this is probably one of the most important activities any firm can undertake.  After 30 years of quality management, lean, Six Sigma, right-sizing, outsourcing and other management philosophies, most organizations have efficient, rigid, inflexible operating models and cultures that are very good at cranking out the same products, and very poor at creating new products.

What's interesting is how nebulous and yet how powerful corporate culture can be.  If asked, we can produce an "org chart" that describes how the organization is structured, at least on paper, which also should suggest reporting hierarchies.  Yet you simply cannot draw, or chart out on paper your corporate culture.  It is clearly present, yet maddeningly transparent.  Corporate culture presents its strength only when you try to change it.  That's when you'll know how powerful, how stubborn and how pervasive your culture is.  And when you'll realize how limiting your culture has become to your attempts to change.

In my conversations with my client, I was asked what the value proposition of changing the culture would be - could we state the reasons why we should change the culture, and could we quantify the value of the change.  This is a bit like asking the value of exercise or dieting based on your health and longevity.  While regular exercise, eating well and other healthy habits may contribute to a longer and healthier life, it won't prevent you from an early death if you contract a communicable disease or step in front of a bus.  In other words, the investments have a real, and positive return, but can't be measured now, and are affected by externalities beyond our control.

But another question arises:  is your culture really responsive and valuable to what you do now, or have you simply adjusted your goals and your work to the culture as it exists?  If you can't define the culture, and if you can't shape the culture or worry about changing it, are you simply accepting your corporate culture and working around it?  Won't your culture become a potential barrier regardless if you decide to pursue innovation or not?  In other words, you'll have to face down, revise and bring the culture under your direction and control at some point in order to make any effective change.  Innovation just seems risky because it requires you to change your culture for an uncertain outcome.

Most likely, you can't quantify the value of your existing culture, or its contribution to your bottom line.  Why would you seek to understand what the value of a new culture can be if you have no baseline to compare to?  Does your organization even understand how powerful your culture is, and what a significant potential barrier it is to growth and change?  Do you understand why your culture will block innovation efforts, and why that is a problem?  Is your culture the elephant in the room, the attribute that everyone knows must change but that no one wants to face down?

It's important to have a strong, well-communicated and pervasive culture, as long as that culture supports and reinforces your strategic goals.  Inevitably culture and bureaucracy become more about self-preservation and inertia than they do about growth and change.  You can't define your culture, you can't chart it, you can't contain it but you know it governs how your organization works.  When you seek to become more innovative, one of the simplest, least defined attributes of your organization will become the biggest barrier.  But it's not just innovation that the culture will resist.  It will resist any change, any growth, any shift in momentum.  Getting a handle on your culture and bringing it under your control, in line with your goals and strategies, is the most important activity executives can do now, because more, and more rapid, change is about to unfold.  Firms that can innovate, grow, shift positions and markets will succeed.  Those that struggle with change, those that are inflexible or lack agility will suffer.  Mostly because their culture, a nebulous, invisible, pervasive but powerful force, resists change and sustains status quo.

It's not just innovators who need a responsive culture in line with corporate strategies, but it is innovators who need a responsive culture even more.
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posted by Jeffrey Phillips at 5:37 AM


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