Monday, January 16, 2012

Is it a fools errand to try to create a culture of innovation?

I was reminded of the Forrest Gump mantra recently - stupid is as stupid does - and it got me thinking.  Strange, almost ironic, isn't it, that a saying like that could make one stop and think?  Or perhaps I'm just living the mantra.  But there's a deeper meaning here for innovators, and for those who babble endlessly about creating a culture of innovation.  What are some of the challenges?

First of all, most "cultures" aren't designed.  When Timmy and Jane decide to build an entrepreneurial company, they are doing so to solve a problem or bring a  new product to the world.  Most start-ups and entrepreneurs give exceptionally little thought to esoteric words like "corporate culture".  There are far too many pressing issues to face.  Second, culture is to a great extent driven by vision, strategy and, most importantly, compensation.  No matter how much any executive talks about the need for innovation, if employees' compensation isn't linked to innovation, its all just talk.  Third, since many firms lack a clear strategy and try to be all things to all people, the products and services they create necessarily have to address all needs and are tailored to the late majority and the laggards rather than the early adopter and early majority.  Want to know why your firm can't create a culture of innovation?  It didn't start out thinking about the importance of innovation, it didn't create a culture of innovation as it grew and it doesn't value or compensate people for innovation now.  Further, the customer base isn't all that keen on innovation.

Once an entrepreneurial firm achieves some reasonable size, their intent shifts from disrupting the market to defending their turf.  As firms scale and grow, they lose the sense of innovation and disruption and become very much like the firms they displaced - more interested in defending existing customer relationship and markets and less interested in innovation.  As that shift happens, business frameworks, service models and compensation schemes all band together to create a business as usual framework that is about providing for the needs of existing customers and defending the firm against disruption.  There's little incentive, motivation or focus on innovation.  The culture is increasingly attuned to short term profitability, defending market share and position and incremental improvements to existing products.
In the face of this hardened business model many firms are now becoming aware of the need for innovation - and not just occasional innovation or serendipitous innovation, but successive, repetitive innovation.  That's when many people realize that existing corporate culture - focused on efficiency, short term financial goals and defending the status quo - must be changed to become a "culture of innovation".  How's that going to happen?  The existing culture was built haphazardly in most cases, in response to shifting strategies and needs over time.  The culture can't simply shift overnight - the whiplash would be too great for the company, the processes and the people who do the important work.  Like eating an elephant, cultural shifts from efficiency to innovation must be completed one bite at a time, over a long period of time.  Which will doom the attempt since most executives and managers can't bear to think in long time horizons. 

It's the difficulty of creating a culture of innovation that led Apple to develop the Macintosh in a skunkworks, and is what makes the magic of 3M and Google so enticing.  But the reason these firms are successful and have a "culture of innovation" is that that's what their original structure, form and intention was.  Look no further than the development of Gore:  Bill Gore was determined to create a new kind of company and started from the beginning with a plan and a strategy that focused on eliminating hierarchies, highly integrated teams and communication and the support of innovation across the organization.  Gore, and other companies like that, were built from the ground up for innovation.  Most companies are now trying to attach innovation scaffolding to an existing business as usual culture, and finding the connection treacherous at best.

So, the question becomes - is it a fools errand to try to create a "culture of innovation" in an existing company that does not emphasize innovation?  Should all innovation in these firms be attempted in a skunkworks?  Can we shift teams and people to begin to embrace innovation as part of the culture?  I think the answer is "yes" - the only other response is to accept a slow slide into oblivion.  What we need to do now is understand what it will take to shift a business as usual culture to a culture that accepts and then embraces innovation.  That is not a quick journey, nor is it an easy one.  Many people, many trusted perspectives and long held beliefs may need to fall in order to achieve that.  Time, patience and commitment - attributes not often attributed to American business - must be applied to make the shift.

Eventually, though, it is the people of an organization who determine the culture.  What's good about this fact is that people are rationale actors - often concerned about change but open to influence by visionary leaders who show the way and by programs that demonstrate innovation is rewarded, not degraded.  Executives must decide that innovation is important, and communicate that decision through actions that demonstrate the importance of innovation:  what they value, who they promote, how they compensate and reward.  Middle Managers must become innovation accelerators rather than efficiency experts.  Clearly, this will take time, focus and energy.  And that's why a culture of innovation is so unusual, and so difficult to achieve. 
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posted by Jeffrey Phillips at 2:09 PM


Blogger Jeffrey Baumgartner said...

Nice article, Jeffrey. But one remark: research has shown that financial compensation is not very motivating (see for instance, Dan Pink's book, Drive). Indeed, substantial financial rewards for innovative ideas seems actually to reduce the level of innovation.

Rather, enabling employees and giving them autonomy to develop their ideas into projects has been demonstrated to be highly motivational. And, indeed, companies like Gore, 3M and Google are all renowned for doing precisely that.

Moreover, if you think about it, giving individuals and teams the freedom to develop innovative projects and rewarding them through recognition as well as by giving them the freedom to launch challenging, new projects is surely a wonderful recipe for creating a culture of innovation.

Nevertheless, as you note, this is a massive change that many organisations, particularly those lacking trust, are unlikely to be willing to make.

Keep up the good work!

Jeffrey Baumgartner

6:48 AM  
Blogger Jeffrey Phillips said...


Strange to reply to a person with the same name!

I agree and did neglect to mention the fact that intrinsic rewards, especially the ability to develop and pursue an idea is exceptionally valuable. However, in today's command and control organization and business as usual framework defined by stovepipes, it is very hard for a person to extend an idea beyond their frame of reference or responsibility without encountering obstacles.

I do agree that intrinsic rewards are important and that's something I should have addressed in the post.

7:27 AM  
Blogger Unknown said...

Wisdom is before him that hath understanding; but the eyes of a fool are in the ends of the earth. (Proverbs 17:24)

I suppose that any quest to shift culture is a foolish one, and perhaps we shouldn't assign such a negative connotation to the term. To remain competitive in a world where new dimensions of innovation are naturally emerging in the developing world will require more than staring at our feet.

Chinese manufacturing innovation can be partially attributed to a more collective orientation to problem solving. There is no longer a 'shared' corporate culture globally. We will need to invent new organizational cultures or watch as more and more wealth shifts into more innovative hands.

3:26 PM  

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