Wednesday, January 30, 2013

The innovation chicken and egg problem

Here's a question that has befuddled even the best innovation thinkers, and has led to countless articles, white papers, surveys and other analysis:  which is more important to innovation success, leadership or culture?  Does an engaged leadership engage an organization and direct its energy toward innovation, or does a sustained culture engage the organization regardless of the will of the leadership toward more innovation?  It is a classic chicken and egg question, and one that my clients and our consultants at OVO deal with constantly.

The fact is that both are vital, and both are predominant depending on the organization.  But the fact is that culture doesn't ring you up one day and ask you to drop by to provide advice about innovation.  Typically its the leaders of an organization that do that.  So it's far easier to place emphasis on leaders and leadership as the key innovation driver, since we can single out a small team of executives and point the finger of blame at them.

That's what Hayden Shaughnessy and Scott Anthony just did in a recent Forbes article.  I was alerted to the article by my good friend Paul Hobcraft, who has also had much to say in this vein.  Anthony suggests in his interview with Shaughnessy that the "One Innovation Rule that Matters Most" is that leadership is vital.  Anthony goes on to say that:
Any company that thinks it has an innovation problem in fact has a leadership problem.”
All well and good, and in may ways this is true.  In fact I wrote about this very topic recently, making the argument that poor prioritization, poor vision and little funding by executive teams lead to a lack of innovation.  My article was based on a recent innovation survey by McKinsey, so the assertions are backed by survey data.

The other side of the coin

However, claiming that an innovation problem is always and everywhere a leadership problem seems a bit too narrow to me.  In my work I've found many executives who are exceptionally focused on innovation, who are willing and able to fund innovation and set clear priorities, but they face a significant hurdle called corporate culture.  You see, no matter how much a small senior team of executives works to influence a culture, that change happens incrementally and slowly if at all.  A leader who is not focused on innovation doesn't necessarily distract a culture that is engaged with innovation (see 3M as an example), and far too often we are caught up making examples of charismatic leaders (see Steve Jobs as an example) that we use to make the case that leadership is what matters alone.

When you see the phrase "Culture eats strategy for breakfast" on a regular basis you begin to grasp the subtle and intangible power of corporate culture.  The unfortunate aspect of corporate culture is that senior executives don't have nearly as much impact as they'd like to think.  Culture is somewhat immune to leadership edicts, since the culture is long established, and recognizes that leaders are temporary.  When leaders are in their roles on average less than five years, the culture will patiently wait out the leadership.  What changes culture is a burning platform.

Large and established cultures will change, and they will change swiftly when threatened.  Too often executives create plans and strategies that keep the culture relatively comfortable and safely ensconced in its existing image of itself.  A burning platform - an immediate threat to the business, a sudden shift in consumer demand, a new law or regulation which changes the playing field - is often what will force a culture to change.  And note that the culture is something that every employee contributes to.  Their expectations, attitudes, behaviors and actions in aggregate make up the culture, so every employee contributes to the shape, size and attitude of the culture. 

Don't leaders establish culture?

You'll be thinking right about now that my arguments are interesting but ultimately futile.  Don't leaders set culture, or at least influence it?  For the most part, most leaders don't understand the true power of corporate culture and fail to understand how to change it dramatically.  Their attempts to change the culture only shift thinking and behavior temporarily, since executives fail to stay engaged with cultural change over their tenure.  The real leadership necessary for innovation to take root is both a clear strategy, well articulated and funded, as well as consistently engaged leaders who work to slowly shift the culture to a new way of thinking, incorporating innovation as a consistent part of the everyday activities, rather than an occasional moonshot.

Leaders don't want to spend a lot of time on culture change, because they realize the work necessary to dramatically change a culture and they feel they don't have the time or energy.  While they may demand innovation activities, they won't ultimately succeed at "making the firm more innovative" until the culture changes as well.

Which comes first?

Which comes first then?  Leadership or culture?  Well, since the culture is a monolith made up of the expectations and behaviors of the entire company, few organizations can start there.  Leaders engage experts and consultants to help improve innovation performance, and many honest innovation experts will frankly tell the leaders that while leaders can impact innovation activities, they can't impact innovation engagement and sustainment without a focus on the culture.  It's easy to run innovation projects, which will be successful in the short run, but which ultimately don't change the culture in the long run, and as soon as the leadership changes and priorities change, the culture reasserts itself and innovation is banished.  Unless there is a string of leaders who are committed to innovation, or a significant burning platform forces an organization to change, or a charismatic leader drags his company kicking and screaming into a new paradigm, its the culture that matters.

And before you suggest that Jobs demonstrates that leaders matter, know this:  Apple was probably a quarter or two from bankruptcy when he took over.  Jobs was a charismatic leader, yes, with a big vision, who rekindled the original culture at Apple, but he also had a significant burning platform.  Apple had to change, and to its credit it has remained an innovator.  Time will tell whether that attitude has permeated the entire culture.
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posted by Jeffrey Phillips at 6:17 AM


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