Tuesday, February 21, 2017

How to tell if innovation matters to your CEO

Thank the good folks at PWC for their latest survey of executives about innovation.  The new article, optimistically entitled "Unleashing the power of Innovation" was recently published and surveyed approximately 250 senior executives about innovation.  While interesting, there's not a lot "new" in the survey, and the authors give away the biggest challenge in the overview, by stating that:
the problem is that while the eyes of the CEO are fixed on innovation, the body of the organisation may not be following. The ‘antibodies’ that inhibit innovation include a culture that sees it as separate from the mainstream operations of the business and is slow to commercialise new ideas. 
And, the survey proves the authors are correct - or that the authors actually cared about what the executives said.  Over 57% of the executives referred to culture as one of the top three barriers for innovation. That's more than 13 percentage points over the second barrier, which is strangely "strong visionary business leadership".  You'd think that in the second case the executives would be pointing the finger at themselves.  But let's focus on culture.

The critical question
The authors state several times that innovation is moving up on the CEO's agenda.  If innovation is important to CEOs (which I believe) and if culture is the biggest impediment (which, by the way, is also almost always true), then there's a simple method for discerning if innovation is important to your company. It's the answer to this question:
Is the CEO and his or her senior staff working furiously on reducing
cultural barriers to innovation?  
If you see that the CEO and senior leaders are working on reducing uncertainty and risk, realigning compensation and rewards schemes, focusing their time and commitments around innovation, encouraging new ideas, balancing the need for efficiency with the need for creativity, then there's a good chance that innovation will flourish.  If the CEO and others talk about innovation but don't do much to mitigate a culture based on efficiency, repeatability and reducing risk and uncertainty, then either they don't understand the impact that culture has on innovation (best case) or do understand and simply don't have the time or energy to change the culture (worst case).

What's changing?  What's staying the same?
If innovation matters to your CEO, if 57% of the respondents recognize culture is a barrier, then you know what to look for.  Evidence that senior leaders are doing everything they can to create a balance between efficiency and innovation.  These two don't have to be mutually exclusive, or even competitors. They can co-exist, but it takes a special culture to encourage co-existence.  What changes have been rolled out in your culture lately?  Do they reinforce innovation or efficiency?

There are several real challenges inherent in this issue.  The first is that culture, while powerful, is intangible and omnipresent.  You don't change culture by engaging in a few training exercises.  It has to start from the top and roll out through the organization.  Which leads to the second issue:  cultural change takes time, and it's easier to recover a once innovative culture than to switch the thinking on a culture that hasn't ever been innovative.  A third challenge is a corollary to these:  if innovation is considered an activity or an occasional project, there shouldn't be a need to invest the time and energy to change the culture.  This skeptical response to cultural change demonstrates the lack of understanding about the power of culture as it relates to innovation.

What can you do?

If your teams want to innovate, the organization must change the culture to at a minimum accept innovation activities and at best embrace innovation and its ingredients: risk, uncertainty, variability, discovery and exploration.  The way to start is to communicate from the top, reinforce the communication with investments and activities, sustain the commitment to change over time, have senior leadership actively engaged in innovation successes and failures, and change the rewards and recognition systems.   But, again, if innovation is a "one and done" activity, why would you go through all of that effort?  And does anyone last long enough in a senior role to commit to all of this change with at best uncertain outcomes?
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posted by Jeffrey Phillips at 5:23 AM


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