Wednesday, January 08, 2020

Culture and innovation bias - the first building block

I'm writing a series of blog posts about the fundamentals of innovation success.  In my previous article I wrote about the importance of fundamentals in any activity, using music and practicing scales as an analogy for understanding the fundamentals of innovation. 

In this post I'm going to be writing about two very interconnected issues - organizational culture and the bias for, or against, innovation.  This is a critical fundamental attribute for successful innovation, not just on a project by project basis, but enterprise wide.

Definition of Culture

I won't spend a lot of time on the definition of culture, but it is worth describing what culture "is" in this context and why it matters.  Culture is the aggregation of all the historical record of the company, the stories the company tells about itself, what it values, what it rewards.  It is all of the formal and especially informal decision making apparatus.  It is the set of beliefs and behaviors that form and structure how decisions are made and how work gets done.  In this regard, culture is an exceptionally powerful but intangible force.

What our cultures focus on now

Over the last 20-30 years, we've trained our cultures to value efficiency, cost reduction, a lack of risk and variance and especially stability.  This has been brought about by a range of management thinking, including Six Sigma and Lean work, right sizing, outsourcing and cost containment.  There is nothing wrong with these ideas - they have made many organizations profitable and effective.  However, they do not lead to growth or differentiation, and have established a very conservative mindset in many managers and reinforced the concept of efficiency in the culture.

How to assess your culture and its bias

If you want to know what your culture reinforces about certain ideas or topics, it is easy to get feedback.  Simply suggest a more radical idea and wait the feedback.  If the feedback starts with "tell me more" or "we could" or "how might we" then your organization may have some tolerance for exploration and risk.  If the responses start with all the reasons why the idea won't work, or worse, why the existing bureaucracy or organization simply won't tolerate the idea, then you'll know the bias of the organization.

Most companies and organizations have a bias for efficiency, predictability, low variability and low risk.  This mindset and cultural preference conflicts with innovation.  So, the prevailing bias for many companies is not necessarily against innovation, but for efficiency, and cultures and their biases are difficult to change.

Readiness to change/bias for innovation

To innovate once, your teams can often scale the organizational bias against innovation momentarily, but to innovate repeatedly and in many sectors of your business you must address the prevailing cultural bias.  As anyone who has worked on culture can tell you, changing a culture happens in only two ways:  really slowly over time, just as the culture was built, or really rapidly.  The problem with the "really rapidly" option is that culture only changes really rapidly under an imminent, observable threat that cannot be avoided. 

Companies and people will jettison long-held beliefs or operations when their company's existence is at risk.  However, this is a really difficult time to innovate because everyone is focused on simply surviving.  So we will have to accept that cultural change and embracing an innovation bias is something that happens over time.

How can you build a bias for innovation

Building a bias for innovation in your organization is relatively straightforward, but it takes management engagement and perseverance.  Just as a bias for efficiency was built over decades, a bias for innovation will be built over years, not weeks or months.  There are a few key activities or attributes you can focus on to help:

  1. Communication.  If innovation is important to the organization, then it should be communicated constantly, and followed up with action.  Communication should occur at all levels, reinforcing the importance of innovation, and identifying the innovative actions that are happening.  Companies should communicate both the innovation successes, and the projects that may not have been successful, but where valuable learning occurred.  
  2. Compensation.  If you want your organization to change its behaviors and bias, then you must change its reward structure.  People and organizations do what they are rewarded to do.  Thus, look at your compensation and rewards structures and programs to see how you can more frequently and more transparently reward innovation, outcomes and activities.
  3. Evaluation.  Every organization evaluates its members, employees and teams.  Most organizations do not evaluate their people or teams based on innovation activities or outcomes.  It's rare to find innovation as a focus of an annual review or an evaluation.  If people or teams aren't evaluated on innovation engagement, then they'll turn their attention to what they are evaluated on.  If you want to shift your bias toward innovation, change what you evaluate.
  4. Find the flag pole people and encourage them to lead.  Every organization, every team has what I call "flag pole" people.  These are people that may or may not be in formal positions of power but whom others in the organization look to for influence and ideas.  Identify these influencers and use them to shift the thinking and behavior of others.  
  5. Adopt good analogies from other businesses.  While I don't know if Microsoft's approach to "learn it all, rather than know it all" is working, it is definitely a step in the right direction.  As the CEO keeps repeating this mantra, he is establishing a theme for the business and setting direction for the company, opening up to new concepts and new ideas not developed at Microsoft.  This is a simple theme with profound implications.  It sets out a new way of thinking and working (learning and discovery) and allows executives and managers to gently influence and correct people who are still in the older mindset (know it all, internal focused, not exploring or learning).
Infection or conversion

Your company can be infected with this thinking, in that new thinking and some new cultural phenomenon can be demonstrated by one or two teams momentarily.  However, you will find that like many other infections the anti-bodies will soon seek to snuff the infection and revert to the norm.  Your organization will need to find a few teams or business units to try out a new cultural approach and bias, and will need to infect them through some of the steps listed above, but will also need to wall off or inoculate these teams from the cultural bias that will react to new thinking.

As you do that, the rest of the culture will be watching, watching to see what the executives do and say, watching to see the results and what happens if the results aren't stellar, waiting to see if this is just another flash in the pan or an ongoing change with deep commitment.  In other words, is the attempt to change a cultural bias a one time activity that is easily snuffed or is there real management commitment behind it?  Will the organization commit to converting to a new normal - a new bias for innovation?


Any team or organization can innovate once or in good times sporadically.  That's because the prevailing culture will ignore or tolerate some dissonance, and times may prevail on the culture to ignore or overlook risk and variability periodically, but cultures will inevitably snap back to their status quo.  Corporations simply cannot afford to fight their own cultures or innovate only every once in a while or based on what the culture is willing to tolerate.  We are in an era where consistent, continual innovation is a matter of survival.

Without the building block or fundamental attribute of a bias for innovation within the culture, you simply cannot sustain innovation, especially transformative or disruptive innovation that drives new organic growth.  With this realization, there are a couple of questions to answer:

  1. Is it worth the effort to introduce change to the culture to create a bias for innovation?
  2. When should we start?
  3. Where should we start?
The answers in reverse order are:

  1. Start with the most important influencers in your business.  These may not be the most important executives but the people that others look to for cues about how the business operates.  You will need executive support as well, but moving the influencers and important middle managers makes all the difference.
  2. Yesterday.  You should have started yesterday, but today is a good day to start as well.  Waiting only postpones and perhaps increases the amount of work you need to do.
  3. The investment and costs associated with changing a culture are surprisingly low.  The problem isn't out of pocket dollars, but management time and attention over a period of time.  That's the investment side.  The return side on the inevitable ROI equation is:  can we return more on this investment than we put in?  Evidence shows that good innovators in every industry have better profit margins, better stock prices and grow revenue faster than their less innovative competitors, so you'll need to be the judge, but evidence shows creating a bias for innovation is a consistent winner.
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posted by Jeffrey Phillips at 8:30 AM


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