Building a Culture of Innovation

by Kevin McFarthing

Building a Culture of InnovationI’m a big fan of the book Obliquity by John Kay. Despite the clumsy nature of the word, the message is simple. Objectives are rarely achieved in straight lines, you get there by oblique means. So if you want to achieve something, don’t aim directly for it, do the right things and you’ll eventually get there.

Let’s take shareholder return as an example. A laser sharp focus on shareholder return is less likely to realize that objective than an emphasis on doing what the business is supposed to be doing, for example delivering great products to happy customers. Focus on doing the right things for the business and, surprise surprise, the shareholder returns follow. Kay calls this the “profit seeking paradox”.

Kay gives many examples, another of my favourites compares Paris to Brasilia. Paris is a city that grew in a mostly unplanned and designed way, with many people doing great things along the way. Brasilia was designed and planned. Which is the greatest city? I strongly recommend the book; it’s short and very easy to read.

Reading the book again made me think about culture and, more specifically, a culture of innovation. The best and coincidentally simplest definition I’ve encountered for culture is “the way we do things around here.” It is quite common to read about establishing the right culture within companies, after all who wouldn’t want to do that? Doesn’t culture eat strategy for breakfast? It is a laudable objective, but the danger is that trying to plan and build a culture as a tangible objective is unlikely to work.

Of course you should talk openly about the culture you want, but don’t treat it like a measurable objective. First of all it’s very tough to reach a common understanding of what it means, and consequently to measure. Next, it’s a moving target. You may never know when you get there, and you never stop developing. Finally it’s something that senior leaders can influence but not totally control; and the more they try to do the latter the more negative consequences ensue.

It’s about aligning what you say with what you do. Consistency avoids confusion. Of course there will be the occasional contradiction but it should always be intended and interpreted as doing the right thing. You will only build the right culture by taking the right actions.

In the context of an innovation culture, it includes being explicit about the role of innovation in strategy; encouraging diversity in creativity; having a balanced portfolio; providing the right resources while demanding that people work efficiently; embracing Open Innovation; applauding initiative; supporting competent failure; supporting brave people taking proportionate risks; promoting the right people; rewarding the right behaviour and results. It is also important to measure the right things by focusing corporate, team and individual objectives on innovation output and process metrics.

Do and say the right things consistently and one day you’ll wake up to find you have a culture of innovation, as well as a successful business.

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Kevin McFarthingKevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.

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  1. Excellent post. One question for clarification: You talk about embracing Open Innovation. I have seen so many descriptions and flavors of Open Innovation, it can mean many things. What is Open Innovation to you?

  2. Hi David. The Henry Chesbrough definition of Open Innovation is “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.”

    The bulk of application of OI is to find ideas, technologies and products outside your company that you can use to develop new products and services that you sell. The strategic logic is compelling – Kraft Foods estimate that 98% of IP in the food industry exists outside Kraft; Procter & Gamble believe there are 200 times as many experts in their field outside the company than inside. These and many other examples underline why OI makes sense.

  3. Leaders must make sure they don’t squelch the culture of creativity and innovation they strive to create. An example: A client of mine creates and produces TV series. It’s a constant struggle to come up with new marketable ideas. So he pulls together his development team for regular brainstorming and idea development sessions. But he’s disappointed with the results. He complains that his people aren’t generating ideas. But I see what happens: he outshines them. He’s a torrent of ideas, and they’re timid about putting theirs out on the table. He needs a process that will encourage them and rein him in a bit. He must also ensure that he’s not expecting things of them that are beyond their skills. Some who are good at taking an idea and running with it are not good at coming up with the idea in the first place.
    Good policies, processes, and tools can shape the desired culture. But make sure you don’t get in the way.

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