Here’s a proposition – a company will never succeed with innovation unless the culture is supportive. It’s best encapsulated in the phrase “culture eats strategy for breakfast”, attributed to Peter Drucker, the noted management guru. In this, the first of four articles focused on creating a culture of innovation, building on a previous blog, I propose that action is what changes culture, and there is a specific sequence to be followed.
Culture can be defined as “the deeply embedded, self-reinforcing behaviours, beliefs, and mindset that determine ‘the way we do things around here’” (Sean Culey). Much has been written about culture change, which I don’t want to repeat, although the #culturecode initiative has some really good presentations on company culture (thanks, Paul Hobcraft). Instead I’ll focus on the key issues for innovation, from a perspective of experience, theory and, of course, opinion.
If you want to launch more new products and services, or a new business model; all with greater revenue, with a much greater impact than at present; then culture change is highly relevant. Doing the same things with the same people in the same way generally tends to deliver less return with time – the world moves on while your company stays in the same place.
A 2011 Booz report on innovation (entitled “Why Culture is Key”) showed that companies with both highly aligned cultures and highly aligned innovation strategies have 30 percent higher enterprise value growth and 17 percent higher profit growth. It’s clear – culture drives output, and if it’s misaligned it can inhibit innovation.
Companies can develop the best thought-out strategies and plans, but without cultural alignment they are doomed to failure. So how does a company change its culture? The first point is not to focus directly on the culture, but on actions that will change it over time. This concept is best captured in the excellent book, “Obliquity” by John Kay; essentially one often reaches goals in an indirect manner. In this context, culture change is the same as shareholder return; it’s best delivered by a focus on taking the right actions for the business, not targeting the goal itself.
It’s important to state a vision of the future, and the values by which the company will operate. It’s good to want an innovation-oriented mindset. But it needs more than that; my view is that doing the right things results in the right mindset when culture change is needed. Of course there will be a self-reinforcing iterative loop, but it’s a mistake to focus wholly on vision and mindset.
In terms of innovation culture change it’s more important to decide what that will look like in substantive terms, by focusing on tangible OUTPUT. For example, what results do you want to achieve; what percentage of your revenue do you want to come from innovation, and by when? Then you can start to build a plan to implement the actions that will ultimately reach the goal, with the need for innovation output ideally defined in strategic portfolio terms.
Another important feature, which should be established at the start of the journey, is to ensure there is a common language for innovation.
Then, how will the change in innovation be achieved? The next area to address is the MANAGEMENT SYSTEM. This includes Stage/Gate but is a whole lot more. It also considers, among other things:
– How to manage across departments and silos with self-managing, multi-functional teams.
– How to implement operational portfolio management.
– How to balance management control and intrapreneurial spirit, with a tolerance for failure and “walking the talk”.
Some companies believe that installing an IT-based innovation management system will cure the process problems and create the right culture. I would urge caution on this. The best way is to approach such systems with the objective of efficiency in mind, and ensure that that they conform to your wishes, not the other way round.
The final area to consider is the one that seems to be the subject of the vast majority of texts on innovation culture – INPUT. So many articles seem to equate creativity with innovation – “we need more ideas” or “let’s run an idea competition.” There seems to be a mistaken belief that focusing on the front end input will transform an organisation and create the culture of innovation.
Is it just a need for more and/or better ideas? If so, then (and I’m not being pedantic here) the need is for a stronger culture of creativity, not innovation.
Everything from suggestion schemes to new age mysticism has been used to engender an atmosphere that aims to draw out the creative side in everyone. One default option chosen by many companies (not one I would advise if done in isolation) is to launch an initiative to solicit ideas from anywhere in the company. This used to be a physical “suggestion box” and is now often based on internal social media. The principle is similar and, as pointed out by Tim Kastelle, still highly unlikely to change innovation output or culture by itself.
Investing more money to produce more inventions, ideally protected by Intellectual Property, will strengthen the input and increase the options for innovation. It won’t be worth anything unless it hits the market and creates value, so it can’t deliver an innovation culture on its own.
Creativity and invention are important, but as Tim points out, very few organizations are idea-poor. Creating a culture of innovation is so much more. Nobody would launch a railway line by building the engine first; the destination, route, stations and potential timetable must all be in place before the train can move. This analogy demonstrates why I believe that the order in which actions to improve innovation culture are taken is so important:
- Decide what you want – what’s the output?
- How to do it – design the management system.
- Fill the pipeline – stimulate the input.
Finally, it is essential to build and execute a plan, a roadmap of activities, priorities and timescale, of the actions to be taken to build the innovation culture; because only action can change it.
In the next three articles, I’ll focus on each of the elements, starting with Output.
image credit: polifilm.co.uk
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Kevin 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.