Want a Culture of Innovation? Here’s how to create an organization focused on freethinking, an entrepreneurial spirit, and sustainable value creation at all levels across all functions.
Editor’s note: This article based on Kaplan’s upcoming book, The Invisible Advantage
Every organization is designed to get the results it gets. Poor performance comes from a poorly designed organization. Superior results emerge when your business strategy and organization fire on all cylinders in symphonic unison.
Savvy leaders shape the culture of their company to drive innovation. They know that it’s culture–the values, norms, unconscious messages, and subtle behaviors of leaders and employees–that often limits performance. These invisible forces can also lead to real business growth when they inspire employees to innovate – through new products, process improvements, and better customer experiences.
Here’s how to influence the soft stuff:
BE INTENTIONAL WITH YOUR INNOVATION INTENT
Most corporate visions and missions sound alarmingly alike: Become the #1 provider of blah, blah, blah. These generic, broad-based goals might rev up sales teams, but they do little to spark ingenuity. The goal: Frame the way you want to change the world, and make it about the customer. For example, the software company Intuit–the developer of Quicken, Quick Books, and TurboTax–makes its mission abundantly clear: “To improve our customers’ financial lives so profoundly they can’t imagine going back to the old way.” Ask everyone to innovate in whatever they’re doing with the goal of making your customers’ lives better.
CREATE A STRUCTURE FOR UNSTRUCTURED TIME
It’s normal to get consumed with putting out fires and chasing short-term targets. But time is the fuel of innovation so it’s important to make time to experiment with new ideas. The software company Atlassian encourages employees to take “FedEx Days”–paid days off to work on any problem they want. But there’s a catch: Just like FedEx, they must deliver something of value 24 hours later.
Carving out time for innovation doesn’t have to mean radically remaking the corporate time clock. Simply setting aside twenty minutes in a weekly meeting to explore “new ideas for making things better” can be enough to start a cultural shift in many organizations. But, of course, something must be done with those ideas. Otherwise, instead of taking a step forward, the culture may ultimately take a giant leap backward.
STEP IN, THEN STEP BACK (WITH TOOL KITS)
Time itself isn’t sufficient to create a culture of innovation. It’s also important to show people how to innovate. Telling employees to “go forth and innovate” just isn’t enough to get sustainable innovation. With the premise that everyone has an equal opportunity to add innovation-based value, it’s essential to help jump start the process. An increasing number of organizations now provide “Innovation Toolkits” to promote and foster innovation across business units and functions. Many are freely available like the Stanford Design School’s Bootcamp Bootleg, Intuit’s Catalyst Toolkit, and Adobe’s Kickbox. The public sector is even getting into the innovation act these days with the Australian government’s Public Sector Innovation Toolkit, and the Community Collaboration for School Innovation Toolkit created by the Colorado Department of Education.
MEASURE WHAT’S MEANINGFUL
Management guru Peter Drucker once said, “What’s measured improves.” Said another way, You get what you measure. For many companies, coming up with ideas often isn’t the problem. The challenge is turning them into something real that delivers an impact. So what metrics should you use?
First, you have to figure out what to measure. In its early days, Facebook measured how often its users returned to its site. Everything they did focused on blowing out this single metric. OpenTable, the restaurant reservation service, focused on two metrics that allowed it to become the dominant player: growing the numbers of restaurants in its network and increasing the number of consumers making reservations.
Customer-oriented numbers are clearly essential. But other indicators can drive internal innovation, too. Here are few metrics that promote organizational innovation:
- Percent of revenue from products or services introduced within a given period of time (e.g, the last fiscal year).
- A pipeline of new ideas that includes a set ratio of short-term products or services and longer-term game changers (e.g., 75%-25%).
- Percent of employees who have been trained and given tools for innovation.
- Percent of time dedicated to discovering, prototyping, and testing revenue-generating new products, services, or business models (e.g., 10-20%).
GIVE “WORTHLESS” REWARDS
The most powerful and robust type of recognition–the kind that shapes organizational values–often occurs more informally. Several members of Colgate-Palmolive’s Global R&D group initiated a “recognition economy” by distributing symbolic wooden nickels to colleagues who had made noteworthy contributions to their projects. The fortunate recipients didn’t hoard their winnings. They passed them on to others who had chipped in on projects that they themselves had led. Nickels are now distributed in meetings, but it’s not uncommon for employees to return from lunch and find a few nickels anonymously placed on their desks. It’s a fun and validating idea; such informal acknowledgments encourage a collective spirit and help promote the free flow of ideas.
The goal is to “formalize” informal rewards. Informal acknowledgments encourage a collective spirit and help promote collaboration and the free flow of ideas. You don’t have to dole out wooden nickels to have this type of impact. Just publicly giving credit to others can go a long way in changing people’s experiences, reinforcing assumptions, and thus promoting more of the behavior you’re giving credit for. A recognition economy based on “conversational credit” can become the basis for dramatically shifting behavior. Of course, you need to decide what behaviors you want to recognize (such as collaboration, creative problem solving, etc.). And once you’ve created your short list, you’ll likely be able to spot these behaviors more frequently and then recognize them on a more consistent basis. Doing this creates a snowball effect.
NO RUBBER STAMPS!
Every company’s culture is inherently different. So when you’re cultivating innovation, you’re cultivating a unique system. Which means you have to be thoughtful about your approach. Whatever you do, it should align with the values of the company and with the company’s goals. And in each case, you have to make it easy and rewarding for the people whose roles and dynamics influence the very innovation culture you’re trying to cultivate.
Creating a culture of innovation is a process that can take some time. When done right, an organization’s culture can become the “invisible advantage” that leads to a continuous stream of incremental improvements, major advancements, and if you’re lucky, even a disruptive innovation that helps grow your business for years to come.
Pre-Order the book and instantly get a FREE toolkit for creating your own culture of innovation…
The Invisible Advantage goes on sale in January 2017. Pre-Order the book and then email the receipt to Toolkit@leapfrogging.com and get an entire Toolkit for creating your own culture of innovation absolutely FREE. For more information visit http://bit.ly/CultureToolkit.
Soren Kaplan is the author of two bestselling and award winning books, Leapfrogging and The Invisible Advantage. He is a former corporate executive, an affiliated professor at USC’s Center for Effective Organizations, and founder of InnovationPoint. Based in Silicon Valley, he has been recognized as a Thinkers50 global Thought Leader and delivers keynote speeches, leadership development, and consulting on business strategy and innovation throughout the world. For more information about Soren visit www.innovation-point.com.