Why does it matter whether your organization embraces innovation by design? We are at the very beginning of an era where the confluence of increasingly powerful compute capability, ease of starting a tech-intensive firm and massive data in a deeply networked world will drive more innovation more broadly than ever before. The rate of change and, indeed, the speed with which new incumbents enter markets and existing players fail will only increase. This means Innovation must become part of a company’s fabric and its culture to ensure success going forward. This article will dig into how to do that and why it matters.
Looking back over the past 20 years to gain a better view forward for the next 20 years, three things stand out, are surprising and instructive.
- Science, geo-politics, sports, weather, information technology and cyber are areas full of events that a year or two before the “event” prominent insiders would say were not in the realm of possibility – not unlikely but impossible, if not loony.
- While impressive, the huge growth and acceleration we have seen in information technology, social media, mobile, big data, several areas of science and cyber all exhibit patterns of the beginning of something, not a pattern of stability, maturation or even peaking. The amount of data, the amount of IP-enabled nodes and the throughput cost of compute could all scale 100 – 500x in the next decade, clearly making today barely the beginning of a hockey-stick curve.
- The simple truth, threat and opportunity is that the rate of change is increasing across all areas of life while the scale of change is expanding.
So what does all that mean? One thing is certain: being agile is not enough. Those that effectively embrace innovation at an organizational if not cultural level will fare better than those that do not. Indeed, if this is the beginning of accelerating rates of change with massive outlier impacts, then driving innovation pragmatically across an “organization” is an imperative.
If, from the top, the mission for everyone in an organization includes being innovative, this can become part of the fabric, the culture of organization. Businesses that effectively embrace innovation at a cultural level will fare better than those that do not. But there is a massive amount of fog around “culture.” I often hear that it is the insurmountable obstacle to innovation at scale and pace.
One F500 Example – Motorola
In the early 2000s, I was an officer with tech and business responsibilities at this storied firm. The culture was largely internally focused, obsessed with continuous often marginal improvements, in love with engineering and IP filings and not necessarily the monetization of IP. It was a family-oriented culture with literally generations working at the firm. The firm was failing.
The board brought in a new CEO from Silicon Valley, and we changed the company culture radically in 18 months. We did six simple things, instigated and championed by the new CEO:
- Clearly communicated a broad new mission about being externally focused, fast paced, innovative and customer centric
- Set out the behaviors we expected and that the company would reward, as well as behaviors that we would punish
- Continually “sold” (over-communicated) the rationale of why we were changing
- Made sure rewards and punishments were, indeed, publicly metered out to support the new direction
- Matched structure to mission and talent to task. (When the game changes from soccer to rugby, not all team members have a go-forward role despite prior excellent performance.)
- Eliminated active objectors and passive resistors who simulated support but were in the boat not rowing. (A third of the top 120 executives changed in about 12 months for mostly this reason).
Motorola changed its culture and performance radically in 18 months. We released the breakthrough RAZR phone, which became the best-selling phone of all time. IT, for example, became a platform for new tech breakthroughs and even had a venture arm for emerging tech. Unfortunately, shortly after that, Apple made a thing called iPhone, we made some very bad leadership talent decisions and we backed hardware over software in our largest BU.
No amount of motivation or positive innovation culture will save you from bad strategy married to poor talent decisions for key posts compounded by groundbreaking, world-class competition.
A well-communicated mission, backed up by clarity on what one gets rewarded for and punished for, is key. The rewards and punishments must be broadly, consistently and continuously metered out for the behaviors that merit either. This will drive the behaviors in the organization. Lots of organizations get the reward part generally right but fail miserably on the punishment side and then wonder why they have cultural obstacles.
Done properly, rewards and punishments drive the behaviors inside your organization. The sum of those behaviors is your culture.
Tips for building an innovation culture
Innovation must be about big and small innovation, not just inventing big breakthroughs. Almost all organizations have an untapped wealth of “innovation” in just eliminating the longstanding negative stuff confronting the rank and file daily. The front-line person in accounts payable, customer service or the distribution center in Managua may have process ideas that are innovative and high impact for the whole organization.
The simple question “What really dumb stuff do we do around here?” in the right penalty-free environment usually unleashes a torrent. But without a culture of innovation, the masses of small, incremental, continuous improvements lie dormant; they rarely surface.
Idea platforms and innovation / suggestion processes are all well and fine, but they should live inside an innovation culture where everyone thinks it’s a permissioned part of their individual mission with the underpinning or institutional agility and continuous improvement that goes with it. Again, you are not asking each person to reinvent Google, Facebook or low-cost Fusion; you are “permissioning” them, rewarding them, for innovative improvements.
To keep up with the changing external environment, an organization absolutely must be adaptable, agile, great at managing change and be very effective at the necessary but mundane underlying program management. It also means an organization must be deeply externally aware and manage emerging potential challenges, opportunities and threat profiles as far in advance as possible. No culture can remain innovative if it is internally focused and not connected purposefully to the outside world.
One simple approach to help instantiate innovation is to use “HLI” and that modern cultural artifact, PowerPoint, to drive innovation into the bedrock of the culture. I did this at several firms where PowerPoint was closer to an addiction than a facet of the culture. Quite simply, I insisted that every program update, every group or function presentation, start with HLI.
- H = Highlights: Show highlights of what the team did well. The real objective is to say thanks and acknowledge a mini win. Over time, teams start to think in terms of what they can put under H on the front page. Accomplishment and recognition of accomplishment are necessary for a motivational environment.
- L = Lowlights: Here you want to see some stretch, some failure; but most of all, you want to see some learning and experimenting. By reviewing this without beating anyone up, maybe even praising the effort, you eliminate the fear. The message quickly goes through the organization that no one got killed for stretching/trying harder and occasionally dropping the ball. This also helps kill one of the most anti-innovation elements in business which is the “under promise, over deliver” malaise.
- I = Innovation: This is simply asking what did you try that was new, what did you grab from phase two and get done in phase one, what serial process did you make parallel, what new method or tool are you using, what did you borrow from prior efforts, etc.
If anyone shows up with a presentation that doesn’t lead with HLI, you politely cancel the meeting and get them to come back later with that fixed. Over time, this quickly creates proactive activity inside teams to fill in each of the three sections. Teams start to have early conversations about how they are going to innovate, stretch and learn.
Innovation at scale requires change management
There are many stories about the initial excitement of going big on innovation that are then followed by failure and disillusionment because the leadership attention waned as the novelty of the program passed and the hard work of change management, scaling and maintaining ensued.
I will not talk about creating a culture of innovation without also teaching which change management models work best. It sounds obvious that driving a culture of innovation is change intensive; yet I almost never see a decent understanding of change management models and which one is most effective.
There are four basic models:
- Participation (the communities of interest help define the change)
- Intervention (the sponsor justifies the need for change, monitors the process and communicates progress)
The change management model that has the highest frequency of success is intervention. It is at least twice as effective as the next-best model. It requires active, ongoing leadership to continually “sell” the vision/plan even while executing it. Understanding how that works and making sure everyone understands and follows the change playbook are topics for a later article.
Suffice to say, if you were to map the change processes at most firms, it is often a spaghetti-esque inefficient, unintended sub-optimized maze. The majority of large tech-intensive programs are late, over budget or deliver less than promised output or all of the above. Most companies have never mapped it and assume all is well.
Creating a culture of innovation inside a supporting ecosystem with a modicum of useful tools and the right leadership can lead to great success. Innovation is a pragmatic, broad-based journey, not a fad-centric exercise. Done well, it is the key to being effectively agile and is a concrete force multiplier. It may well be the only sustainable competitive advantage over the next decade. Do you have a culture that can innovate broadly, or do you have a silo-ed innovation team or champion or campaign?
Toby Eduardo Redshaw is CEO of Kevington Advisors and a leading authority on leveraging modern IT for competitive advantage. He has 30 years’ experience leading in change-intensive environments from both business and CIO perspectives at FedEx, Motorola, American Express and Aviva as well as several startups. He has served on several boards, both private and public. Toby was the founding chairman of the Kellogg Innovation Network and was chairman of the RosettaNet Council in Telecomm. Contact him at Toby@kevingtonadvisors.com.