How to Cultivate a Culture of Innovation

Creating a culture of innovation will not only benefit the business’s top and bottom line, but it’s also something everyone in the organization values immensely. I have spoken to many professionals and managers in my network, and almost everyone loves to work for companies or startups with a strong innovative culture. A culture of innovation is for sure attractive to any employee. So then, I probed further to the same group of people and asked them to describe innovative culture. They all provided a set of characteristics you can find in management books; an acceptance of failure, psychological safety, agile, collaborative, experimental, and non-hierarchical. And I am pretty sure that these characteristics that lead to improved, innovative performance are backed up by research.

Even though the culture of innovation is so obviously good and most leaders claim to know what these cultures require, they’re challenging to build and maintain. Why is it so? Maybe it is just too difficult to change the behaviours of individuals. Or perhaps we don’t really understand innovative cultures as well as we thought so.

It is easy to fall in love with the pleasant side of innovation culture: Cross-functional collaboration, experimental, agile. But there is another facet of innovation where it is not as fun. This other not-so-fun facet creates tension, and the culture of innovation can only be successful when we manage these tensions well. In the rest of the article, we will explore how these tensions are critical in creating a culture of innovation.

The Tensions of the Culture of Innovation

1. Acceptance of Failure VS The Need To Build Competency

Innovation can’t happen if people are unwilling to explore the unknown, so it doesn’t surprise anyone that a culture of innovation should create psychological safety to stomach that failure. We all know that many innovative companies such as Apple, Google, Microsoft, Netflix, and Tesla have built an experimental framework in all their products or service design.

Creating psychological safety is essential for the product teams to experiment, but it should not be seen as a tolerance for incompetence or perpetual non-performance. Innovative companies set a high-performance standard and solid Objective Key Results (OKRs) for employees. They go the extra mile to recruit top talents. Taking risky moves or experiments is okay, but it should not be confused with having sub-par technical skills, sloppy thinking, and working habits.

Many organizations today still struggle at setting that high standard for quality. I once heard about a company in the large pharmaceutical where R&D groups haven’t discovered candidates for new drugs for almost a decade. That is a case of perpetual non-performance, but senior leaders refrain from changing their personnel or management. They seldom fire people in R&D groups when they underperform unless there’s an ethics violation. “We have a culture where everyone is like family. So we are not comfortable firing people,” said the senior executive.

Building a new business model or creating new products or services entails lots of uncertainty and complexities. Running structured experiments becomes very important to learn about those unknown parameters and risks involved. Creating that culture of failures around a team of competent people yields a very different outcome than a sub-par competency team. In some circumstances, failure becomes a valuable lesson that allows people to advance. However, it can also lead to issues with management, poor designs, weak analysis, and a lack of transparency.

2. Structured Experiments and The Need To Be Strictly Disciplined

Innovation is different from best practices. A best practice is good for scale, but it inhibits innovation to some extend. Innovation requires one to break out of the usual thinking pattern, challenge long-established assumptions or explore new areas that very few companies are willing to make that investment. Companies that advocate experimentation understand the definition of innovation and the uncertainty and complexities that come with it. They don’t act like they know everything from the get-go, and the main objective of experimenting is learning, not just producing a service or product they can market quickly. However, this openness to experimenting doesn’t mean people can work without structure and discipline.

“ Structure experiments mean setting clear objectives and hypotheses, while discipline means consistency in running those experiments. ”

If there’s no structure, we will not learn from our experimentations. We need to establish a set of clear criteria to decide whether or not an idea is worth pursuing, modifying, or discarding. It takes time, effort and skills to design a well-structured experiment. In addition, having the discipline to kill projects that aren’t going anywhere makes it easier for everyone to experiment.

Flagship Pioneering, a company in Cambridge, Massachusetts, is an excellent example of the kind of culture that mixes an openness to experimentation and discipline. They have a business model focusing on creating new ventures in the field of pioneering science. Instead of soliciting business plans from independent entrepreneurs, they use their internal scientific team to uncover opportunities for new ventures.

This company follows an established process for exploration, where small teams of scientists are empowered to research an issue of social or economic significance. They read a ton of literature and engaged its network of external scientific advisers to provide new insights. Initially, this exploration is without constraints. All ideas, no matter how crazy they may seem, are considered. The whole process allows teams to formulate testable hypotheses for new ventures.

The company incentivizes the venture team members to choose the projects to maintain because they gain nothing from being a part of a bad project. If they continue chasing a lousy project, they lose opportunities to work on a good one. What matters is the number of successful ventures created. It is not about keeping projects on life support.

As a leader, it is essential to inspire people to innovate and give them space to test out their ideas, even if it seems absurd in the beginning. All significant innovations come from a ridiculous idea in the first place. Henry Ford’s famous quote on innovation: “If I had asked people what they wanted, they would have said faster horses.” We all have finite resources, and it is critical to strike a balance in the criteria to continue or kill projects. Business leaders are also expected to model the discipline for continuing or killing projects. For example, they should end a previously sponsored project or change their minds when presented with new data or findings from the experiments.

3. Create A Psychologically Safe Environment

Innovation requires a diversity of ideas to be heard and adequately debated. Leaders need to create an environment where individuals feel free to speak without fear they will get in trouble for doing so. A polite and “yes” culture where words are carefully filtered, and restricted disagreements leave no room for innovations.

Psychological safety isn’t a one-sided deal. Everyone should give opinions and counter-perspectives to each other, regardless of the “position” in the organization. And it has to start with each of us having that open mind to receive and hear other people’s perspectives, especially among senior leaders. How can we create a psychologically safe environment if we always keep that defensive mode on?

We should also not confuse a polite and yes environment as being psychologically safe. Giving honest feedback can sometimes be very difficult as the behaviour could sometimes be perceived as personal or not a team player. One tip is that when presenting your idea or confronting others’ ideas, methods, or processes, back it up with sound rationale or data.

“ We often hear the term brutally honest. Of course, we should be honest with our opinions but it doesn’t need to be brutal. Just treat people with respect. ”

In terms of innovation, a candid organization consistently outperform a “nice and yes” organization. As mentioned earlier, “nice and yes” organizations often confuse respect with honesty. But we can be honest and respectful at the same time.

Something worth noting is that psychologically safe organizations don’t offer super comfortable environments. To people looking from the outside or are new to this kind of environment, honesty may seem aggressive or harsh. It’s challenging to create a culture where honest debate is the norm, especially in organizations where confrontation is avoided or people view debate as unfavourable against civility. Senior leaders are responsible for setting the tone by example, so they should be open to offer, accept, and even demand criticism without being harsh.

4. Strong Leadership in A Flat Organization

An organizational chart tells about the structural flatness of an organization. However, this doesn’t reveal much about the organization’s cultural flatness, which refers to people’s behaviour or interaction no matter what their position is in the organization. When the culture is flat, people have access to more precise communication, empowerment to make a decision, and freedom to reach out and interact with anyone in the organization. With a more precise communication of enterprise strategy, an organization can respond faster to ever-evolving circumstances. More direct contact with anyone in the organization also allows more ideas and insights to be shared efficiently across functions.

However, flat organizations command a much stronger leadership. The organization can quickly become disorganized without a clear set of strategic priorities. Google and Amazon are great examples of flat organizations where employees have the freedom to chase new ideas, no matter what level they’re on. These companies also have strong, creative, and inventive leaders who are great at communicating objectives, organization principles, and expectations on the operation.

Striking the proper equilibrium of flatness and strong leadership is not easy for management and employees. Senior leaders need to learn to articulate strategies and compelling visions while also being technically and operationally well-versed. Steve Jobs is a model because he could communicate his dreams while also hyper-focusing on design and technical issues. On the other hand, employees can achieve this balance by developing their leadership skills and taking responsibility for their decisions.

Creating Culture of Innovation Is Extremely Difficult

Making changes to the organization’s culture is never easy because they are similar to social contracts that provide all the membership rules. When leaders change the organization’s culture, they are breaking that ‘contract.’ So it’s not shocking that people within the organization resist change in one way or another.

Paving the way to building and maintaining a culture of innovation is challenging for a few reasons. Firstly, we need to manage well the ‘tensions’ of innovation culture through clear communication. For example, if a project goes wrong, should there be a celebration? Should the program leader take responsibility for that? The answer will depend on different factors. Could the failure have been prevented? Did we know about any issues beforehand that could have allowed us to make other decisions? Were the members of the team being transparent? Was something valuable learned from this outcome? And more. If people don’t have clarity about these factors, confusion will set in, and they will even become cynical about the intentions of their leaders.

Secondly, cultures of innovations require certain behaviours that are unnatural to adopt, and leaders should be role models in exhibiting those behaviours. A culture of innovation is not just about having fun. While many are excited about having the freedom to experiment with new ideas, they also need to understand that this freedom comes with individual accountability. Leaders should also need to recognize that there are no shortcuts in creating an innovative culture. Breaking down silos and flattening the structure alone does not magically turn an organization into an innovative one. It requires senior management attention to continuously shape behaviours, norms and values, through their actions and behaviours.

Thirdly, cultures of innovation require a system of interdependent behaviour, which means they can’t be implemented just in one department or unit. With some exceptions, developing an innovation culture has to be an enterprise-wide activity. Consider how behaviours complement and strengthen one another. Thus, it isn’t easy to build and maintain the culture within a single department or team.

Note: I do not speak on behalf of any organization. You can connect with me through my digital, data and analytics blog or my youtube channels on digital innovations

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WRITTEN BY

Andy Teoh
Digital and Advanced Analytics Professional | Entrepreneurial Maybe? | Networker |

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