When you ask Executives what they want beyond short profit and revenue growth they’ll likely say ‘more innovation’. Why? Because they face unprecedented business challenges. Let’s look back. The current modern corporation was invented about 100 years ago – at the start of the 20th century. That’s when the big companies were born like the US railroad companies, US Steel, the big banks, IG Farben. Some exist still today (GE).
What’s different about 100 years later?
- Acceleration of Change: Change has become faster than ever. It took the radio 38 years to have 50 million listeners – Facebook achieve this diffusion in 2 years.
- Knowledge is becoming a commodity. An example: there are about 130 million books (Google estimate) but over 2 billion accessible websites – at least a factor of 15X.
- Globalization creating Hyper-Competition. Not only more of the same type of competition but competition from areas which you did not expect. Example: Polaroid’s instant picture business was killed by digital imaging technology developed in photocopying.
More Innovation – Mission Impossible?
Why is it so difficult even for successful companies to become more innovative? Although they are already innovative – to a certain extent? Because there are two major hurdles to becoming more innovative – at the individual, personal level and at the organizational, company level. The former hurdle is anchored in neuroscience. We humans are programmed by evolution against being innovative. Our brain is wired to keep us alive by perpetuating what worked in the past – no experiments please! Here an example: Neuroscience has proven that the brain is wired to minimize loss. We want to keep what we already have. Equally, we are not interested in something new, until we address our pains. The brain seeks preservation over surprise, even if it’s a breakthrough promising great benefits.
Too much or too radical innovation is perceived as a threat ….so it gets killed.
At the company level effectiveness and efficiency rules supreme. The modern corporation is designed for scale and sustainability – surviving and prospering by more of the same. Too much or too radical innovation is perceived as a threat to the well-oiled machine like a virus entering a healthy, well functioning body. So it gets killed.
How to get more innovation? First innovation is not an end in itself; it is a means to an end – to support the business. So innovation needs to be anchored in the business strategy. If you want more innovation you have to look at your business strategy whether your business will in fact become more successful via more innovation!
More innovation comes with more risk. So Top Management needs to help the organization how to deal with more risk.
Lastly: if you want to get more innovation, your likely will have to change the organization – the structure and (some) people. Otherwise you will only get the same – or at best more of the same – incrementally improved.
But how to deal with this neuronal handicap of managers for and the organization’s immune response against more innovation? You need to create a company culture which supports innovation – a culture which consistently and persistently fights the evolutionary and organizational pressure to perpetuate what worked well in the past.
Company Culture – the Elephant in the Room
What is the culture of a company? My definition: Culture is what drives decisions when the boss is not around. Here some illustration. How often have you heard your CEO saying:
- The earlier this pays out, the better!
- Don’t take any unnecessary risks!
- Keep me posted!
- This is an R&D/Manufacturing/Marketing…..idea!
But what culture messages does the CEO send to the organization by following those principles most of the time. Here is what the organization hears him say:
- Implement fast. Make only incremental moves.
- Avoid risk – do not fail. Failure is not an option.
- Boss wants control. Don’t venture too far.
- This is not my project. Thank you.
So the culture the CEO is driving with these good, solid, no-nonsense management statements is….
I love Progress, but I hate Change! (Mark Twain)
Will this create more innovation? I doubt it!
The Boss Drives Culture When the Boss Is Around
How to change culture? And who can do it? Remember the definition of culture: Culture is what drives decisions when the boss is not around. Its corollary is the answer: The boss drives culture when the boss is around.
When you fail, destroy any evidence that you ever tried!
Let’s look at the strategies and goals set by Top Management for innovation as reported in a study covering 1000 top companies around the world by Strategy& in 2011 on the importance of culture for innovation (‘Why culture is key’):
Top Innovation goals (0-10 scale)
|Products Optimized for Local Markets||2|
|# of Breakthrough Products||1|
|Success rate of new Products||1|
Very clearly the focus is on current business and incremental innovation. Changes to be tolerated need to be small: cheaper, faster, better – more of the same.
How is this reflected in the company culture? Here are the results: company culture perfectly mirrors the focus of Top Management on incremental innovation. So more radical innovation – the one many executives crave for – will not happen.
Top cultural attributes (0-10 scale)
|Strong Customer Orientation||6|
|Passion/Pride in Products||5|
|Respect for Technical Talent and Knowledge||3|
|Sense of Accountability For Innovation Process||1|
|Tolerance for Failure||1|
Failures – or unexpected outcomes as I like to call them – are unacceptable, to be avoided. When you fail, destroy any evidence that you ever tried! So the company can learn only within the realm of the current operation – business as usual!
Top Executives Need to Be Missionaries of Innovation
So how to change culture and who can do it? Like any lasting change in an organizations it needs
- Leadership Commitment
- Communication (Internal & External)
Communication is the one factor most executives under-estimate and under-leverage. But take spreading a religion as an example for a culture change.
If you want to change attitudes, start with a change in behavior.
You grow the faith in your community by talking about it in your community – like the stories of miracles experienced by believers. You convert non-believers to believers by talking about your faith outside your community – with suppliers, customers, partners…like missionaries do when they go out to convert the world. Top Management needs to become missionaries for innovation. They can do it as proven by the successful introduction of Total Quality, Six Sigma, sustainability…
Remember: If you want to change attitudes, start with a change in behavior. (William Glaser, American psychiatrist and developer of reality theory and choice therapy)
About the author
Joachim von Heimburg is one of the most experienced innovation practitioners in Europe and the Middle East. He designs and implements innovation strategies, processes and structures and makes them operational creating value for the business. This he supports by creating a culture fostering an innovative spirit and entrepreneurial activities.
From 2006 to 2009 he led the culture change of Procter & Gamble from traditional R&D to Open Innovation in EMEA. From 2010 to 2012 he was General Manager Innovation and Corporate Program at SABIC, one of the leading global chemical companies. At present, he works as Innovation Architect and Executive Advisor on state-of-the art innovation capabilities and structures helping companies and other organizations to innovate how they innovate. He has extensive multi-cultural working experience in 7 countries (Belgium, Canada, Germany, Saudi Arabia, Switzerland, Turkey and the USA). He holds a Ph.D. in theoretical physics of the University of Marburg, Germany and studied economics at the University of Frankfurt, Germany. More on his website www.jvhinnovation.de