10 Key Dimensions to Driving a Culture of Innovation
Product lifecycles are getting shorter. Consumers are well informed and restless. And the relentless march of information technology have all forced organizations to be more agile, flexible and innovative in order to remain sustainably competitive. But establishing a culture of innovation is easier said than done, especially for larger organizations that have the legacy of established systems and processes to be adhered to.
So what can we do to drive the culture of innovation in our organization? Here are 10 different dimensions to look at:
#1. Create urgency – establish strong business reasons
Can any organization create a culture of innovation without establishing the reason for change? The answer will always be an emphatic NO. For any organization enmeshed in certain ways of working, shockwaves are required to get the jolt and change the course. Leadership, therefore, has the task of answering the question: “Why change?”
Reasons may be related to the aging of existing products, rising competition, inavailability of suppliers, shifting customers, etc. Whatever the reasons, they need to be identified, articulated and should be used for creating a sense of urgency within organization to change and innovate.
#2. Drive from the top – create a vision for the future
Innovative DNA cannot be generated only from the bottom-up. It requires drive, focus and vision from leadership. Leadership must create urgency and facilitate the nurturing of innovation through communications, systems and policies.
It is also important to understand that developing an innovative mindset is not just about creating a perception in the market place to gain business advantage. Such an advantage, if gained, will always be short lived, waiting to slip away anytime if innovation is more lip service than a real mind shift. In today’s fast changing world, only a deep rooted innovative mindset will be able to withstand the pressure created by rapidly changing business situations. The leadership of the organization will have to make adequate investment in developing this, if they are really interested in sustaining/ growing the market position, in years to come.
#3. Select the right leader to drive the culture of Innovation
Selecting the right leader is crucial for driving a culture of innovation. Driving innovation is different from running business-as-usual. A leader has to:
- To create belief in the organization – “Change is good”
- To create urgency for change – “Innovation is the only way forward”
- To instill confidence – “It works”
- To innovate can be arduous and risky- “It’s OK to take risks and fail”
Additionally, a leader has to have the right credentials and ability to establish credibility with his or her organization. A leader, whose personal characteristic does not match with what is expected in driving innovation, may not be the right choice for the role. The leader has to have the following:
- Past history that matches the requirements of the role
- Imaginative thinking, holistic approach and a fine balance of intuition and rational judgement
- Great ability to communicate. Ensuring a good balance of assertiveness, sense of purpose mixed with the right dose of humor
- Firmness of character
- Ability to make things happen
- Excellent people management skills
- Able to lead from front
- Ability to encourage and reward learning from failure
#4. Endorse disruption
Think how quickly businesses and products come and go in today’s business environment. Products that were a premium consumer good just a decade ago have since vanished. Organizations, which were part of Fortune 500 not so long ago, are no longer anywhere near that list. Indeed, 88% of the companies, which were in Fortune 500 in 1955 are no longer there.
Disruptive innovation is eating up products, which were quite popular only a few years back. For example, not that long ago (certainly within most of our lifetimes), the Walkman was the commonly used device for listening to music. It has since become redundant because of smartphones and ipods. Desktops are fast vanishing under the onslaught of laptops. Point and shoot cameras are disappearing, since mobiles have integrated cameras now. Organizations like Nokia lost market share so quickly, since it could not keep pace with the disruptive changes brought out by Apple and Samsung. Organizations that demonstrate inertia today are under constant threat of losing their markets and customer base rapidly.
#5. Encourage breaking rules
Most of us have grown up hearing that we should follow the rules. The issue is that following the rules is good for maintaining BAU ( Business as usual) but may not be good for creating a culture of innovation in the organization. So, while innovating, it’s important to think beyond existing rules/ stereotypes. Let me put only few generic rules, organizations may think of breaking:
- Grey hair means more experience hence better idea
- Leaders are there to make decisions and others have to follow
- Strategies are to be created only in boardrooms
- Only those, who know the process can help in improving the process (actually an outsider can bring fresh/ novel perspective triggering huge change)
- Customer is always right (actually the customer may need education)
- A degree from university is the measure of intellect (there are plenty of example of drop-outs changing the world)
#6. Respect failure
Risk and return are the two faces of the same coin. An organization looking for higher returns has to inculcate the culture of taking risk. Failure is a quintessential part of taking risk. So, an important aspect associated with taking risk is failure; however to minimize chances of failure, organizations need to encourage taking calculated risk rather than blind risk.
Can we guarantee that if we take calculated risk, we will NOT fail? Of course the answer is “no”. However, every such failure should be respected, learning should be captured and the organization should move ahead knowing one more way that doesn’t work. We have plenty of examples of people or companies – Walt Disney, Arianna Huffington, Steve jobs and many others – who have reached to exemplary heights after repeated failures.
But what mechanism should be established to respect failure? Should people be rewarded for reporting failure? Should there be defined metrics for no. of failure/ success? Should the organization publish failure stories along-with success stories? Leaders need to take a call based on how they want to set direction for organization.
#7. Create and track metrics for learning
Organizations generally fall into the trap of following and tracking performance metrics that directly impact the outcome: Business growth, Profitability, Gross margin, etc. At the operational level, a mechanism is set to monitor performance by looking at metrics such as the speed of operation, quality of delivery, resource utilization, etc. In this whole game of tracking efficiency, effectiveness and business outcome, do organizations really track the metrics that are indicators of learning in the organization?
For creating a culture of innovation, it is important to have metrics that encourage learning in the organization. Here are a few examples of metrics that may help in encouraging innovation through learning:
- No. of new ideas generated/ month
- No. of ideas experimented/ month
- % R&R contribution to failed ideas
- Time elapsed between new idea successful pilot and first product sale
- Revenue contribution through New Products ( not more than X years old)
#8. Involve everyone and respect their ideas
Any organization looking to drive the culture of innovation, has to work on the basics of involving the masses in generating ideas, respecting ideas received and creating a system of executing ideas. Some of the key aspects of such system can be:
- Energize the organization by creating an end to end idea management system
- Make use of social networking within the organization to nurture the Idea Management System
- Create a hierarchy-free system, where anyone can provide an idea at any time
- Support idea generation, selection, execution, and closure through an appropriate structure, system and accountability
- Close the loop on all selected/ rejected ideas. Rejected ideas should also be acknowledged appropriately to encourage continual idea submission
- Design Risk & Reward appropriately to encourage idea submission. Reward brilliantly executed ideas. Focused effort is required to create a buzz around the end to end Idea Management process
#9. Customize the performance management system
Within organizations, under normal circumstances, the performance management system is primarily structured to achieve results aligned with the business strategy. So can the existing performance management system be designed appropriately to reward associates for taking risk, innovating and failing? Can we measure everybody across the same scale, where a few units are taking care of already developed product and a few units are trying to develop new product/ service and going through experimentation? If we use the same scale for all, are we potentially discouraging those who are risking their present performance to create something new for organization? Is the current performance system good enough to award the learning and not only the result?
Organizations need to look into this aspect to tweak their performance management system. People engaged in new product/ service development, should be rewarded not only on the basis of result but on the basis of activities performed for achieving the result. KPIs can be created around such activities, encouraging associates to take risk and create better products/ service.
#10. Recognize and reward innovative talent
An innovative organization has to look at the reward and recognition system appropriately to drive the behavior of innovation. The designing of a Risk & Reward (R&R) system must be such that the reward for risk taking should be more than the outcome from failure. A few guidelines, that can be used for designing R&R program are:
- Reward by designing the performance evaluation program focused to encourage innovation
- Create a reward system for failure where the result is learning for future
- Recognize people in front of peer group, leaders, large gathering etc. (Recognition is arguably a bigger motivator that monetary rewards so make use of it extensively.)
- Create an accelerated career growth plan for leading innovators
In this article, I have tried to enlist a few key dimensions that are important for incubating, developing and nurturing the culture of innovation in any organization. I hope you have found it useful.
But what do you think? What have you seen work to create a culture of innovation in organizations?