Culture Clubs Innovation

Jeffrey Phillips posted some interesting thoughts at Innovate on Purpose about what he learned at this year’s Front End of Innovation conference.

Jeffrey learned from talking to attendees that their biggest problems with creating innovation within companies was not process-related or tool-related but culture-related. I was surprised at first by this finding—I’ve posted before on how companies acknowledge that they need to innovate but the biggest problem they face is not knowing how. Whirlpool was the classic example of a company that found out they couldn’t just say to its employees, “Let’s be innovative, everyone,” as if they were a corporate version of the young Mickey Rooney and Judy Garland inspiring their friends to solve a problem by enthusiastically exclaiming, “Let’s put on a show!”

But on second thought, the complaints that Jeffrey heard at the innovation conference make sense. First of all, the IBM CEO Global Study on Innovation that I recently reviewed states explicitly that corporate culture is an impediment to innovation. The chart to the right is from that study and plots the top six most significant internal obstacles to innovation, with the numbers corresponding to the percentage of CEOs who named each entry as an obstacle. The results show that the biggest obstacle to innovation is corporate culture. One CEO explained this by saying,

Employees behave as if it is inappropriate to rock the boat.

This is one of many reasons that an innovation process needs to be put into place. If employees see that their company has gone to a great effort to recruit their ideas, they will be more likely to participate. A complete process needs to be in place for this to work, however, because recruiting ideas is only the first step in the process and without the right followup steps, employees will consider their efforts as wasted.

Jeffrey goes into detail on what he thinks the specific corporate culture roadblocks are. Read his post for a more complete discussion, I’ll simply highlight his thoughts here and provide my own.

Lack of Motivation
Jeffrey notes that most employees need to be motivated to participate in a new process. Given the comments from the CEO survey, I would say that this is particularly important if a company expects employees to offer ideas that are different from the current direction of the company or the “obviously correct” approach of the industry.

Jeffrey says that tying compensation to innovation is one way of addressing the motivation issue. To my knowledge, most companies reward employees for contributing to their patent portfolios, so doing the same for their innovation process is an obvious move. I would guess that many companies do not have a formal compensation policy in place for innovation as they do for patents. If pressed, those responsible for these decisions would say that this is what bonuses are for, but those are often too ill-defined and abstract, or simply absent, to be motivating factors.

Making senior management’s support for innovation visible is another suggestion of Jeffrey’s, although I’ve already discussed why this often is no more than lip-service to generating innovation within a company. I prefer Jeffrey’s suggestion to develop innovation metrics that measure the success of the process and people’s contributions to it. This would go hand-in-hand with creating a formal innovation process that is as well-thought out and implemented as most companies’ patent process.

Size and Complexity
Most companies are too big and organizationally complex to easily implement a corporate-wide innovation strategy, so nothing gets implemented. Jeffrey rightly suggests that this can be resolved by starting small. Pick a unit within the company and develop an innovation process. Once success is demonstrated within this unit, expand to other areas within the company.

The only problem that I see with this approach is if the development and implementation of innovations that get generated within the small unit requires other units to prove its success. For example, if an innovative user interface is developed through a group’s new innovation process, then sales&marketing and the rest of R&D are going to be needed to productize this innovation and demonstrate the financial value of what that unit’s innovation process has produced.  I offer this more as a caution rather than a criticism. Starting small before going big makes a lot of sense and drives many other business models.

 Cost
Any new corporate process is going to cost money, both in tools, people’s time, and perhaps the support of outside consultants. A company’s obsessive focus on expenses and safe ROIs will limit any new developments within a company and limit them to licensing proven successful technology from others that invested in innovation. They will rarely be technology leaders in their field and will continue to produce products with lower margins and prices than their more innovative competitors.

Jeffrey says that not developing an innovation process is short-sighted given the potential benefit that can result from increased innovation within a company. I suggest that the previously offered solution to Size&Complexity—starting small and proving value within a small business unit before going corporation-wide—is probably also the best solution to the Cost roadblock. Start small, limit costs, and prove value. The success of this approach, of course, may have the same difficulty that I mentioned previously: wide corporate involvement and greater expense may be necessary to prove the value of the innovation in the consumer marketplace.