Many companies want to establish a culture of innovation, one that will encourage employees to take risks that lead to breakthrough products. But how exactly to build this kind of culture is often elusive for senior leaders, threatening the success of their innovation initiatives.
Interestingly, it may be that their focus on culture is what is holding them back. They think about the big picture, instead of instituting the changes that would actually allow that image to exist. Culture is the net effect of shared behaviors, and therefore the adoption of innovative behaviors must take precedence. You change the culture by becoming more innovative, not the other way around.
As Jon Katzenbach wrote, companies should focus on changing a few critical behaviors – “a small number of important behaviors that would have a big impact if put into practice by a large number of people.” When it comes to innovation, adopting the following five behaviors can help your organization take the plunge.
1. Build collaboration in your ecosystem. Innovation is a team sport. This requires excellent collaboration between siled business and functional units and between geographies, as well as with external partners. Finding the best resources inside and outside your organization and combining them is the hallmark of successful innovation.
Internally, to find the best solutions, you need to leverage your organization’s skill set. This requires you to leverage capabilities from the entire company; it doesn’t happen when people work separately instead of collaborating.
Just as important is external collaboration, because there are billions of IQ points outside of your business. If you can leverage them, you will establish a significant competitive advantage over those who cannot. The best solutions come from working with customers to create a revolutionary product.
2. Measure and motivate your intrapreneurs. Intrapreneurs are the people in large organizations who combine an entrepreneurial mindset with the ability to leverage business assets such as channels, brand, and market insight. In order for intrapreneurs to be successful, you will need to measure and recognize their innovation efforts. Three metrics play special roles.
You change the culture by becoming more innovative, not the other way around.
The former are leading indicators such as the percentage of employees trained in innovation processes and the size and strength of the internal collaborative ecosystem. The second type of metric measures the process. How many meaningful ideas are in your pipeline? Is your portfolio balanced and robust? Are you marketing your ideas at a rapid pace? Finally, there are lagging indicators, which most people think of first. These metrics focus on new product revenues, the impact on profits and the effect of innovation on the brand.
Metrics fuel motivation: you need to publicly recognize innovators. Bonuses are great, but they’re private – no one in the organization sees the check. However, when you promote someone based on their contribution and collaboration to successful innovations, colleagues take note. In addition, it signals management’s commitment to people who demonstrate genuinely innovative behavior.
Metrics fuel motivation: you need to publicly recognize innovators.
3. Emphasize speed and agility. Innovation happens best when people change quickly. This doesn’t mean sloppy product development. Innovation requires a mix of real-time data collection and smart decisions about whether to invest more now or to change course.
Successful startups seem to know this intuitively, and this agility often helps them disrupt established businesses that have a lot more resources. For large organizations, it is important to develop similar methods to quickly identify and select ideas, and then bring them to market through prototyping.
4. Think like a venture capitalist (VC). Venture capital firms tend to focus on big ideas that make the risk worth taking. You should do the same. When you hear a new idea, ask if it can make a significant difference. If not, hand it over to someone in operations; it’s always a good idea, but you’re looking for the next big thing.
When you come up with an idea that matters, the next question in a traditional mindset would be: What are the risks? This is where most companies get stuck, as managers tend to say things like “we’ve never done this before” or “it would mean big changes in the way we work”. But the questions you want to ask about big ideas are: What challenges do we face to achieve breakthrough? Which of these could kill the idea? How are we going to mitigate them?
5. Balancing operational excellence with innovation. Some experts believe that large companies cannot win in the face of disruptive innovation, even if they are good at operations. The truth is, they not only can, but must. The tension that comes with balancing operations and innovation is what drives true success in today’s world. A recent PwC survey of CEOs (pdf) around the world found that 64% of them believe innovation and operational efficiency are equally important. Companies have proven that they can achieve operational excellence, increase profits and increase revenue from existing products while imagining and developing products that help reshape their own markets. In fact, innovation can help protect your business from disruption. Authors Charles O’Reilly III and Michael Tushman have for years championed the notion of ambidextrous managers at companies like Fuji, which flourished in the age of digital photography even as the shrinking film market left Kodak far behind.
Of course, not everyone in your business is ready to change their behavior today. This is to be expected. But companies that build strong cultures of innovation don’t wait for it to happen. Their leaders are taking matters into their own hands and demonstrating that innovative behaviors generate undeniable value for the company – and more will follow shortly.