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Yankee Democracy at Work… The “Ingenuity” Lies Within the Ranks

This week, we'll take a not-so-happy look at the state of affairs in many organizations: underlying blocks to innovation.  Gotta look at what’s broke to be able to fix it!  Next week, I promise the happier view, looking at solutions and inspiring best practices being used by innovative companies. 

Ducks in a row According to Bloomberg Businessweek’s “Most Innovative Companies” article, “Most businesses operate in ways that are antithetical to innovation.  They want stability, predictability, avoidance of risk…”  But “innovation is more about managing risk” than avoiding it…” [i]  The functions of quality control and Six Sigma are about “control.”  “The cultures of most organizations are set up to resist fluctuation and purge deviants,”[ii] known to others as “the innovator’s DNA.”

“But innovation is all about novelty and the unexpected…. innovators upset the apple cart, and move the cheese!” [iv] “In almost every company there are the ‘rebel’ thinkers, people who are always looking for ways to improve things, solve problems, individuals that look to the future, not the present or the past.” [v]  Research varies, but reports that 50-90% [vi] of all new product innovations “fail” at even the most successful companies. 

Given this predominant modus operandi, most organizations have a lot of work to do so that employees will feel safe enough to openly share their ideas and take risks.  A great amount of trust must exist in an environment in order for innovation to take place.  Very hierarchical “Win-lose organizations usually are not trusting environments…” [vii] In short, a sense of trust, safety, and partnership are key to innovation which is “a collaborative endeavor… There is little innovation without collaboration, and there is no collaboration without trust.” [viii]

Parallel Organizations: “Skunk Works”:

Some believe that it may be more efficient for large organizations to start satellite entrepreneurial organizations to germinate and develop the innovative ideas, rather than undertaking the significant task of changing the ways and culture of the primary organization.  These sub-organizations are often called “skunk works” or “skunkworks”: “groups within an organization given a high degree of autonomy and unhampered by bureaucracy,” tasked with working on various projects. (Wikipedia)  The term "Skunk Works" is a registered trademark of Lockheed Martin, which by some accounts, was responsible for the creation of both the practice and term around 1943. 

This model will be explored in an upcoming post, as well.  However, I will say that I am highly skeptical about the wisdom of viewing this approach as the panacea.  It may be best for some rapid solutions or time-to-market “hits.”  However, it does not solve two significant and interrelated problems.  By simply handing over creative thinking and innovation to the parallel, more agile “David” structure versus forcing the larger "Goliath" organization to reshape its management practices leaves the same problem in place: the creative ideas and full range of talents of all of its employees continue to be blocked and wasted.  “Skunk work” organizations can only do so much.  What if the creative genius of everyone within the entire primary organization was cultivated and set to work – what would be possible then? 

As the 2010 Boston Consulting Group report recently summarized in this blog pointed out (and other studies concur) – U.S. businesses do not have time to leave the creative thinking to the few.  All hands are needed on deck.  For the first time since Bloomberg Businessweek began ranking the Most Innovative Companies in 2005, the majority of corporations in the Top 25 are outside the U.S. as new global leaders emerge from Asia.

From My Soapbox… 

I believe the primary shifts that need to occur boil down to this:  “In many organizations, the Exclusive Gate real thinking is seen as the purview of a privileged few.”[ix]  There’s the rub!  From my professional experience, from what I learned in my organizational development master's program, and based on the research I have conducted thus far, innovation and management bottle-necking cannot co-exist.  That’s what many of the IBM CEO study innovation leaders were telling their colleagues.  “Flatten thy organizations!”  Lose, or certainly lessen the hierarchy. 

 “People are dying to bring their passionate, authentic selves to their jobs.  In most cases, their jobs often won’t let them.  These people often represent the undervalued intellectual capital in a company.  Choke personal creativity, and you choke that organization’s chance to flourish.” [x]

Mannequin headsAs the saying goes, “A good mind is a terrible thing to waste.”  Sadly, most organizations, from corporations to small nonprofits to governmental agencies, are wastelands of brilliant, potentially profitable or otherwise beneficial ideas that were smothered by others before they were allowed to see the light of day.

And on a More Cheerful Note

In the next post, I’ll share specific practices being utilized by some to create a “thinking organization that encourages discovery and celebrates new ideas and the people who generate them.”  And then how they gather, vet, and prototype those ideas.  I hope you'll send in suggestions for some of the best practices you've encountered, as well!  Butterfly freedom image

 

 


[iv] Langdon Morris, “Creating the Innovative Culture: Geniuses, Champions, & Leaders,” InnovationLabs. (2007).

 

 

 

 

 

 

[vi] “50 Ways to Foster a Culture of Innovation,” Idea Champions puts it at 50-70% and Wikipedia offers the 50-90% figure.

 

 

 

 

 

 

[vii] Langdon Morris, “Creating the Innovative Culture: Geniuses, Champions, & Leaders,” InnovationLabs. (2007).

 

 

 

 

 

 

[viii] Langdon Morris, “Creating the Innovative Culture: Geniuses, Champions, & Leaders,” InnovationLabs. (2007).

 

 

 

 

 

 

[ix] “Fostering an Innovative Company Culture,” EOS Strategies White Paper (2010) attributed to Daniel D. Elash, Ph.D., “Thought Partnerships Build A Company's Thinking Skills.”  (2003). 

 

 

 

 

 

 

[x] “Fostering an Innovative Company Culture,” EOS Strategies White Paper. (2010).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A couple of weeks ago, I delivered a training session on some of the
Raw ingredientsingredients that are necessary in order for organizational cultures to become more innovative.  The stand-out leaders in the 2010 IBM CEO report recommend some high-level management approaches for fostering innovation, such as the need for managers to create cultures in which questioning of the status quo is welcomed along with calculated risk-taking, and where creative thinking is encouraged at every level of the organization.  

This all sounds great to me, but exactly how do managers go about putting all this into place?  As most of us know, management by mere decree alone doesn’t generally work.  And, even with the best of strategic intentions on the part of leaders, as the saying goes, “Culture eats strategic plans for breakfast.”  So, how does one go about making the changes needed to cultivate productive, innovative thinking throughout an organization in a systematic, self-perpetuating fashion?   

– And that’s what we’re talking about: creating cultures of ongoing innovation.  Producing a successful innovative product or service once does not make a company innovative.  The ability to do that repeatedly is what makes them innovative. “The genius of companies like Apple, Cisco, and Toyota… is that their leaders seem to have found a way to standardize the process of innovation.”  (Langdon Morris, InnovationLabs)

In the next few posts, I will pass along some of the research I have gathered on HOW TO create an organizational culture with the structures and processes and spirit that standardizes innovation as a way of operating, and that allows businesses to grow market-share and nonprofits to accomplish their missions more effectively. 

Cocoanut cake But first, I will share the model or metaphor that I believe is helpful in envisioning and differentiating between the basic components necessary for innovative culture to exist – that of a three-layer cake! 

The Bottom Layer: Organizational Development 101:  These are the basic, fundamental structures and processes that are necessary for any fairly stable, functional organization with semi-aligned vision, mission, accountability structures, management training, etc.  These require ongoing maintenance and “tweaking” in order for some level of organizational health and stability to exist.  Without these basic pieces in place, not much will flourish for long, let alone innovation.

–However, even in a troubled organization, wise senior managers will solicit the creative thinking and ideas of his/her staff on ways to get basic operating systems and structures working more efficiently.  Then, in the process of rebuilding the organization’s foundation, the way is being paved for a culture in which employee input, creative problem-solving, and innovative thinking can become the norm. 

Top Layer: Key Structures for Innovative Culture:  This is the layer within which the  additional structures needed for innovation are put in place, such as:

  • Shared agreements on what innovation should look like within a particular organization.
  • Efficient systems for the ongoing collection of a range of ideas solicited from everywhere both inside and outside the organization.
  • Low-cost prototyping systems for rapidly vetting ideas and determining which should be explored and which shelved.
  • Reward systems for experimentation that reframes what has typically been called "failure" as learning instead; etc. 

And lastly -

The Icing: Daily Operations Re-thought!!  The icing is the “fun” or Mad Hatter cake tilted "Fun-Ovator" stuff.   It entails continually experimenting with creative ways to run daily operations in more interesting and creative ways, which will result in producing an ongoing spirit of experimentation, “play,” and creative thinking.  This includes reconsidering things such as:
how meetings are run; how recruiting and hiring and job descriptions are done; being more creative with celebrations and incentive and reward programs; and so on.  

 

The icing really helps to shift culture so that creative and innovative thinking become the “norm.”  The HR departments of Southwest Airlines, Google, Virgin America and other innovative companies intentionally describe their cultures as “fun” and seek employees who are excited by the idea of jumping in their “sandboxes" of ongoing experimentation.  

 

TO BE CONTINUED
Subsequent posts on some of the great recommendations I've gathered for creating the canvass needed for innovation to flourish in organizations won’t deal much with the bottom layer of the cake, because anyone who has studied management or organizational development, either in school or in the field knows these basics.  However, as we look at the structures and processes that support innovative thinking, it will become apparent that these bear a striking resemblance to what many of us learned (at least in school) were management best practices! 

 

 

 

 

 

 

  Whoa tornado While doing research for a training program I delivered last week on structures and processes needed for organizations to shift their cultures so they become conducive to creative thinking and innovation, I came across a sobering 2010 report compiled by the Boston Consulting Group (BCG).  Although 51% of the global leaders polled in the IBM CEO study said they didn't believe their organizations were prepared to succeed in the increasingly complex global environment (second blog post), this BCG report summarized below makes the IBM study look like a Hollywood romance by comparison.

As I wrote in the launch of this blog, my interest in and commitment to this topic comes from a deeply-held conviction that our imminent economic future as a nation depends on U.S. organizations getting on board the innovation train, quickly. Certainly for me, the BCG study strongly reinforces that perspective. In addition to the business case, when it comes to our myriad environmental and social problems, as Albert Einstein said, "We can't solve problems by using the same kind of thinking we used when we created them." 
(The report is cited by permission of The Boston Consulting Group.  Click on the link below to see the full report.)

"Innovation 2010: A Return to Prominence–And the Emergence of a New World Order":       

Working in partnership with BusinessWeek and its Market Advisory Board, The Boston Consulting Group (BCG) conducted a survey for the seventh year in a row, gathering input data from 1,590 executives from around the world representing a range of markets and industries. 

This most recent 2010 report postulates that as a result of the U.S. and other mature economies' general lack of commitment to and investment in innovation, "a new world order in innovation is taking hold, one in which rapidly developing economies (RDEs), led by China, India, and Brazil, will increasingly assume more prominent positions, while the United States and other mature economies continue to play major roles but gradually become less dominant."  (p4)

Apple and Google were ranked by international executive respondents as the two most innovative companies, with Apple once again as the hands-down winner (a rank it has held in this survey since 2005). Yet, more than half of those who participated in this survey expect that U.S. will lose its standing as the leader in innovation within the next five years.  

These predictions are similar to the warning flags waved by Thomas L. Friedman in his book, The World is Flat. Among the precipitous trends, Friedman points to:

  • America having recently slipped from 1st to 4th place in the number of patent applications.
  • The increasing dearth of math and science students training in U.S. universities just as our nation’s top scientists prepare to retire.
  • Tightened U.S. immigration policies that have caused a significant drop in foreign math and Tsunami Wave students attending American universities and who now have considerable job opportunities in others countries that are investing more heavily in innovation.
    • And funding cuts to the National Institutes of Science.  

If these trends remain, then it only goes to follow that American business will lose even more of their global market shares with our nation losing considerable economic strength. 

Implications for Leaders: 
BGC attributes the low level of U.S. investment in innovation to companies “hedging their bets about the economy” with incremental improvements versus “moving aggressively to discover, invent, and capitalize on new growth areas.” The report ends by offering the following recommendations to business managers in the established economies who have yet to “fully come to grips with” the consequences of not making innovation strategic priorities.

1.    Becoming better at innovation is probably the single most important thing that you can do this year.   (p20)

Why?  Although you survived the Great Recession – so did your competitors.  Like you, they too largely "mastered the cost, productivity, and operational excellence playbook." However, many of them, upon realizing they had survived, saw innovation as a top strategic priority and started investing heavily in it around the middle of 2009. If you are not one of those companies – you are about a year behind (when this report came out, mid 2010).  

 2.    If you don’t get better at innovation, your boss (or board) will eventually either stop spending money on it – or find someone who can improve things. 

“Part of the issue may be that most companies can’t even define what they really mean by innovation, let alone measure it. And while there is no right or wrong definition, you do need a definition that everyone agrees on and that aligns with your company’s strategy.” – Get a clear, shared definition.  (p21)

 3.    Top management is really going to have to get its head in the game this year. 

“In every highly innovative company we know, the CEO truly has innovation near the very center of his or her radar screen. Indeed, the difference between a company whose CEO and leadership team have an “all in” mentality regarding innovation and one whose leadership supports innovation merely at an abstract level is unmistakable – and so is it’s impact on culture and results. 

 If you think your company can win at innovation without your being truly committed, you are wrong and will be increasingly exposed.  Too many companies are being led by fully committed and engaged leadership teams that have linked innovation to the company’s business strategy, put in place the needed measurement systems, and are investing to see the results.”   (p21)

4.    Your company cannot afford to cut back on its innovation investments in the BIC countries and other RDEs. 

If you thought competition was tough in the past, just wait. …As can be seen from our list of the most innovative companies, the “BIC*-plus” world has arrived on the innovation front and is quickly moving into the mainstream.  *(BIC stands for Brazil, India, and China.)

‘To deal with this new reality, you need to increase your investments in these countries, not decrease them. …Lower your investments in these countries at your own risk.”  (p21)

 The report concludes:
“Keeping pace, let alone flourishing in this environment will demand a two-pronged attack.  Your company needs to be actively innovating both in and for the slower-growth, mature economies, which remain very large and profitable.  Simultaneously, you need to be ever more focused – no matter how focused you think you already are – on the much faster-growing developing economies, especially China, India, and Brazil, with their promise of large markets and newly innovative competitors.  Striking the right balance here will obviously be highly challenging. But the potential competitive rewards of hitting the mark are vast – as is the downside of coming up short. Indeed, skillful leadership in innovation has never been at such a premium.”   (p21)

  
Wake up call Dramatic natural disaster photos aside, I hope I've won over a few more believers that we need to rally and inspire others and send wake-up calls around our organizations that the time is upon us to do whatever is needed to engage the other half of our brains. 

 

 

 

 

 

 

 

 

 

 

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