Innovation -Creating the right culture for innovation (Part 1)

Background
In the previous article I discussed the important role of leadership to foster innovation in the organisation.  If the organisation’s leadership cadre does not display the behaviour which will create a conducive environment for employees to take risks, submit ideas and act on the ideas, innovation will certainly not happen easily in the organisation.
This article will focus on creating the right culture for innovation and it is such an important topic that I will deliver it in two parts. Part one will focus on explaining why corporate culture have such a significant influence on innovation, and part two will focus on how the culture can be changed in order to become a more innovative business.
The right culture for innovation
Extensive research done across a number of organisations across a range of industries by the innovation consulting group OVO has found corporate culture to be the most consistent hurdle for innovation success, over factors generally considered more important, such as a lack of ideas, a lack of an innovation process or a lack of funding.
Why is something like corporate culture, which seems so benign, so powerful when it comes to creating and sponsoring innovation? Simple. Corporate culture dictates how people expect to work, and what the “rules” are about how the organisation is run. Wikipedia defines culture as the “attitudes, experiences, beliefs and values of an organisation”. When people join an organisation, they usually adopt the culture of the organisation as well, reinforcing the belief systems and encouraging others to adopt the culture as well. A strong corporate culture can have a very positive influence on the business, aligning the entire organisation to a specific set of values or goals.
However, a strong corporate culture can also have a negative influence. Strong cultures often discourage change or new strategies when they are most needed, and resist new approaches or new methods. Years of cost cutting and focus on process excellence have created in many organisations a culture that is focused on operational excellence and risk avoidance. Organisations (and people, for that matter) love stability and predictability because these factors make it easier to earn profits. Innovation, however, is about adaptation, risk and change, which can be very difficult to live with or to profit from. The characteristics needed to achieve an innovation culture are not seen as the ones that are needed in successful companies.
One of the main reasons that organisation leaders don’t “walk the talk” is that they have an unrealistic expectation of the return on investment period for innovation. Most innovations require substantial time to develop, mature as new products or services and achieve market benefits. While the development of a new product or service may take considerable time, executives are hammered constantly for quarterly results, which can distract them from the longer term benefits that innovation can provide. Add to this the fact that innovation is a game of statistics. Of the ideas that are generated, very few will create a significant difference to the business.
These facts suggest that a business needs a long runway and a number of ideas at any time to see real results from innovation. What happens in most organisations is that senior management requests more innovation but expects results in one or two quarters, when the average product or service development cycle is longer than that. When innovation initiatives can’t create significant new revenue and profits quickly, the business returns to cost cutting and process excellence initiatives which have a faster payoff and lower risk profile.
Next Time
Wow, I have painted quite a dire picture for innovation here, but these are the realities that businesses are faced with when trying to become more innovative. The good news is that it is possible to change the culture to embrace and nurture innovation and I will discuss this in the next article. I conclude with a quote by Roger von Oech: “It’s easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date.”