Creating a Culture of Innovation in Your Company

Stephen DeAngelis

March 28, 2014

If you want a creative company, you have to do more than hire creative people. You have to provide those people an environment in which they can thrive — an environment that creates a culture of innovation. Like Victor W. Hwang, you might be asking yourself, “What the heck is business culture?” [Forbes, 13 September 2013] To that question, he adds another one: “How does culture actually cause innovation?” On a national level, most people understand what culture means. It’s not hard, for example, to recognize the difference between French and Japanese architecture, Western and Middle Eastern music, Scandinavian and African native dress, and classical European and Chinese art. But, according to Hwang, cultural differences involve more than appearances, language, religious beliefs, and food preferences. “A few years ago,” he writes, “talking about the economic role of culture might have gotten someone in trouble as an arrogant American.  Now, it’s a consensus opinion. That’s a huge shift.” I’m sure there is still some sensitivity when it comes to this topic. After all, the world reacted pretty strongly when President Obama used the term “American exceptionalism” in a speech. Those words motivated Vladimir Putin to pen an op-ed piece for the New York Times. Hwang, however, claims that his opinion is supported by studies. He writes:

“My friend Bill Colglazier, the Science Advisor to the U.S. Secretary of State, referred to a study by the National Academy of Sciences which reviewed six major countries and concluded that the biggest indicator of innovation success is culture. … But all this raises a big mystery. If everyone believes in innovation culture, then why is there a problem? For example, I don’t know anyone who says they are anti-innovative or anti-creative. So why aren’t certain countries, companies, or communities more innovative, if they are all in favor of innovation culture? Why can’t they just do it?”

There is a 1960s rock-and-roll standard sung by The Boxtops entitled, “Soul Deep.” That’s a pretty good description of how deep culture must penetrate as well. The answer to Hwang’s question, “Why can’t they just do it,” is that too many countries, companies, and communities that claim they want to be innovative only change the surface of things. They don’t go soul deep. Changing the culture of a company is hard enough. Trying to change the culture of a community or a country is extremely difficult. So let’s concentrate on what pundits have to say about developing a culture of innovation in a company. Before diving into that discussion, however, let me remind you that there is a natural tension between innovation (which is all about change) and organization (which is all about stability). The secret to fostering innovation is creating the greatest amount of tension without allowing the cords that hold the company together to snap. John Kao, an innovation adviser to corporations and governments, calls this maintaining the yin and the yang of business — that is, finding the “balance between training and discipline on one side and improvised creativity on the other.” [“The Yin and the Yang of Corporate Innovation,” by Steve Lohr, New York Times, 26 January 2012]

Like it or not, creating a culture of innovation begins at the top. If corporate leadership doesn’t buy into a culture of innovation, it simply won’t flourish. Some innovation may take place, but it will be brought about by revolutionaries who defy the organization’s stifling culture. As you know, however, revolutions don’t last long. Culture endures. Paul Saffo, a technology forecaster in Silicon Valley, believes that it takes both top-down and bottom-up efforts to create a culture of innovation. He told Lohr, “There is nothing democratic about innovation. It is always an elite activity, whether by a recognized or unrecognized elite.” He went on to observe that successful innovation requires “an odd blend of certainty and openness to new information.” Lohr interprets that to mean “a blend of top-down and bottom-up discovery.” Brené Brown agrees that a culture of innovation has to start at the top. She writes, “To reignite creativity, innovation, and learning, leaders must rehumanize work. This means understanding how scarcity — a feeling of never having enough — is affecting the way we lead and work, learning how to engage with vulnerability, and recognizing and combating shame. Make no mistake: Rehumanizing work requires courage.” [“3 Ways to Kill Your Company’s Idea-stifling Shame Culture,” Fast Company, 13 September 2012] She continues:

“When the culture of an organization mandates that it is more important to protect the reputation of a system and those in power than it is to protect the basic human dignity of individuals or communities, you can be certain that shame is systemic, money drives ethics, and accountability is dead. In an organizational culture where respect and the dignity of individuals are held as the highest values, shame and blame don’t work as management styles. There is no leading by fear. Empathy is a valued asset, accountability is an expectation rather than an exception, and the primal human need for belonging is not used as leverage and social control. We can’t control the behavior of individuals; however, we can cultivate organizational cultures where behaviors are not tolerated and people are held accountable for protecting what matters most: human beings. We won’t solve the complex issues that we’re facing today without creativity, innovation, and engaged learning.”

Hwang, and his colleague Henry Doss, argue that too many businesses mistake a business model for a business culture. Doss writes, “The business model is how money gets made, what drives the profitable execution of the business. The rules of culture are the values — spoken and unspoken — that drive behavior, commitment and ambition.” [“Your Business Model Is Killing Innovation,” Forbes, 28 October 203] Using Brown’s words, cultural rules are what humanize work. Both Hwang and Doss include the following table that distinguishes “the operative norms for production and for innovation.” Hwang describes the two lists as descriptions of social contracts. “One social contract is based on values of production. The other is based on values of innovation.”

Business Rules
(for innovation)

1. Break rules and dream
2. Open doors and listen
3. Trust and be trusted
4. Seek fairness, not advantage
6. Experiment & iterate together
7. Err, fail, and persistPay it forward
Business Rules
(for production)

1. Excel at your job
2. Be loyal to your team
3. Work with those you can depend on
4. Seek a competitive edge
5. Do the job right the first time
6. Strive for perfection
7. Return favors

Doss writes, “The value system on the left tends to be operative and necessary for innovation; the values on the right tend to be operative in a production mode.” Hwang insists, “Culture in business is primarily the conflict between [these] two opposing social contracts.” In other words, Hwang and Doss agree with Kao that a balance must be struck between organizational stability and innovative change. “At first glance,” writes Doss, “[the lists] seem to be nearly incompatible, or at the very least in conflict. But they don’t have to be.” He explains:

“The trick is in bringing your business model requirements into an innovation framework, rather than the other way around. Innovation rules become the driver of business model (production) outcomes. Of course, growing an innovation culture is a long-term and rather complex thing. … Developing an innovative culture does not mean compromising your business plan outcomes. It means bringing innovation thinking into your business model. An innovative business culture is one that understands the risk of not taking risk and constantly looks for something beyond the status quo. In this culture, your leadership could very well be more powerful; your conversations could be deeper; and the pace of positive change could be radically accelerated. And in this way, innovation drives better business model outcomes.”

Matthew E. May, who calls himself “an innovation crusader,” believes that the blend of rules required to create an innovative culture is best achieved through systems thinking. “The best and most consistent innovators have the ability to think through all the conditions and connections required to allow a given solution to fit seamlessly into the everyday beat of those who will use it,” he writes, “That kind of thinking is systems thinking. It’s the ability to provide solutions within the current context, or providing a new one along with the solution.” [“To Change A Culture, Change The System,” Edit, 6 January 2014] He believes that an innovative culture is something that emerges from systems thinking rather being something that can be created out of whole cloth. “YOU do NOT attack ‘culture’ directly,” he writes, “for the simple reason that people will hold on even tighter to the culture you’re trying to change.” That is probably a sentiment with which most pundits would agree. Culture blossoms gradually, like a flower grown in the right soil and provided with the right nutrients. Ultimately, however, culture provides the environment in which creative people can do their best work. Julian Birkinshaw reminds us, that innovation isn’t about idea generation, but about translating ideas into action. “Many companies get distracted by the allure of new ideas,” he writes, “and they forget that the hard part is taking those ideas and putting them work. That is where the real progress is to be made.” [“Three principles for making innovation a reality in your company,” FreshMIX, 1 November 2012] An innovation culture is vibrant, action-packed, and tense — but always moving forward.