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How to Create Innovation Cultures That Keep Working

September 5, 2014
Borderless Leadership

Americans are innovative almost by nature. We grow up with lemonade stands, Shark Tank, and Kickstarter projects. Our national identity is built in part on bootstrapping and experimentation. We’re indoctrinated early with the twin beliefs that each of us holds the seeds of invention and that a good idea can come from anywhere.

And that’s a big problem for corporate culture. Because innovation is the water we swim in, we tend to believe that once we’ve created a functioning culture of innovation, it will sustain itself naturally.

It won’t. Like every other part of a successful business, a culture has to be continually managed, refreshed, and refocused.

During the last four years, my team and I have engaged with executives from over 300 global enterprises across 20 major industry segments. Along the way, we’ve conducted our own informal survey on innovation management. What we’ve heard is that of all the challenges businesses face, culture is the one true deal breaker. It has the power to stymie invention and discovery at every level. Smart companies are already consciously designing the human experience to foster breakthroughs, but they don’t plan for what happens when their culture evolves or breaks down.

Here are two popular innovation culture styles, their challenges, and the best ways to keep them robust and healthy.

Formulaic Cultures

At BMW, the creation of a new car concept is a wonderful orchestration. Every detail, from engine size to how a door closes and to how an engine should sound, is carefully planned. Any new technology, such as a rear-view camera, is prototyped, integrated into the design, endlessly tested, and weighed to the gram. To accomplish all of this requires the coordination of multiple departments—materials science, styling, power train, ergonomics, and manufacturing.

Looking to speed communication and promote idea-sharing across divisions, executives have brought all of the critical functions together under one roof. The headquarters building in Munich uses a hub-and-spoke model with a central core connected to each of the floors that house the product groups. No matter where you are in the complex, you’re within easy walking distance of any of the expertise centers—electronics, safety, environment, drive train, etc. As you spiral down into the building, you can experience firsthand how even the most mundane task is still connected to the overall vision of the BMW experience.

In other words, BMW’s leaders put as much thought into designing how people work as into their cars. Their culture is an exemplar of formulaic innovation management.

Companies in this category don’t just bolt on an R&D department and wait for the latest idea to pop out. Instead they inculcate a vision and support it with operational processes throughout the culture to enable their employees to take measured risks. Innovation is socialized. New ideas are encouraged and can emerge from anyone in the company. When good ideas do emerge, they’re supported through one of the company’s time-tested processes.

The big challenge with process-oriented cultures is that they can begin to value the system above breakthroughs. Like Rube Goldberg machines run amok, the path to results grows ever more elaborate and convoluted.

One antidote is to shorten the distance to failure by returning to rapid prototyping and testing. When the speed of failure slows, so does the speed of invention.

The second challenge is that the culture can become complacent. Lulled by the hum of the company’s finely tuned processes, employees are placated by steady incremental innovations and forget to stretch for breakthroughs. Disruption, after all, may start with upending a cherished system inside the company.

A powerful remedy is to open the culture to the outside. Look across domains and value chains. Don’t abandon processes but rather retarget and reinvigorate them.

Recently BMW announced and delivered a new series of electric cars. The company challenged itself to rethink design and performance at every level. What emerged were two completely new approaches to function and style, the i3 and the i8. BMW’s intent is clearly to give Tesla a run for its money but also to redefine what it means to experience an electric-powered car. Employees knew from the start that the goal was not to build a me-too vehicle but to find a way to articulate BMW’s vision of the “ultimate driving machine” in a new platform.

Entrepreneurial Cultures

Despite the outsize attention they often garner, true entrepreneurial cultures are rare in large companies. One of their hallmarks, at least in their early days, is that they often feature a single, rogue innovator, a leader who by timing or luck finds himself orchestrating a maelstrom of technology disruption. Think Steve Jobs, Mark Zuckerberg, Carroll Shelby, Stephen Elop, Sergey Brin, or, long ago, Edwin Land at Polaroid. In keeping with the bold personalities that run them, the companies are usually willing to take risks that normal companies would consider off the charts.

Cultures that form in response to these leaders are almost never satisfied with incremental growth but rather strive for major disruption. Like sharks, they target and attack mature companies where they are weakest—in their business models. They prey on lethargic industries with outdated practices that can be completely disintermediated. They use the power of emerging and disruptive technologies to reinvent the way products and services are used.

Such companies and their cultures can accomplish historic things. They are the very embodiment of the go-big-or-go-home mentality.

The challenge with entrepreneurial cultures is that they can rely too heavily on the genius and charisma of the central innovator. His (or her) singular vision can overshadow everything, often devaluing the ideas of others and fostering an atmosphere of suppression and fear. In fact, the leader can be so difficult to handle that the company grows weary of the struggle and forces him out. One of the more stunning images in Silicon Valley history is that of ousted disk drive legend Al Shugart driving each morning past the company bearing his name. And of course, Steve Jobs became the poster child for fired icons after being booted from the first iteration of Apple under John Sculley.

The antidote for this kind of lopsided culture is to empower others. Designate intrapreneurs. Create models and practices that don’t just encourage novel thinking but also offer channels and forums to openly challenge leadership. Steve Jobs did this brilliantly in his second term at Apple.

Sergey Brin, the co-founder of Google, may have started as a maverick, but he has settled into being the kind of visionary leader it takes to create and nurture a culture friendly to other entrepreneurs. Google revealed its 9 Principles of Innovation last year, and they’re worth studying. Like BMW, Brin and his team deliberately established processes to provide the necessary protection for risk takers.

The lesson is that a faltering culture is not a failed culture. Even the big boys go off the rails occasionally. Like the process of innovation itself, cultures require constant adjustment. Make your culture responsible and responsive to its own actions. Stay conscious. Stay deliberate. Keep iterating, not just on product but on culture.

by Mike Steep

Source: Forbes

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