Recently my colleague, Brian Greenacre, wrote an article Innovation and Cultural Transformation, it got me thinking about some of the key elements to innovation from my own experience in Human Resources (HR).
For most businesses an innovative culture is essential to achieve success in an ever changing market. If you are looking for more than incremental changes, if you want to be able to respond rapidly to market changes (or, in fact, be responsible for disrupting the market you work in) then developing a culture where innovative ideas abound and are acted upon is critical.
In my years in HR I have worked in some organisations that do innovation really well, they are open to trying new things and create a culture that encourages appropriate risk taking. Interestingly, with a few small changes I have seen those same organisations shift significantly, and I have watched employees and leaders become more risk averse and seen innovation stifled.
From my experience, I suggest 3 questions to ask yourself if you are looking to develop a culture that drives innovation.
1. “What are we measuring and how will that encourage innovation?”
One of the most important aspects of developing a culture that is open to risk and to being innovative is how we reward and reinforce behaviours that are innovative. In most organisations we reward people based on ‘success’ metrics of some kind, whether that is hitting a revenue target or meeting certain process KPIs. Often those KPIs have been the same or similar for years and encourage ‘tried and true’ behaviours. To truly encourage innovation I believe it is important to understand what your existing policies, performance management systems and reward frameworks encourage and reinforce. It could be as simple as thinking about when was the last time you celebrated a failure in your organisation? A risk that was taken that may not have delivered what you hoped, but that was bold and different and innovative? Conversely it could go to the heart of how success is measured in your organisation.
In one organisation I have worked with employees are assessed on a ‘pass’ or ‘fail’ basis for each objective. The pass or fail is based purely on whether or not they have met the identified target. Anything less than 100% is a fail. Think about what behaviours this will reinforce. How likely is an employee to take a punt and try something different if they know there will be no leeway in how they are assessed? How powerful could it be to instead assess not only whether a target was achieved, but how an employee applied new thinking to an objective to try and get a better outcome?
Most people know the old adage ‘what gets measured gets done’ – so if you apply this thinking to developing an innovative culture I would ask the question ‘what are we measuring and how will that encourage innovation?’
2. “How do we encourage new employees to question and keep questioning what we do and why we do it?”
We often underestimate the importance of new thinkers in a team. New employees come in and when they are fresh they can offer great insights into where there are opportunities for change and innovation. In countless organisations those suggestions will be met with ‘you don’t understand our business’; ‘we have tried that and it failed’; ‘if it isn’t broken don’t fix it’. Soon your new employees lose that objective lens and get caught up in ‘the way we do things’, ultimately when another new employee arrives they deliver the same messages that were delivered to them and so the cycle continues.
In my experience organisations with innovative cultures are more likely to encourage new employees to speak up and share their insights, and rather than shoot them down use them to generate ideas and ultimately new approaches to the way they do things. In one organisation I worked in we actively encouraged new employees to critique the way we did things – we provided them with a specific forum to look at some of the key challenges and one of the few rules was that we were not to shoot down suggestions but rather open our minds and listen to the feedback. So my second question I would ask if you are looking to develop an innovative culture is ‘how do we encourage new employees to question and keep questioning what we do and why we do it?’
3. “How do we empower people to make decisions?”
Finally, how decisions are made in an organisation can have a significant impact on the level of innovation that occurs. Whilst understanding that certain parameters may be necessary to ensure governance in an organisation, the opportunity for employees to have accountability for their area, and to be empowered to make decisions can have a significant impact on the level of innovation that occurs within a business.
I have experienced this first hand as I have worked with different leaders over periods of time, in one organisation I witnessed the death of innovation as a new leader took a wholly hands on approach to reviewing and approving changes in the organisation. This happened over time where an employee would make a decision to implement a change (often minor), at some point the leader would become aware of the change and overturn the decision for some reason (again, often minor), the culture of the organisation quickly shifted to the point where people were hesitant to make a decision on their own, and often looked for senior management to approve any changes they wanted to make even if they were within their own sphere of influence. As a result, bottlenecks formed and soon many simple ideas were abandoned before they were attempted.
Reducing the layers of bureaucracy where possible and providing accelerated decision paths is critical to building a truly innovative culture. In other organisations I have seen decision trees used effectively to help individuals analyse the issue in front of them and whether it is within their remit to make a call on their own or how they should engage more broadly if the decision is outside of their role scope. So the final question I would ask is ‘how do we empower people to make decisions?’
There will certainly be other initiatives that can help to develop an innovative culture, programs that help skill employees in different models of process improvement, building innovation centres of excellence and innovation programs may all go to driving this cultural shift. In my opinion though, the critical foundations to developing an innovative culture are to think about what you measure, how you encourage people to speak up and how you empower people to make decisions.
If you’re interested in discussing innovative cultures with me further and how this could apply to you or your business, please connect with me.