Professional Documents
Culture Documents
AIM-article # 005-2011
How
to create
a culture
that
supports
innovation?
by
Dirk Loop
Co-Founder & Director of CIPOC Ltd.
KNOWLEDGE IN PRACTICE
We at CIPOC often work on projects on behalf of others, mainly larger companies.
Many times teams we have been delighted to work with suffered from strict corporate
process frameworks. Of course, working as external project managers do not free us
from these rule-sets but it is much easier to question or even to ignore certain parts
of these. It is easy to get people to talk (about their private lives) and thus to build up
trust, especially when you are new just temporarily deployed in a company. This way
we typically identify innovation and improvement potential within a few days. Many
consultancies use this knowledge to sell new projects. We, for our part, found that our
clients are generally more pleased if permanent employees can be encouraged to take
over the lead of their own ideas.
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How
DIRK LOOP
Having studied national economics, Dirk Loop is also educated in
banking, highly trained in effective leadership & communication
skills and a PMI-certified Project Manager. He offers fundamental
interdisciplinary knowledge, and more than ten years of relevant work
experience in various industries and professions - from corporate
controlling to public relations, from ip-management to software
development. Loop is a co-founder and director of CIPOC ltd (http://
www.cipoc.com), a consultant firm focused on innovation and quality
management for telecommunication, energy and banking.
4. Try to avoid a bird perspective. Always have Typical projects coming out of Benchmarking work
a detailed perspective on everything. Do not like this: You identify todays industry leader, evalu-
burden yourself with independencies, other ate what creates his leadership and set up a five-year
business units or market demands. This will program to close your gap. Following this path, in
only distract you from really important tasks. five years time you will be as good as the industry
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How
leader is today. However, you will still be five years HOW TO CREATE A CULTURE THAT
behind todays industry leader as well as other com- SUPPORTS INNOVATION?
petitors. In addition, copying is the antipole of in- This in-depth article is divided into two parts: The
novation and therefore a bad start to become more first part, Top-down steps, gives recommendations
innovative. to line managers. In this context a manager is defined
as someone who leads a team, has organizational au-
The following recommendations should neither be thority and has access to budget. The second part,
understood as a blue print nor as a strict map to suc- Bottom-up steps, focuses on the individual worker
ceed in innovation. Nevertheless, their consideration or project member who has limited formal power,
will certainly help to avoid threats and instead help but some opportunity to change the culture of an
find opportunities to become more competitive. enterprise from the inside.
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How
Figure 1.
even provide a false sense of security. They can help think it might change our whole industry. Silence.
but they are not sufficient. Innovation is fundamen- Now its manager Bs turn: We will take our existing
tally influenced by people in need of not only being product x and bundle it with our successful product
managed but also to be led. Yet processes are no sub- y. We will use our existing advertising and distribu-
stitute for visionary leadership. tion channels to sell it to our existing customers.
Look at the spread-sheet, this will be the end-year-
However, my experience is that especially larger com- profit. Whose budget will be approved first?
panies often rely on processes, because strict processes
deliver predictable results. They need predictable re- Best advice is to learn the process, execute the pro-
sults for board meetings and shareholder announce- cess, and then (to) lead within it (Jacoby, 2011). If
ments. Unfortunately, this belief in organizational this means that lines have to be crossed, so be it.
structures promotes smaller improvements and incre-
mental innovations, avoids breakthrough innovation BE PATIENT
and therefore becomes a risk sooner or later. Many project or portfolio management processes
follow strict rules. They start with workshops in
An example: Two managers apply for their portion which stakeholders (typically Marketing units) ex-
of the budget. Manager A says: Ive got a great idea. press their ideas and requirements, ending up with
We dont know how much money we will have to highly defined schedules and planning spread-sheets
spend till we know that it really works and at this of product lifecycles and revenue forecasts. Starting
point we do not have a marketing strategy, but we an innovation project leaves a lot of question marks
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How
because innovation as opposed to improvement his pocket began to melt. He then put popcorn into
is unpredictable. the machine, and when it started to pop, he knew he
had made a revolutionary invention on his hands:
Best example is the first tablet computer Newton, the microwave oven. (MIT, 1996)
from Apple, the first of its kind. Ten years ago, Ap-
ple stopped the Newton in 1998. Some say it was Another good advice is to consult rather than con-
a commercial flop because the tablet had been to trol. If every stakeholder knows that innovation is
big for a pocket and the 90ies-man, tend to buy unpredictable and that timelines are more likely
gadgets, was not willing to carry handbags. Others estimates based on a bulk of assumptions, nobody
believe that Apple stopped its development because will confound it with a strict rollout-plan, which
the product devoured a billion dollars (MacNeill, can actually be controlled by hard figures. Leading a
1998). But the tablet returned, and on January team with good advice and useful hints will increase
18, 2011 Apple announced it had sold 7.33 mil- motivation, and the spirit of innovation, much more
lion iPads during its fiscal 2011 first quarter ending than dead-lines and finger pointing.
on December 25, 2010 (Apple, 2011). As men still
tend to buy more gadgets than women, it looks as There is a German proverb that says: If a train runs
if men at least changed their minds on handbags in the wrong direction, each station on its way will
significantly. be wrong. In my opinion this is the best way to
check if an innovation train is still going towards
No one becomes impatient when a scientist cannot its goal: To look at the stations, not the train or the
tell, within a few weeks spent experimenting, how tracks.
to build a simple, cheap and safe spaceship, say for
vacations on Mars. This would take at least anoth- DO SOMETHING
er ten years or so. But once an invention is made, Every innovation project requires the willingness
many stakeholders expect development and deliv- to take charge and make it happen. Obvious? Not
ery to be less complex and revenues to be safe, or at all! We live in a world of memos, emails, work-
at least predictable. In most larger innovation proj- shops, reviews, boards, meetings and discussions
ects many events take a different course to what was about memos, emails, workshops, reviews, boards
originally planned. In order to manage expectations and meetings. There is at least one complaint on ev-
better, timelines and profits should not be promised ery idea and there is always a good reason to have
or assured. This only leads to disappointment and another discussion.
impatience.
It has shown that the easiest way to stop excuses is
Perhaps the best advice is to be prepared that ex- to start some kind of prototype, at least something
pectation will probably not be met. However, this that gets people to think: Well its not perfect, but
might not necessarily be a bad thing. Sometimes its a smart idea. This could be a success. I should get
outputs also overachieve the original scope planned. involved. This prototype, however, might not even
Take Percy Spencer as an example. While he was be close to a beta-version. Its only purpose is to stop
conducting a radar-related research project with a people complaining and get them involved.
new vacuum tube, he realized that the candy bar in
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How
ally use their products in good faith. Nobody trusts demands more so than planned strategies. So, even
a bold hairdresser who sells hair-restorers. So the very small changes within their organization cause
best question any executive could ask his or her em- the companies unforeseeable impacts.
ployee, coming up with a new idea, is: Would you
invest your own money in it? And the best answer A closer look at todays software development proj-
an employee could give is an honest Yes. ects illustrates the above: In software development
projects, timelines and amount of new functional-
It is actually crucial that the person who sells an idea ities to be deployed often are ambitious. As a result,
is committed to it. It often takes months to get a slot source code of new software is often littered with
in a board meeting to present a project. And it may hot-fixes and workarounds. The end customer will
even take a longer time to obtain a decision. probably not notice, since everything seems to work
without a problem. But programmers working on
But anyone who chooses this path should be aware upgrades or additional features have to consider ev-
of its strengths and weaknesses. A good social net- ery line of code and its impact on the others.
work and personal (not necessarily organizational)
authority within a company will help make things Not only does complexity increase efforts, it also
easier. And what also helps is being a specialist in a increases costs. This should become evident when
certain discipline, ones expertise being underlined business cases are made. If it does not, then wrong
by publication or external speaking engagements. expectations are raised that will most likely lead to
disappointment. Infamous examples can be found
Another good advice is not to disregard daily busi- unfortunately to no surprise in todays software in-
ness especially it has no direct link to innovation dustry. But just because complexity is complex, it
projects. Being smart at everydays work helps not should never be an excuse not to start. Start at a lower
to provide targets to enviers and to raise self-confi- level, e.g., with a pilot and take one step at a time.
dence. However, it should be considered that there
is just a fine line between self-confidence and hubris. BUILD A TEAM
The myth of the lonely genius who creates a fortune
THINK OF THE WHOLE PICTURE out of inventions he has made in his basement still has
Although an idea may be great and market opportuni- a strong lobby. In reality, teams are generally more ef-
ties look right, following these might not be the top pri- fective not only in generating ideas but also in bring-
ority of an enterprise at that specific point in time. Oth- ing them to life. An idea from one person often lead to
er topics or projects may be more important or have a several more ideas from others. Ones complaint may
better alignment to the companys overall strategy. For be another ones solution. A task that is too big for a
example, if a companys current cash flow depends on single person might be a small thing for a team.
just one customer, it may be a good idea to attract new
prospects in order to reduce this dependency. But it will It is no secret that the effectiveness of a team emerg-
almost certainly be a bad idea to put the current in- es with its commitment to a certain goal, sharing the
come at risk before identifying a reliable new source. In same vision. And it is generally helpful to involve
the end, these decisions have to be trade-offs between people who are enthusiastic and excited about an
safeguarding the present and the future. idea, because they are more likely willing to spend
additional effort, often extending into their own
Bottom-up innovators often forget to consider inter- spare time. (also see Pellman, 1999: 82)
dependencies and complexity. Companies in grow-
ing markets particularly force such challenges be- To create not only an innovation but also a culture of
cause organizational structures often follow current innovation it is necessary to give credit to the achiev-
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How
ers wherever possible. In his book, The Journey is whith this commitment come extraordinary results.
the Reward (1988), Steve Jobs tells how it was the The worst for an innovation team is to remain silent.
team that created the Apple Macintosh. He recog- This normally shows a sign of a lack of interest.
nized their efforts and contributions by casting their
signatures on the inside of the casing. (Sloane, 2006: When a team has been created that is enthusiastic
100) Generally I think crediting should start much and ready to make things happen, someone should
earlier. In my opinion it is a question of manners. be in charge to keep the team together. An easy way
is to hold periodic meetings. Another is to divide and
Who should be part of a team? Valuable team mem- address responsibilities and tasks, and track and re-
bers should bring along with them the skills required port them as often as possible.
for certain projects as well as their enthusiasm. In
some cases the question of required skills is not that STICK TO THE PROCESSES
simple. Especially at the start of an unpredictable As elaborated above, it is often a good idea for in-
project, requirements and hence the scope, activities novation projects to depart from the usual paths
and skills needed might be unclear. and processes. But this is not a free ticket. A famous
quote by Edison that should be mentioned in every
Another experience we have had over the years article on innovation is that Genius is 1% inspira-
is that teams are often more effective when they tion and 99% perspiration. In order to use these
fight, fighting in a contextual sense, of course, is a 99% of perspiration wisely, it should be considered
good thing. It shows that people are committed, and to follow specific rule-sets and processes.
Figure 2.
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How
Many tasks within an innovation project are not so If you are not sure whether you have got what it
innovative, but still have to be done. These especial- takes to transform a company bottom-up, shed a
ly, should be managed properly. Classic project man- light on it by using figure 2: Ask a flow-chart.
agement methods like PMI or SCRUM have shown
to be extremely helpful for managing sub-projects of
innovation topics.
Concluding remarks
Most companies employ a top-down strategy to en- innovation more or less like a hobby or freestyle ex-
hance a spirit of innovation. They dedicate some bud- ercise, as something to do for fun, and if the daily
get to innovation, call on someone to be in charge business allows it.
and acquire some expensive software tool intended to
help them manage innovation projects and ideas. Web- I think that this attitude is a mistake. As Peter
portals designed, fancy cards and posters printed to in- Drucker, the evangelist of Marketing, puts it: Ev-
cite employees and customers to take part in idea con- ery organization not just business needs one core
tests that are often more lotteries than real contests. competence: Innovation. (Drucker, 1999: 119) This
is why I advocate a different strategic approach to
Out of question, there have been efforts like this innovation and a generally different self-image of
shown to be surprisingly helpful. But in most cases, innovation managers. The core mission of any in-
the results are unused ghost intranet websites, dis- novation manager should be the enhancement of a
appointed employees and de-motivated people who culture of innovation. Innovation depends on people
are told to be innovation managers but never have and their personal skills, trust, teamwork and com-
had any organizational authority to actually change mitment. Anybody improving these skills directly
anything. In other words, many companies still see and indirectly helps enhance a culture of innovation.
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Managerial implications
MANAGERIAL IMPLICATIONS MANAGERIAL IMPLICATIONS WHEN
WHEN YOU WORK TOP-DOWN: YOU WORK BOTTOM-UP:
1. Trust your people 1. Improve everything but not at once
Know your people Listen to every complaint and every suggestion
Reward opposition Always think of the customer experience
especially if the customer is a co-worker
2. Do not trust your processes Concentrate on feasible project sizes
Lead, dont just manage Improve yourself
4. Built a team
Know your weaknesses
Find a team to compensate your weaknesses
Never trust a team that never fights
Do everything to keep the team together
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References and
recommended reading
Apple Inc (2011) Apple Reports First Quarter Results
Johnson, S. (2010) Where Good Ideas Come From: The Natural History of Innovation
Rowling, J.K. (2008) The Fringe Benefits of Failure, and the Importance of Imagination
Sloane, P. (2006) The Leaders Guide to Lateral Thinking Skills: Powerful Problem-
Solving Techniques to Ignite Your Teams Potential (2nd Edition)
www.innovationmanagementforum.com
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