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How to Build an Innovative Culture

2012 October 24
by Greg Satell

Every manager would like to be Steve Jobs, but very few ever even come close.  Many seek out advice, read case studies and go to workshops to help guide them.  Yet still, very few companies are able to innovate effectively.  Why is that?

Surely there is no lack of desire.  Ask any top executive and he will tell you that innovation is a top priority.  It’s not a lack of commitment either.   Businesses invest billions in R&D every year, yet all to little avail.

One big reason is a the lack of innovative culture, especially at successful operational firms.  Competing for the future is different than competing for the present.  If you try to innovate the same way you operate, you probably won’t get very far.  To break the cycle, you’ll need to build a culture that promotes innovation as well as operational excellence.

Embrace the Audacity of Youth

Unfortunately, innovation is often confused with strategy, so it’s not surprising that it’s often approached the same way.  High level meetings with senior executives are convened, big decisions are taken, announcements are made and vast resources are deployed.

The problem is that decisions made that way will reflect the skills and experience gained in the past which, while possibly still effective at present, often isn’t relevant to the future. What you get, in other words, is an attempt to advance past paradigms instead of a serious commitment to creating new ones.

The truth is that breakthrough innovations are more often the product of the audacity of youth than the wisdom of experience.  Newton, Einstein, and Watson and Crick all made their major contributions as the foolish young men we forget, not the mature men of science that we have come to revere.

So the first step toward creating an innovative culture is recognizing that senior management is often unable to drive it.  We can monitor it, enable it, promote it and ultimately decide when and how it gets deployed, but most of us are ill equipped to create it (and I include myself in that number).

Be The Dumbest Guy In the Room

Innovation is frequently a product of synthesis across domains.  Quite often, breakthrough solutions in one field are achieved by borrowing wisdom from another. Experts often hit a wall, because they are blinded by past successes.  Old solutions are often poorly suited to new problems.

In his recent book, The Idea Factory, Jon Gertner explains how Bell Labs designed their buildings so that people with varied expertise would be forced to interact.   Jonah Lehrer describes much the same at Pixar in Imagine, his (somewhat tarnished, but still worthwhile) book about creativity.  The highly innovative Santa Fe Institute is specifically set up for cross-disciplinary study.

The problem is that if you manage innovation, you end working with people who know a lot about things you don’t.  Therefore, you have to get comfortable being the dumbest guy in the room.  It’s frustrating and takes some getting used to.  Nevertheless, it’s absolutely essential to breaking new ground.

So feel free to be the dumbest guy in the room.  After all, if you already had an answer, it wouldn’t be an innovation.  Better to feel silly in the office than in the market.

Promote Sustainable Failure

As I’ve written before, the truth about innovation is that it’s a messy business.  It rarely springs forth fully formed, but rather comes to us in a crappy disguise.  It usually doesn’t work very well at first, existing customers are often skeptical about it and rarely delivers immediate ROI benefits.

Many innovations ultimately fail.  Failure is part and parcel of innovation.  That’s why venture capital funds expect most of their investments to founder.  The trick is to fail cheaply and not to penalize those involved with a failed project.  If you can do that, you can make failure is sustainable and stumble your way to success.

Here’s the thing though.  Failing cheaply requires minimal involvement by senior management and highly paid consultants.  Once they’re involved, failure becomes expensive.  Vast resources (and egos) become invested and projects begin to take a life of their own.  When they go under, they can take the whole enterprise with them.

The Ultimate Question

A lot of people think they have an innovative culture, but very few are actually able to innovate.  So how do you know?  What can you do to ensure that you are building a culture that promotes innovation rather than one that smothers it?  I believe many of the answers can be uncovered by asking yourself one simple question:

If someone came to you with a breakthrough innovation, how would they sell it?

Wal-Mart and Sears.  Netflix and Blockbuster.  Nucor and US Steel.  In each case, the market leader had a chance to invest or partner with the upstart that eventually disrupted them.  They simply weren’t buying.

So ask yourself, how would you avoid the same fate?  If Sam Walton came to you with a new retail concept, or Reed Hastings with a new way to rent videos, how would they get through the front door?  Who would they talk to?  How would they be received?  What if the next great entrepreneur already works for you?  Would she fare any better?

At its core, building an innovative culture means instilling the spirit of the future into the practicalities of the present.

– Greg

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