Creating an innovation culture that meshes with a quality culture
by Peter Merrill
One of the most frequently asked questions by people interested in innovation is, "How do we create a culture of innovation?" This is because they recognize that innovators do things differently.
In truth, it’s not the right question. People are really asking, "How do we create a culture of creativity?" The reason for the question is that, intuitively, they also understand that creativity flies in the face of the classic quality culture that aims to reduce process variation, increase process efficiency and produce highly predictable results.
Types of culture
It’s worth reviewing some of the classic types of culture to see which aspects are of value for innovation. Terrance Deal and Allan Kennedy describe, among others, the "macho culture," which has quick feedback and high rewards.1 You think of the stock market and sports teams. The agility of these cultures is important for innovation.
The "work hard—play hard" culture seems to have replaced the macho culture in terms of popularity. This culture is the customer service culture, with its own private language and a focus on working and playing as a team. It is seriously risk-averse. This is the way of organizations of the 1990s and does not lend itself to innovation. The collaboration required in this culture, however, is essential for innovation.
The "process" culture involves people who are task oriented. They produce consistent results, but always the same type of results. For innovation, the process culture may be a nonstarter, but following processes becomes necessary for innovation.
In addition to these types of cultures and behaviors, a culture of creativity allows time and space for people to explore, collaborate and experiment. A culture of creativity needs an open network and a loose process for new ideas to emerge. Knowledge will change and direction of travel will change as new knowledge emerges.
The challenge is how to enable this culture of creativity to coexist with the "execution" culture of quality management. Quality management is essential to succeed at innovation. Quality is the platform for innovation.
The challenge for the innovative organization is that these two sets of behaviors that must coexist make an innovation culture complex. The creative phase of innovation—which finds radical new solutions and requires loose or open thinking—needs an open network structure. The search for speed and efficiency of the last 50 years has driven this out of organizations.
The execution phase of innovation, however, demands speed to market. The challenge is that we require both loose and open behavior, as well as the need for speed. The question that is ultimately being asked is, "How do we restore creativity to our organizations?"
Culture is based on behavior, and knowledge is innovation’s fuel. An innovation culture embraces a set of behaviors that will discover knowledge we may not realize we have or create new knowledge by developing existing knowledge.
In the 1990s, people mistakenly thought it was possible to document all the knowledge in an organization. This led to the nightmare of procedure writing initiated by ISO 9000. As the discipline of knowledge management emerged in the late 1990s, it became recognized that typically only 20% of an organization’s knowledge can be documented, and the clear majority of knowledge is the tacit and subconscious knowledge in people’s minds (see Figure 1).
Step one: The behaviors that will release and develop this knowledge are exploration and interaction with new people and having new experiences. You repeatedly hear the expression, "Step outside of the box." Today, we work in a box, have lunch in a box and think in a box. People want to be released from this mental prison. So, giving people time and space is the first step to an innovation culture. It is this "release from prison" that makes it so easy to engage people in creative thinking.
Step two: Interaction with people who are different from ourselves is the next step, and this is not easy. The mirror effect often draws us to people with a similar background and experience. Diversity creates tension, but this tension creates new knowledge.
Scott Page, a California Institute of Technology professor, researched how a group of ordinary but diverse people had far greater collective knowledge than a group of Mensa-level, or high IQ, people.2 The ordinary guys consistently outperformed the Mensa people at problem solving.
Collaborating with people who are different is not easy, so we must discover and respect their strengths. As Stephen Covey said, "Seek to understand before you seek to be understood."3
Diversity is a vital component for an innovation culture, and the United States has always been near the top of the list in terms of diversity. There are many lessons to be learned from a diverse nation rich in culture.
Step three: The third key behavior in an innovation culture is experimentation—that is, a willingness to try things and not be afraid to fail. Capturing lessons learned after things fail is how we grow knowledge.
Willingness to take risks has been suppressed over the last decade. Perhaps one of the best stories of celebrating learning from failure is one about the popular household product, WD-40, a penetrating oil and water-displacing spray. When Norman Larsen finally found his solution back in 1953, he recognized the learning from 39 previous failures by naming his product WD (water displacement) No. 40.4
These behaviors do not magically happen. An often-overlooked aspect of innovation culture is the organization structure within which the culture can exist. The next question that arises is how do we create the framework in which the two distinct behaviors can coexist.
An innovation organization must be agile, able to change direction easily and move with speed. A network structure can assist with this, and there are two main types of network (see Figure 2). In the creative phase of innovation, we need an open or knowledge network. In the delivery phase, a closed or clustered network.
There are different approaches, and we must find the one that works best for us.
- For years, W.L. Gore, the makers of Gore-Tex, the waterproof, breathable fabric well known to outdoor enthusiasts, has used a flat organization with self-managed teams.
- Under CEO W.G. Lafley, Procter & Gamble outsourced its creativity through InnoCentive, an R&D and crowdsourcing company.
- Lockheed Martin created Skunk Works to isolate its creative and innovative efforts to another business group.
There are other methods and different solutions to the enigma of peaceful co-existence of creativity and execution.
Too often, we separate salespeople from R&D people because they seem different. One key part of W.L. Gore’s success was getting these people to work together in the creative phase of innovation.
Changing behavior and culture
A factor that also must be understood and not ignored is a nation’s culture, and this will influence organizational culture. Data analysis from one World Economic Forum (WEF) report shows some important lessons in developing organization culture.5
China has a culture in which respect for elders is paramount, and this inhibits new ideas. The country knows this and it has a reputation for R&D being "robbery and denial"—that is, advancement by any means. It’s no coincidence that 2015 was the year of innovation for that country as it took its first steps into culture change.
In Europe, the French and Italians have an enormous reputation for creative design with brands such as Chanel, Ferrari, Prada and Gucci. The Germans have a reputation for precision and execution with names such as Mercedes and Audi. What if those two cultures could coexist?
Well, of course they do in Switzerland (companies such as ABB, Swatch Group and Swisscom), and it comes as no surprise that Switzerland is near the top of the WEF list of innovative nations.
So how do we begin this change of behavior and culture?
The challenge is clearly one of Leading Change, John Kotter’s book on the subject.6 There are issues that will create resistance to changing to an innovative culture. You see some of the issues related to resistance from the new behaviors described in this column and also by looking at your existing culture. Resistance will be especially strong if you have a history of success. It will be necessary to create a sense of the need to change.
The following approach provides a process for handling change as illustrated in Figure 3, and the business leader plays a key role in all of this:
- Create a sense of urgency. Create a burning platform.
- Create a change team. Its mission is to quickly create a critical mass of believers.
- Win early. Produce a quick result, which is then publicized.
- Communicate vision. This becomes a key task for the business leader.
- Enable action. People must be given the authority and time to innovate.
- Don’t declare victory. The short-term win creates danger as people relax.
- Anchor a new approach. Embed new behavior until innovation becomes business as usual.
- Recognize success. The behaviors described earlier are endorsed.
You must recognize new behaviors, not results. Recognize participation in innovations and not heroic defenses of the old. Endorse the behaviors I have described.
Reinforcing new behaviors builds trust, especially when the behaviors are based on the new values that they imply. In the 12th of his 14 steps to quality improvement, Philip Crosby wrote, "Appreciate those who participate."7
Coexistence of different behaviors, organizational structure and the influence of national culture are just some of the factors that must be addressed when developing a culture of innovation.
A culture of quality and a platform of quality management are essential for delivering innovative offerings.
Innovative new offerings only develop when a creativity culture coexists within a quality culture inside an organization structured to allow for that coexistence.
- Terrance Deal and Allan Kennedy, Corporate Cultures: The Rites and Rituals of Corporate Life, Perseus Books, 1982.
- Scott Page, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies, Princeton University Press, 2007.
- Stephen Covey, The 7 Habits of Highly Effective People, Simon & Schuster, 1989.
- WD-40, "Fascinating Facts You Never Learned in School," https://wd40.com/cool-stuff/history.
- World Economic Forum, "The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution," January 2016, www3.weforum.org/docs/WEF_Future_of_Jobs.pdf.
- John Kotter, Leading Change, Harvard Business School Press, 1996.
- Philip Crosby, Quality Is Free: The Art of Making Quality Certain, McGraw-Hill, 1979.