Most organisations believe their people are their best assets.
They invest heavily in talent development programs and encourage their people to participate in strategic plans. While these activities start off looking promising, they end up producing lackluster results.
For instance, program participation rates start to dip. Or while employees are equipped with new skills and perspectives, there's little evidence this improves their output.
On a broader scale, the organisation suffers from employee churn rates and disengagement.
Why does this happen?
An underlying reason boils down to unintentionally creating an organisational culture that discourages participation and innovation.
To some, it is perceived as yet another buzzword. A vague term that is thrown around by corporates and 'experts' - adding to the noise and confusion.
To others, organisational culture is recognised to have a real business impact. It is the glue that attracts and retains top talent while reducing expenses due to costly staff turnover.
It is also considered a hidden growth engine. With the right talent and approach, you can unlock breakthrough innovation. This is critical when it comes to staying ahead of the curve - in the face of competitors and disruptive technology.
A common mistake organisations make is treating culture as an afterthought. For instance, adding bean bags and ping pong tables in hopes of creating a work environment with a 'startup feel'.
Or they might go one better by running innovation programs such as hackathons. While these initiatives might create buzz during the event day, everyone returns to the status quo the day after.
So how do you create an organisational culture that drives innovation while engaging employees?
“CULTURE TAKES CARE OF ITSELF WHEN YOU INSTALL THE RIGHT TYPE OF PLUMBING.” - LARRY KEELEY
Enticing young talent to innovate isn't enough. Larry advises linking incentives to innovation outcomes. When working with young talent, organisations can structure incentives so that seniors executives have skin in the game. For instance, they could risk losing up to 40% of their bonuses if they don't hit certain innovation KPIs.
"When senior leaders say everyone needs to be an innovator, they are partially right yet completely wrong." - Alex Osterwalder
Not everyone in your organisation needs to be responsible for generating groundbreaking innovation. Alex recommends different expectations across various departments. Teams in supply chain and operation, for instance, should aim for incremental improvements. On the other hand, individuals who are responsible for building new growth engines should be held to a different standard.
"Be open to hiring team members who appear different on the outside but hold similar shared beliefs" - Rand Fishkin
Innovation starts with attracting the right people for your company. Prior to hiring, you should make clear your core values, while communicating with candidates about your expectations and deal breakers. This allows them to decide if they would a good culture fit. One tactic would be to include a section on the position description on "why you should NOT work for us".
"The way feedback is received depends on how we frame it" - Adam Grant
Innovation starts with giving honest feedback on what's working well and what can be improved. Yet radical transparency can be difficult as people are conditioned to be socially polite. Adam shares how Bridgewater Associates has a "challenge network" culture. Each employee has a network of superiors and colleagues who are actively encouraged to challenge them to be better. This helps team make conscious decisions between protecting a person's feelings versus rooting for them to grow.
"Tie innovation projects to tangible outcomes." - Dr. Nicole Forsgren
Most companies are well-intentioned when it comes to launching hackathons and ideation session. Unfortunately, they lack proper planning when it comes to following through. Hence, employees who participate in such projects could end up feeling disgruntled and demotivated especially if their ideas get shelved.
Nicole recommends being very clear about follow-up actions. For instance, listing out reasons why ideas wouldn't be pursued further (e.g. lack of product market fit, misalignment with strategic direction). Or detailing action steps if an idea is shortlisted (e.g. prototyping, market testing).
"Quit overpromising employees." - CY Wakeman
Most employee engagement programs fail because their focus is on "perfecting the environment" in order to create happy employees. Cy cautions against chasing for employees' love as it creates a huge amount of emotional waste (drama) and entitlement. Worst case scenario, it reinforces the "victim mindset".
Instead of worrying about creating a perfect environment for employees, leaders should focus on cultivating personal accountability, which is death to the ego and the ultimate foundation for engagement. Cy reminds us that happiness and engagement are not correlated to your circumstances, but to the amount of accountability you take for your circumstances. When employees are accountable, ready for what's next, and willing to buy-in to the goals of the organization, they will naturally be more engaged. For those lower in accountability, you need to be aware of how much they are costing you in terms of their drama quotient, instead of trying to appease them based on their past merits. This helps you decide which employees to keep and nurture or let go.
"Conflict is not necessarily a bad thing" - Sam Walker
Common mistake: Employees who challenge the status quo and take unpopular stances create healthy conflict that can lead to breakthrough solutions and better ways of doing things. Unfortunately, the same type of individual tends to be squeezed out in the corporate hierarchy. Employees are discouraged from thinking independently and pushing back against the well-oiled machine. While this can create efficiency in the short term, it prevents the organisation from discovering opportunities for exponential improvements
"Employee engagement is a short-term fix to a long-term problem." - Jacob Morgan
Most companies try to entice employees with superficial perks such as free lunches, free yoga classes and working from home arrangements. Yet their employees are still stuck with outdated workplaces and practices.
Hence it is no surprise that many companies invest in employee engagement programs, yet they experience low happiness scores. Jacob recommends re-designing and changing workplace practices. This includes breaking down silos between departments and allowing employees to experiment with new ideas.
"Leaders need to get out of their echo chambers" - Lawrence Levy
Common mistake - When corporate innovators face setbacks, senior executives typically feel the urge to rush in and try to fix things. Instead, it takes courage to take a step back and give your people the space to navigate out of things. Lawrence recommends developing a tolerance for ambiguity and equipping your people with the necessary innovation skills.
"Celebrate both successes and failures." - Kevin Mulcahy
Make your workplace a safe space to experiment. The default assumption among employees are that there has to be guaranteed successes or someone's head is going to roll. Kevin recommends organisations make it explicitly clear that employees should focus on the innovation process while results are secondary. It's only by trying new things that the team gain the breakthroughs that matter.
"Don't boil the whole ocean" - Katherine Squire
Initiating top-down changes across various departments can be very difficult. People are resistant to change and getting buy-in from gatekeepers becomes an uphill task. Instead, Katherine recommends implementing new ideas on a tiny scale, creating small circles of excellence, then sharing success stories. When employees from other departments see the benefits, they become curious and start to participate.
"Get employees involved with idea generation" - Maggie Riad
Inviting employees to share ideas has dual benefits. It helps give decision makers new perspectives while raising staff engagement levels. Maggie shares how by engaging employees through idea contests and hackathons, they learn so much - whether its company culture, how the company makes decisions and the selection process for picking good ideas. These bits of information might be previously unknown to employees especially if they don't have access to executive meetings and boardroom sessions.
"Create a culture where people are comfortable with failing." - Robert Kegan
Robert shares how allowing employees to "fail fast" is vital. The default mindset for most employees is to avoid failing and looking stupid. Hence you should give people the opportunities to experiment and the safety net for failure. When the right environment is set in place, innovation starts happening.
It is also important to install rapid feedback loops. Millennials, in particular, want quick feedback about how well they are doing. One company that does this well is Bridgewater Associates. Every employee brings an iPad to a meeting. They can use a feedback app to rate other employees on particular qualities and give feedback. This raises performance across the entire workforce.
"Encourage radical questions." - Dave Gray
Dave shares how Nokia had a great culture where ideas flowed and people got along well. Unfortunately, it was eventually overtaken by competitors like Apple and Samsung. The reason is that their culture didn't keep up with their business requirements.
You can avoid this fate starts by asking radically different questions. A banking corporation, for instance, could ask "Should we be a bank?", instead of "how do we differentiate ourselves from other banks?". When the world has a high level of volatility, you have to ask a whole different set of questions. Then align your culture and people accordingly.
"In trying to put an innovation process in place in a large company, you have to hack the culture. It's not just one big bang and let HR implement training. It boils down which part of the system needs to adapt and adopt. What do we need to change in HR? What do we need to change in Finance? And where and when and how?" - Steve Blank
Steve shares that when a large Japanese corporation first launched an innovation program, it faced dismal attendance rates. The reason? Middle managers were reluctant to release their team from daily responsibilities. This changed when the company's president wrote a commendation letter - praising the first manager who took the leap and let his staff take part in the program. Since middle managers valued recognition from their big boss, they quickly let their staff attend the program.
"Focus on the early adopters with the willingness and openness to change and leverage digital" - David H Deans
In order to create digital transformation, you first need to bridge the talent gap. This could mean teaching employees how to use new technologies (such as artificial intelligence and the Internet of Things), along with innovation skills.
In addition, significant changes need to be made to the organisational culture. Traditionally, organisations operate in silo-ed functions such as IT, sales and supply chain. To be successful, people, processes, and technology to blend together.
"Great workspaces aren’t designed simply to create somewhere trendy to wow clients. They vital to encouraging emotional engagement with employees, attracting and retaining the best talent and creating and maintaining a solid company culture." - Jo Geraghty
While open-plan office spaces are increasingly popular, they aren't suitable for everyone. Successful workspaces need to support behavioural personas (nesters, campers, routiners, hiders) and different personality types (introverts, extroverts).
Jo highlights Airbnb's Paris office as an example. The office comprises of communal working spaces where employees sit at large custom designed tables. It also has a designated dining area that allows employees to eat together every day to reinforce a sense of family. Lastly, it has carved out space for “espace zen”, a place to retreat for privacy or reflection, which includes a sofa and a balcony.
"Creativity is a fragile concept, and innovation will quickly disappear within your company if you drive the wrong behaviours, or neglect the right ones." - Daniel Lock
Daniel points out the neglecting people's ideas or failing to give proper credit diminishes the spirit of innovation. This happens because employees are sensitive to the attitudes and responses of their seniors. To mitigate this, leaders should both challenge and motivate creative work.
When the inevitable failure does occur, instead of taking on a punishing mentality, focus on problem-solving, the organisation’s overall performance, and how the team can learn. This will motivate people to speak up, address concerns, and ask questions.
"We must selectively forget the past. That means not accepting current practices but challenging underlying assumptions, our solutions and mindsets, and the way we tackle the problem." - Paul Taylor
If you hear phrases such as “That’s the way things get done around here” or “That person isn’t really a (insert your company name) sort of person”, those are red flags.
To prevent such situations, Paul recommends leaders need to actively encourage diverse thinking.
"Innovation is not a KPI, it has to be embedded within the cultural fabric of a company." - Pete Sena
Pete advises that while innovation should be encouraged, it shouldn't be pushed into overdrive. If everyone in a company is a disruptor all the time, you can wind up cannibalising your own successful business.
The middle ground lies in creating a structure for conditions of experimentation that focus on learning and continuous iteration and improvement centered around key intentions and real human-centered problem solving.
Pete also encourages small teams to be made up of practitioners from a variety of disciplines. For instance, the fresh perspective that a designer can offer an engineer, or that a supply chain expert can offer business development will unlock previously unconsidered solutions. Diversity in thought and approach leads to new possibilities.
"Is the CEO and his or her senior staff working furiously on reducing cultural barriers to innovation?" - Jeffrey Phillips
If you see that the CEO and senior leaders are working on reducing uncertainty and risk, realigning compensation and rewards schemes, focusing their time and commitments around innovation, encouraging new ideas, balancing the need for efficiency with the need for creativity, then there’s a good chance that innovation will flourish.
If the CEO and others talk about innovation but don’t do much to mitigate a culture based on efficiency, repeatability and reducing risk and uncertainty, then either they don’t understand the impact that culture has on innovation (best case) or do understand and simply don’t have the time or energy to change the culture (worst case).
"Curiosity drives inspiration and insight" - Braden Kelley
When it comes to innovation, teams make the mistake of viewing it as a one-off project. Instead, the perspective needs to shift towards viewing innovation as an on-going process. In addition, it is a capability that the organisation needs to build to survive (like good governance or operational excellence).
"Data and technology don't change your culture, they reveal it." - Greg Satell
Greg shares the story of Cava Mezze, a full-service restaurant in Washingon D.C. They used data to improve employee experiences. When it came up that employees, especially those with long commutes, hated working short shifts, the data team redesigned the scheduling software to take into account the quality of life. It saved the company $500,000 in retraining costs and productivity losses.
"View innovation as a competency." - Drew Boyd
Drew advises that innovation is a skill, not a gift. Companies can nurture it in their employees by creating a well-defined set of innovation competencies. Then embedding them into every employee’s competency model along with other required behaviours such as ethics and leadership.
So there you have it - 24 experts sharing their best advice on how to create an organisational culture that drives innovation.
This report draws on our work driving change at large companies as well as from thought leadership in the space of not just management literature, but also evolutionary biology, psychology and sociology, because in order to see things clearly and influence human behaviour, we need to think holistically.