Building an Innovative Company Culture

Executives love talking about “disruption” nowadays, but very few companies can achieve truly disruptive results. The reason: before you can disrupt an industry, you need to disrupt your own company culture first. The problem: organizations value conformity.

A conformist company culture stifles innovation and breeds weakness

The weakest part of organization is where conformity rules with an iron fist, in the name of efficiency. According to Harvard Business School Professor Teresa Amabile, “In many companies, new ideas are met not with open minds but with time-consuming layers of evaluation”. These “time-consuming layers” in most organizations are the middle-managers. These leaders have built careers on figuring out what works in their organization, for their current clients, and they ensure others follow similar approaches in an effort to hit near-term targets and drive year-over-year results.

The problem with this approach is that while you can be very good at identifying and executing the incremental innovations that will grow your business year over year, you are virtually certain to miss the disruptive innovations that can change industries. Over time, the middle management fixation on efficiency, hitting targets and investing in ‘sure things’ virtually ensures that the most disruptive ideas will never get adequate attention and resources.

This problem was well described in the classic book, The Innovator’s Dilemma. While middle management can keep the company strong in the near-term, the stifling of innovation makes the organization weak in the long-run. This creates openings time and again for startups disrupting the industries of much bigger incumbents, because company culture within early stage companies values innovation — these organizations live for it and their futures depend on it.

Conformity abhors change

People stick to their patterns of behavior because they see no reason to disrupt things in the near-term. They do the things they do, because they have worked in the past. They are comforted by consistency….by conformity. There is not enough upside for them to take a risk. Change = non-conformity in places where conformity is valued.

Communities that are used to conformity are unable to change without significant effort invested in creating an innovative company culture. This investment, including the attention of senior leadership, is needed, because it bucks the natural tendencies of employees.

Conformity smothers creativity

Creating new insights, dreaming-up new approaches and challenging the status-quo are all necessary for innovation and creative problem-solving. And yet conformity tells us that we mustn’t challenge or invent, but instead tread the well-trodden path. Employees who see their innovative thinking is not really valued (especially by middle-management to whom they report), will stop trying to create, stifling innovation. This is why early-stage companies highly value curiosity and creativity, while more established organizations appear to prize conformity more highly.

How to break from conformity and build an innovative company culture

1. De-emphasize ‘cultural fit’ when hiring
   If you want your employees to be non-conformist innovators, you need to stop putting so much effort into hiring for “cultural fit.” This is a non-conformist, counter-intuitive view for sure! But innovation in a company demands people who see the business differently and who have the courage to break out from conformity. If your business isn’t constantly innovating, it’s likely because all your employees are team players that have excelled at thinking ‘inside the box.’ This level of conformity, while comfortable in a company culture that values it, is the enemy of innovation. Hire people who make you a little uncomfortable.
2. Set an example
   If you are a leader in your organization, get curious about new approaches and be a nonconformist yourself. Observe what the cutting-edge companies in your space are doing around the fringes of your space. Don’t discount small players today who are trying new things for which you cannot see the business case, as they just might be onto something you can’t see, especially if they are attracting investment capital and/or redefining the market. Purposefully work to push yourself outside your comfort zone and try new things. Challenge the status-quo! As you seek to set an innovation example in your effort to change company culture, be sure to explain what you are doing to your bosses and peers. Let them know it is purposeful, vs. reckless. You might not always get the OK to proceed, but from time-to-time, you just might be able to try some new things. Encourage people reporting to you to experiment.
3. Build a company culture of experimentation
   The best approach we have found is to identify some ‘pilots’ or ‘experiments’ you can run and invest appropriately. You don’t want to bet the company on something entirely disruptive, but you can start small and expand from there. Specific bets, rooted in market, trend and customer insights, provide a focus for a new, experimental approach to innovation. An added upside — when sold internally as a pilot or experiment, you are setting up the possibility of failure/learning in advance, so there is no surprise when things don’t go to plan….because most things don’t go to plan!
4. Support your innovators
   Provide training in iterative, experiment-rich approaches to innovation and new product development. Approaches such as Agile, Design Thinking and The Lean Startup, can help equip your internal innovators to think differently and try new behaviors, which over time can help you develop an innovative company culture. Provide people with the latitude to try new things and don’t berate those who took calculated risks and failed. Celebrate what they learned and identify ways to leverage those learnings for future attempts at innovation. Finally, since you’ll be asking people to take a risk in an organization where conformity has been valued in the past, provide them with coaching to help them along the way, especially as they try to execute on a new approach. Your investment in your innovators will send a strong signal that you value the type of nonconformity required to innovate.

Some watch-outs as you try to change your company culture

1. Don’t start out by trying to change culture…as you seek to drive culture change. Again, this is another counter-intuitive idea, but an important one. We have seen companies make grand declarations about how they are going to create an innovative culture, only to lose interest when their efforts don’t create instant change. Start by doing instead, setting an example and figuring-out what boundaries you can push, and what blockers need additional attention, but proclaiming that you have created an innovative company culture.
2. Avoid the hoopla. This is related to the point above. We have seen numerous companies run big innovation events, pitch contests, and hackathons as a means of kicking-off major innovation initiatives. These events and the hoopla surrounding them can set inappropriate expectations within organizations that have a long-standing company culture that values conformity. Internal innovators invariably run into a large number of obstacles as they try to turn their innovative idea into something tangible for the organization. Let initial results of initial experiments provide necessary examples around which you can tell stories and encourage innovation.
3. Start small and expand. Don’t try to kick-off 10 pilots or experiments at once or try to engage your entire organization in the effort. It is better, in our experience, to identify and support a handful of innovators who have new ideas to explore and the energy to invest the immense amount of effort required to be a nonconformist in a conforming company culture. Start with 3-4 initiatives and learn from those.
4. Start with a good mix of experiments. In addition to a truly disruptive idea or two, try placing smaller bets at the same time. The disruptions are going to be messy, with a lot of uncertainty. A few quick wins with less ambitious ideas can help build confidence. Now that said, don’t stack the deck with experiments that everybody can agree with. Everything you pursue in the name of innovation, need to break the mold somewhat, or else you are simply conforming in a different way. The nonconforming ideas are where there is potential gold. Take some risks!