Innovation is a strategic imperative — ultimately, corporate survival depends on it. But executives (and shareholders) are usually pretty underwhelmed with innovation efforts. What is going wrong? We started this series with the hypothesis that culture was the missing piece of the puzzle.
How do you create an innovation culture — and make it stick?
This is what we learned from the academics, consultants and innovation leaders we spoke to:
You can only make innovation culture stick if you embrace its 'dark side' — the boring and more difficult parts
Who did we talk to?
Gary Pisano, professor of business administration at Harvard Business School.
What did we focus on?
Some executives see ‘innovation culture’ as faddish or clichéd. It could be down to change fatigue, past innovation promises left unfulfilled, or simply a feeling that technology and disruption have been over-hyped recently. To convince the sceptic, innovation leaders have to show that innovation culture is not just fun ideation sessions, it is about accountability and measurement too.
In Pisano’s words
“People gravitate towards the nice side of culture. The easy side. And in doing so, they overlook the harder, or darker, side of culture.”
Read Innovation culture has a dark side you need to embrace.
Don’t see innovation culture as rule-breaking, change the rules
Who did we talk to?
Tendayi Viki, associate partner at Strategyzer; Catherine Wallwork, head of innovation engagement and mindset at Deloitte Ventures; and Yossi Feinberg, professor of management and professor of economics at Stanford University.
What did we focus on?
Turning innovation in a heroic endeavour where individuals prevail against all odds is often where programmes start to go wrong. It makes for a great story, but it doesn’t set up an environment where you get repeated success. There are seven main pitfalls companies should avoid, from a lack of clear vision to a lack of CEO involvement; from copying culture to giving innovation teams proper support; from a rallying-cry or CEO-mandate not being enough, to seeing culture as a static concept.
In Feinberg’s words
“People can get distracted by what an innovative culture might look or feel like without first being clear on how innovation will enable their organisation to be successful in a sustainable way.”
Read Seven myths and missteps of innovation culture.
You’ve got to rattle a few cages
Who did we talk to?
Matt Atkinson, former C-suite executive at Tesco, Saga and The Co-op Group.
What did we focus on?
It can be hard to get a company started on innovation — not everyone will feel there is an imminent threat that they need to respond to. If this is the case, you need to find ways to make that case using an arsenal of “decent insight”. You need to push enough to secure a pot of capital, and apply structure and discipline to dispel sceptics.
In Atkinson’s words
“If you’ve been isolated and done nothing to bring the organisation with you, you’ve got a problem. The old world will kill the new world.”
Read Culture change – sometimes you’ve got to rattle a few cages.
If you want innovation culture to stick, you need to build it into performance reviews and bonus schemes
Who did we talk to?
Herminia Ibarra, professor of organisational behaviour at London Business School.
What did we focus on?
Microsoft, under Satya Nadella, is among the minority of companies that have successfully managed a true cultural transformation. Ibarra says it comes down to two things — they refocused their performance reviews around innovation and weighted compensation packages around the new products. She talks through five questions that can help determine if a company is ready to take culture change as seriously as Microsoft.
In Ibarra’s words
“Building an innovation culture will not succeed without the leadership of the CEO. Period.”
Read The questions every corporate innovation leader asks about culture, answered.
Senior leadership has to put skin in the game
Who did we talk to?
Ben Allgrove, partner and chief innovation officer at Baker McKenzie.
What did we focus on?
Changing a dusty sector like law isn’t easy, but law firms have come under intense pressure from both new tech entrants and clients who refuse to pay high legal fees. Baker McKenzie pushed through a digitisation programme over five years and shared how they managed it — from senior staff putting their political capital on the line to recruiting “ambassadors” for the programme across the business.
In Allgrove’s words
“Having someone from the leadership willing to sacrifice 50% of their time adds credibility.”
Read Under new threat, law firms learn to innovate.
Your innovation programme will keep changing over time
Who did we talk to?
Ben Luckett, chief innovation officer at Aviva.
What did we focus on?
Insurer Aviva started off with a digital transformation programme, but ended up with both a venture building unit and a corporate venture capital fund. Luckett explains how he learned to navigate different time horizons to manage short and long-term tensions, embedding innovation at the heart of corporate strategy — not appended to it.
In Luckett’s words
“I don’t think it’s particularly helpful to set innovation up as any more important than anything else we’re doing for customers on a day-to-day basis. Why should the back-office finance function that keeps the ship moving be given any less prominence or value?”
Read Six lessons Aviva learned about working with startups.
Stop obsessing about 10x — 10% innovation is important too
Who did we talk to?
Pascal Brier, group chief innovation officer at Capgemini.
What did we focus on?
Often innovation is understood as something strategic and transformational, but Brier says many companies can benefit from a more incremental approach. Encouraging all employees to have a 10% improvement mindset every day, in everything they do, can have a powerful impact.
In Brier’s words
“You create a lot of testing, you pretend you’re doing open innovation, you’re endorsing new technologies, but if it never hits your operation, it never changes the way you do things.”
Read Stop obsessing about 10x — 10% innovation is important too.
To keep innovation culture going, you will need 'safe spaces' and coaching
Who did we talk to?
Stefano Brusoni, professor of technology and innovation management at ETH Zurich; and Ben Bensaou, professor of technology management at INSEAD.
What did we focus on?
Starting to change is easy. Keeping it going once the initial enthusiasm has faded is harder. Brusoni and Bensaou offer some strategies, from embedding innovation coaches in the business (like Bayer did) to making sure the innovation team has enough diversity to it. It is important to understand the psychological side of innovation — that anxiety affects all of us (even the agitators), the importance of short-term feedback routines, and the value of collaborative innovation.
In Bensaou’s words
“You can’t just go around evangelising and advocating for innovation… you need to create a protected and fully legitimised space where anybody can innovate.”
Read Seven steps to sustain change.
Being the broker between a startup and the core business is crucial — and takes hard work
Who did we talk to?
Shereen Zarkani, head of Maersk Growth.
What did we focus on?
Making innovation something that is central to an organisation rather than peripheral, takes some planning. Maersk’s venture capital arm has recently focused on making sure its investments get embedded in the business. Zarkani’s team keeps a tight grip on setting up pilots and joint projects and will only back away once things are running smoothly.
In Zarkani’s words
“Corporate venture capital can have a bad reputation for over-promising and not delivering.”
Read Five steps to keep innovation part of your core business.
Scaling an innovation experiment across the whole company requires is hard — you’ll need clear principles and a lot of soft influence
Who did we talk to?
Anne Nijs, transformation lead, rare conditions, Roche.
What did we focus on?
Four years ago Roche started a small-scale experiment in changing how it interacted with patients with rare diseases. This was successful and Roche wanted to roll it across the business more broadly. This took a whole new set of skills, Nijs told Sifted. It is a case of influencing people rather than coercing, allowing people to adapt the system in their own way while still keeping hold of the essential guiding principles.
In Nijs’ words
“You cannot talk endlessly about vision and purpose. You have to connect it with 'the how'.”
Read How Roche is scaling innovation culture across the multinational.
A corporate venturing unit should operate at arms length — but not too far.
Who did we talk to?
Heriberto Diarte, CEO of SE Ventures
What did we focus on?
Giving corporate venture capital the breathing room to succeed, without losing connection to the wider organisation is a tough balancing act. Diarte, who set up and leads Schneider Electric’s venture capital arm, says the unit must look mostly outward, but it will tap into Schneider’s internal experts to evaluate startups. The CVC unit needs a variety of internal and external people as staff — and they need to be paid in line with VC packages.
In Diarte’s words
“We rely on Schneider engineers to vet the viability of unproven technology. I need to know if something is feasible, or if it’s against the law of physics.”
Read ‘On the edge but close enough’: Creating cultural conditions for CVC success.
An end to the series, but also not
There’s no single solution to creating an innovation culture. But the last twelve weeks have helped us understand the toolkit a bit better: senior level support, structures (including pay packages) that encourage it, aiming for the small wins as well as the moonshots. You may need innovation coaches, you’ll certainly have to make innovation feel like the rule, rather than the exception.
Does this chime with your experience? What did we leave out? We’d love to keep the conversation going so get in touch on LinkedIn or Twitter by searching hashtag #FutureProofonCulture — and use it to share your views.
