You have likely heard the popular phrase “Culture eats Strategy for Breakfast”. A recent study from Booz and Company further reinforced this notion by surveying 2,219 senior executives. Unsurprisingly, Booz found that 84% of executives believe culture is critical to their business success while 60% of executives believe culture is more important than strategy or their operating model.
Organizational culture is reflected in nearly every aspect of a company. We see culture exemplified through factors such as whether they are willing to take risks or if they prefer to play it safe? do they focus more on driving results and achievement or on people and relationships? Is the company open to new opportunities and change? How do they generate and move ideas within the company?
Clearly, culture has a huge impact on today’s business and has become a major differentiator for progressive companies such as Zappos, Starbucks and Apple, however, in the context of the analogy, strategy is just a mere dessert for culture’s feast while innovation is its main course. Essentially, strategy will set the direction of a company’s desired destination, while culture is in the driver’s seat with a much greater deal of influence on the company’s ability to evolve, innovate and leapfrog the competition.
There’s always been much discussion and debate around why companies fail to innovate. Some argue innovation often defies and doesn’t fit existing business models or perhaps it is a matter of aligning the right talent or having the right innovation processes. While all these arguments (and many others) are likely contributing factors to a company’s ability or inability to innovate, nothing stops ideas dead in their tracks than aspect of a company’s culture.
Venture Capitalist Ben Horowitz said it beautifully in a recent blog:
“Big companies have plenty of great ideas, but they do not innovate because they need a whole hierarchy of people to agree that a new idea is good in order to pursue it. If one smart person figures out something wrong with an idea — often to show off or to consolidate power — that’s usually enough to kill it”
Yes, you can have the best talent, best ideas, best processes, abundant resources and cash, but at the end of the day, if the key attributes and behaviors engrained in your organization’s culture do not align with the concept or idea, being successful innovation starts looking as if it’s a matter of luck.
Mandating innovation from the top also rarely delivers. If the culture doesn’t support it, it doesn’t matter where in the organization the mandate comes from or how much executive support is behind it. Let’s take a recent example at Nokia. Nokia never suffered from a shortage of ideas. It spent $40 billion on research and development over the past decade, almost four times what Apple spent over the same period. Yet, if you read between the lines of Stephen Elop’s now infamous Burning Platform memo, Nokia’s culture grew so complacent and complex that despite having a product that resembled the iphone over 14 years ago, it shrugged off the idea and it never got to see the light of day.
There are different opinions and practices regarding what it takes to build the right culture, but what it comes down to is that culture is the outgrowth of leadership and it is the leaders, who through their shared vision, shape and foster the culture of a company.
There are many companies today that can demonstrate their success in building the right culture for innovation. Netflix for example, which has been a disruptive force and has out-innovated many incumbents, has publicly shared their organization’s cultural handbook. Netflix aligns all of its employees to nine behaviors and skills that are clear drivers of innovation (which include, among others, Selflessness, Curiosity, Communications and Courage). They also clearly call-out behaviors and attributes that could inhibit innovation such as the intolerance of ‘Brilliant Jerks’ and curtailing process-adherence in exchange for creativity and self-discipline.
IDEO, one of the world’s most revered innovation and design firms, recently shared a glimpse into their culture, where attributes such as optimism, embracing ambiguity, selflessness and an orientation towards action reign supreme. IDEO ingrains cultural guidance such as “Deferring Judgment” and “Going For Quantity” in its culture. Their culture is meticulously designed to create an environment that’s safe for taking risks.
As a 112 year-old company, 3M proves that fostering the right culture for innovation isn’t just possible in smaller companies or start-ups. Though 3M has had a new CEO every five years on average over the past 40 years, the philosophy of William L. McKnight, its inspirational leader from 1929 to 1966, is passed along to every new scientist or engineer. The company’s culture was shaped to firmly believe in tolerating fast failures, promoting networking, and allowing employees freedom by using 15% of their paid time to “chase rainbows” and hatch their own ideas.
Culture is a balance of attitudes; behaviors and actions that combined can create and foster incredible things. The right culture does way more than guide the way a company operates or makes its profits. It actively and passionately engages employees in the business, no matter which rank or level they are in the organization. It strives to remove barriers such as bureaucracy, complexity and prejudice that are known for killing good ideas and instead encourages key ingredients to innovation such as creativity and risk-taking. It empowers employees to take the necessary risks and let ideas flow through the organization. Most importantly, it helps people deliver their best work.
Innovation is too important to be left to chance. No matter the industry, in a fast-pace and ever-changing society where the needs of the customer are constantly shifting, a company will struggle to keep up with competitors if their culture cannot foster continuous innovation. The right culture begins with the right leadership mindset. When leaders establish and foster the right organizational culture that supports innovation as a top priority, they open the door for growth.