Just about everybody familiar with startups knows they have a reputation of being hip, exciting, and more often than not, they’re at the forefront of the innovation conversation. Meanwhile, big corporations are no strangers to that conversation, but it’s their participation that carries criticism. A 2013 study by Accenture found that 93% of CEOs said the long-term success of their business strategy relied on innovation, yet only 18% felt their investments in innovation were paying off. Clearly there’s room for improvement.
For corporations today, it’s essential to have an internal culture that promotes startup-like innovation not only for attracting talent, but also for stimulating real business growth and staying competitive. That said, innovation culture itself is not so clearly defined. What does it look like? And is it possible to build one?
What is innovation culture?
First, it’s important to acknowledge that partial definitions about both innovation and culture seldom do the job in explaining how they fit together. Digital Knights places a very high emphasis on culture when evaluating software development companies, and the data collected through studying team after team has revealed that innovation culture does not come down to just one or two things. Instead, it’s the blending and facilitation of a set of principles that allow groups and individuals to be experimental without the fear of failure, and to take risks while being free from added consequences.
On the whole, organizations that are innovative usually share the same set of traits:
- Innovation is encouraged at all levels with management cultivating opportunities for it to prosper.
- Traditional business models are altered to encourage collaboration.
- Time is prioritized and managed effectively.
- Processes are in place, but flexibility and agility are more important.
Management drives culture change
“Most leaders are unaware of their power to change the culture of their companies and instead find themselves imitating trends and fads. Their company’s culture is created daily by what they themselves as leaders punish, recognize, celebrate, and reward. The adoption of new innovation tools will not help a company if its leadership team is still hanging onto traditional management practices.” - Forbes contributor and author Tendayi Viki
Arguably, the biggest influencer on innovation culture is the management team. Innovation calls for both regular and irregular creative thinking, and managers can facilitate this by creating an environment that invites any and all roles to share ideas and pursue the good ones. One example of a large company doing this well is Google's "20% time" policy, which encourages employees to spend 20% of their work week on alternative projects that they want to tackle.
Digital Knights asked several of its approved development partners and they all agreed: If the client's management team isn't fully onboard with innovation culture and there's little room to share ideas and feedback within the company, then the failure rate of that client's projects will remain high.
All in all, the most crucial outcome of management buy-in is the adoption of this culture by the wider organization from the top down. Basically, if management doesn’t take the new way of working and thinking seriously, there is very little chance the rest of the organization will.
Innovation needs to go beyond the existing business model
The company structure of most corporations is not naturally set up in an open, transparent format that is conducive for innovation. Often, reorganization is required to promote a collaborative working environment where people within the organization have an equal voice to contribute to discussions and share opinions/perspectives, regardless of their experience, time at the company, or their role.
It’s already out in the open that a flat hierarchy is more favorable for creating the shared marketplace of ideas needed for an innovative culture, and according to McKinsey, “R&D leaders need to hire people who are willing to join multiple projects and to move from one to another as needed. Call them ambidextrous; call them system thinkers. These are people who want to solve problems that matter and that take them from invention to final product.” This means that in a lot of cases, the hiring process also needs to be reevaluated to accommodate individuals who are adept at thinking cross-departmentally.
Time is used wisely
Many large corporations that have their hands in innovation are prone to setting up innovation hubs/garages/centers/labs separate from their main core business. Companies such as Lufthansa, Vodafone, and Thyssen Krupp have established dedicated innovation hubs, garages or labs. While this is great initiative, the sustainability becomes an issue when staff who participate in these hubs have to fit their commitment around their regular 9-5 jobs. This means they don’t get the time and/or focus required to be truly effective, in addition to their likelihood to burn out. Teams within the Digital Knights network warn that this way of working poses risks to the overall project (and the budget) due to delays in communication and lack of equal commitment.
Alternatively, environments where employees are given allocated time to work in the innovation center within regular working hours have a much higher chance for success. When the focus is high and the time is ample, the overall dynamism allows solutions to arrive much quicker rather than hunting people out when needed and derailing momentum.
Flexibility needs to be a priority
An obvious and consistent barrier to corporate innovation is the bureaucratic measures, red tape, and other standard company procedures that cause significant delays to the innovation process. In order to operate in an agile way, companies must be prepared to challenge their existing methods and bypass them to stay competitive, no matter how difficult it may be. This is generally where large corporations fail because they are not up for the challenge internally. Teams within the Digital Knights network have said that a leading cause for corporate clients not moving as fast as their competitors is holding themselves up and waiting for multi-level approvals from within.
While corporations are typically large, slow moving beasts governed by strict processes, creating a culture of innovation in a corporation is still entirely possible. It hinges on management’s attitude and approach, prioritization of time, and flexibility of the business structure and processes. In the end, innovation is not just about having great ideas. It’s about having the freedom to come up with any idea, the encouragement to try it out, and little to stand in its way.
For more about innovation within corporations, read Speeding up innovation in a corporate environment.