Early this year Harvard Business Review published an interesting article about innovative organizations by Gary P. Pisano.
Most organizations perceive innovative culture as a key to their future competitive advantage and therefore something leaders want to establish and invest in. Also, employees value innovative organizations and consider them as a great place to work for. Moreover, it seems there is a pretty well-known and straightforward recipe for creating an innovative organization which can be summarized in just a few bullet points:
- A tolerance for failure
- A willingness to experiment
- Psychological safety
- Flat structure
And yet every year pretty much the same group of companies are widely considered as innovative. So, how is it possible that despite such a huge demand and superficial simplicity innovative cultures as so difficult to build?
In his article, Gary P. Pisano shares his thoughts on this problem. From his perspective, innovative cultures are misunderstood and oversimplified. Easy-to-like features mentioned above must be counterbalanced by much harder to implement behaviours that don’t look the fun in PR materials.
- A tolerance for failure requires an intolerance for incompetence
Exploring new, risky areas, by nature, leads to failures which is an acceptable part of life in every innovative organization. But the very same companies that accept productive failures show high aversion to incompetence and sloppy thinking. Innovative culture requires high-quality standards from its employees and expects outstanding performance. And what’s most important, failures are accepted only if they lead to productive learning. The fact that you allow for failures doesn’t mean you can afford repeated attempts at something that should have been done right in the first place. Failures of execution don’t give any value, it just wastes time and resources.
- A willingness to experiment requires rigorous discipline.
Successful innovative organizations design and select their research initiatives carefully putting a lot of attention to their expected learning value. Moreover, from the very beginning, clear criteria are defined to decide whether to move forward with, modify, or kill an idea. Finally, innovative cultures accept the facts generated by experiments which include admitting that an initial hypothesis was wrong. There is no tolerance for working on costly projects that don’t bring any value, regardless of how promising a given idea seemed at the beginning.
- Psychological safety requires comfort with brutal candor.
Successful innovative organizations provide an environment where people feel safe to speak openly about problems without fear of reprisal. Employees are encouraged to voice their opinions and challenge different ideas, including the ones shared by their superiors. However, it means that employees are also ready and willing to digest the criticism they get from others, regardless of where they are positioned on a corporate ladder. Sharp (yet professional and respectful) criticism is critical to ensure that only the best ideas are followed and invested in. Such an environment, however, may not be a good fit for everyone (at first sight it seems impolite) and it requires strong support from leadership.
- Collaboration must be balanced with individual accountability.
In complex, fast-paced environment innovations can’t be done alone and effective collaboration between diverse contributors is a must-have. Collaboration, however, can’t slow down the process and be confused with never-ending discussions or looking for consensus. Innovative organizations have to encourage collaboration, but yet they require someone to make a decision and be accountable for it. There is nothing conflicting about a culture that is both collaborative and accountability-focused. Moreover, liability and collaboration can be complementary, and accountability can drive collaboration.
- Flatness requires strong leadership.
Innovative organizations are capable of quickly responding to rapid changes in the environment they operate in. It’s achieved by simplifying the processes and flattening their org structure. And it’s not even about hierarchy flatness itself, but rather decentralizing decision-making process that is pushed down the ladder to all employees. Successful organizations give their employees a high degree of autonomy (yet keep them accountable) which results in generating a richer diversity of ideas faster. Flatness, though, doesn’t mean a lack of leadership. On the contrary, strong leadership is required to set clear priorities and vision, and therefore set coherent ground rules for their employees.