Building a true culture of innovation

The status, hierarchy, power and culture of innovation

The approach to innovation has emerged in recent years as one of the most important processes for an organization. It has also been identified as a critical factor for competitiveness. In my experience as a consultant helping companies innovate, I’ve come to realize that there is a very biased perception about innovation. Most organizations see innovation only as a method. As a result, they focus only on trying to implement innovation with a series of tools, processes and models to help update new products and service offerings. A reductionist approach -purely methodological- and focused only on the process and not on people, or the importance of building an internal culture of innovation in the company.

In the end, this kind of approach always confirms the same reality: without a culture of innovation results are less than optimal and, in many cases, don’t produce the expected results. What’s more, the outcome is often contrary to the expected; disappointment, and thus results in a discouraged organization adverse towards innovation.

To build a true culture of innovation, it’s key to transform the organization from within. This implies the need to address a long-term commitment to a personal culture change. From the managers point of view it also requires accepting that the organization must take greater risks; to delegate authority to facilitate the creation of a culture of innovation, as well as the implementation of the processes and results. Without any doubt, the most determinant variables of innovation for an organization are those related to cultural and structural factors.

The cultural factors of innovation

There are many different determinants for innovation, but the most important are those related to the organizational culture. These are the values, beliefs and principles shared by all persons belonging to the organization.

The implementation of the innovation culture is critical because, depending on the existing culture in the organization, you may be stimulating innovative behavior or promoting a totally contrary attitude. Through the already established culture members of an organization are able to welcome and accept innovation as a fundamental value, as part of the DNA, and secure a commitment to that value. It’s important to understand that the fundamental elements of a culture – the promoted and shared values – have a strong impact on the innovation capacity and creativity of the team. Trough the observation of socialization practices (activities, rules, procedures, etc.) and behavior of people in an organization, we can validate if creative and innovative behaviors are part of the organization’s DNA or not. Also, from various activities developed by teams and individuals, we can look at how the organization is generating values that promote and enhance creativity and innovation. Thus, by using the appropriate behaviors and activities, we can build, promote and improve the innovation capacity of the organization.

Flexibility vs. hierarchy

As I have pointed out previously, the promoted values in an organization such as tolerance, respect, honesty, equality, flexibility, etc. are very important because they are an essential driving force for how someone understands and conducts his job. There is clear evidence that shows the relationship between flexibility and a culture that supports innovation. The less hierarchical, more organic and flexible organizations favor innovation, as opposed to the rigid and hierarchical organizations that hamper it. Centralization, formalization, and status of authority are clearly not good enablers for innovation. Instead, evidence shows that delegation of authority combined with participation and collaboration by employees in decision-making, facilitates learning and enables them to adapt to change and assume the risks associated with innovation.

To foster an innovative culture we need to promote flexibility and avoid the hierarchical traditional culture based on a strict order, the importance of standards and norms, stability and rigid roles, etc. The traditional leadership, operating from the top of a hierarchical structure, is not efficient in managing the complexity and uncertainty of a business environment that requires knowledge management along with the ability of transform. It is impossible that only an "elite" at the top of the organizational pyramid can successfully assume the competitive challenges of the organization. Today, more than ever, a competitive organization requires cross-fertilization of ideas and intellectual diversity of people with unique talents. It also requires team work and collaboration from different functional areas and backgrounds, both internal and external.

In several organizations that I've worked with, and more often in Latin countries, I have noticed an excessive respect for authority and routines. As a result, employees often work in their “comfort zone”, following a set of routines. They are subordinates to a cultural model that is centered in the hierarchy according to rules and procedures, and these people will rarely develop their full potential and talent, unless they see a possibility for development. This is a completely disastrous foundation for the creation and promotion of an innovative culture.

Hierarchy and knowledge

The traditional cultural model focused on the hierarchy also brings another big problem; the association of hierarchy with the level of knowledge. Again, this is a practice that I’ve noticed more frequently in countries and organizations with a Latin culture. Organizations in countries like the United States, Canada and Sweden understand that teamwork is critical to company success and people work in teams without fear of sharing their knowledge and ideas or voice opinions- a fundamental necessity for innovation.

It is interesting to note that in these countries you often see a significant relationship between the existence of flexible behaviors and models of organization, together with a lower  cultural dimension of "distance to power" (see the work of Geert Hofstede), and therefore less hierarchy. This contributes to the closeness between the boss and his collaborators with positive impact on the achievement of objectives and the dissociation between power and knowledge.

The environment and the atmosphere

Finally, we find another key aspect of the organization that could be described as the “right environment”. The environment is a good indicator of the culture of an organization. Through different interactions between the team and its leaders a certain type of atmosphere is formed and shared. Here, leaders play a fundamental role as key influencers through their explicit and implicit behaviors; what they say and do.

In organizations with strong hierarchical structures, it is quite common to find a climate of animosity, possibly because there is greater resistance to change as it could mean a loss of status and power. Often this translates into fearing the boss and feeling threatened by collaborators who suggest an improvement to the innovation culture. Managers that live this experience traumatically, usually do so because they are looking at change in terms of losing power; “Then…where is my authority?” They typically react with authoritarian practices and revert to hierarchical power to demonstrate their status.

Several studies have demonstrated that when the gap between the highest and lowest salaries on a team is reduced, the result is a better work environment and improved outcomes. As Soutton mentions in his book "The no asshole rule" (2010), reducing the distance between the salaries of the CEO and the average of the rest of the team is specifying a clear message: they are not superstars or superior beings. This is an important message to encourage collaboration and foster a culture of innovation, where everyone feels part of the same challenge and a common project.

Without a doubt, culture is the basis upon which an innovative organization is built. An organization has to be ready to embrace change as an opportunity, and not as a threat, and encourage minds to be open and attentive. To build an internal culture of innovation, it’s imperative to develop processes of lateral thinking, to express greater creativity, and to boost the development of innovation and business value creation for the team and for society.