Date posted: 17/05/2017 8 min read

Innovating from the top

Embracing innovation can deliver rich rewards, but it needs to be woven into the very fabric of your organisation. Does your business have what it takes?

In brief

  • How often do companies walk the talk when it comes to new ideas?
  • Innovation often comes from employees challenging the status quo and discussing new ideas that may sit outside the box.
  • Implementing innovation into your organisation's workflow will allow space for new ideas to grow.

By Tim Dean.

Tucked away in the corner of a common room in the Sydney offices of a large multinational legal research company (which shall remain unnamed) is an imposing reinforced metal chest.

Inside can be found an eclectic mix of objects including a string of fairy lights, some Angry Birds plush toys, a Sherlock Holmes costume set (including pipe and magnifying glass, of course) and a collection of monkey facemasks, among other trinkets and games.

Innovation is a watchword of 21st Century business.

It could be mistaken for a kindergarten toy box, but the true purpose of the chest is far more serious.

The first sign that it might even have a purpose beyond idle titillation is the small stack of books included therein, with titles like The Innovator’s Solution and The Innovation Secrets of Steve Jobs.

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This is no mere vessel of whimsy; it is “innovation in a box” and it serves as a handy example of precisely how not to encourage innovation in your organisation.

This is especially the case if, like this particular company, the internal culture goes out of its way to stifle creativity, discourage experimentation, oppose risk-taking and snuff the fostering of new and disruptive ideas. It’ll take more than a Sherlock Holmes role play and skimming a few pages about Steve Jobs’s life to inspire innovations in legal research in an environment like that.

Creative tension

Innovation is a watchword of 21st Century business. Virtually every business leader praises the virtues of innovation and emphatically commits to having more of it in their organisation. Yet few companies get innovation right. In many, there is a precipitous gulf between talk in favour of innovation and genuine action to promote it.

According to Professor Danny Samson, of Melbourne University’s Department of Management and Marketing, management will often say one thing, and then by the very policies and the culture they cultivate, do another.

“It’s easy to talk about the naturally attractive aspects of innovation, but the doing of it is harder,” he says. “Very often there is risk aversion, fear of failure, a culture of doing the same-old, same-old, and staying in one’s comfort zone. However, innovation is about taking yourself out of your comfort zone, preparing to try new things, and accepting that not everything that you try will work.”

This is because innovation is intrinsically risky. It is about stepping boldly into the unknown, hoping for a breakthrough, but facing the very real prospect of walking into a dead end. As a Nobel Laureate once told me: “If you know what you’re doing, then you’re not innovating."

Innovation often comes from questioning the status quo and challenging conventional wisdom.  

Perhaps not surprisingly, many business leaders don’t like feeling like they don’t know what they’re doing. Thus, many standard business practices work in direct opposition to the very processes that serve to promote genuine innovation.

For example, most businesses like to keep things predictable, yet the outcomes of innovation are inherently unpredictable. And businesses are often highly risk averse, yet genuine innovation inevitably involves plunging into risky waters.

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Many businesses also reward their workers on the basis of successful outcomes and, by the same stroke, effectively punish perceived failures.However, not every innovation will turn out to be a winner.

Some will prove to be utterly uninspiring, while others will fall flat entirely. It might take many tries to achieve a breakthrough. If workers are too fearful of failure, they’ll be unlikely to stick their necks out and try something new, particularly if their last venture was perceived to be a flop.

Many organisations also have a culture that implicitly encourages conformity and have authority structures that discourage disagreement and dissent. Workers will often be reluctant to speak against the prevailing practices and even more reluctant to contradict their boss. Yet innovation often comes from questioning the status quo and challenging conventional wisdom.  

So it’s probably no surprise that many organisations end up paying lip service to innovation – perhaps even forking out for a box full of frivolity intended to inspire new ideas – all the while maintaining a culture that suffocates innovation before it can begin.

Shock of the new

However, for most businesses, innovation isn’t a luxury. These days many industries move at a rapid pace, absorbing new technologies and adapting to the shifting market ecology that results. There’s often an element of the “Red Queen effect” at play, where the business environment is changing so rapidly that “it takes all the running you can do, to keep in the same place,” as the Red Queen told Alice in Lewis Carroll’s Through the Looking Glass.

"If you know what you’re doing, then you’re not innovating."
Professor Danny Samson Melbourne University’s Department of Management and Marketing.

This is particularly true of sectors that are strongly influenced by information technology, or that touch on the notoriously fickle consumer market.

While many businesses might depend on the occasional “lucky break,” serendipity alone is an unreliable mechanism for promoting innovation. In fact, many lucky breaks might occur at the wrong place or the wrong time, and thus may either be poorly implemented or never implemented at all.

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Without the systems in place to identify and capitalise on a random brainwave, you might not even know one has taken place in your organisation.Thus, rather than leaving innovation to chance, Samson recommends weaving innovation into all parts of your organisation.

“Terrifically innovative companies don’t wait for the occasional lucky break,” he says. “They have a system for organising the processes of investment in innovation, they lead the innovation process from the top of the organisation.”

Samson calls this systematic innovation. When embraced, it can deliver rich rewards. He and his colleague, Dr Marianne Gloet, recently surveyed more than 2,000 Australian business leaders, and they found that those businesses that embraced systematic innovation benefitted in manifold ways.

Not only did they tend to have strong revenue growth, profitability, productivity and cash flow, but they also enjoyed a long-term competitive advantage in their field. One of the first steps in taking a systematic approach to innovation is embracing risk, says Samson.

“Not everything that you try that’s new will work. So you have to get over the fear of failure.”

And this needs to be an attitude that spreads throughout the entire company in order for individual workers to feel safe enough to take a stab at a new venture. It also means accepting the occasional failure and moving on. Samson’s advice is: “fail fast, fail early and dust yourself off and try something else”.

This means not waiting too long before deciding a new speculative project is going nowwhere and pulling the plug. It can be painful to wipe the slate clean after sinking a lot of time, energy and money (and possibly ego) into a project, but sinking even more into it once it’s known to be doomed is even worse.

Failure also isn’t always a bad thing; you’ll often hear research scientists say that a negative result is still a result. Your organisation can learn a lot from failure, but only if the processes are in place to extract and disseminate that knowledge.

Samson recommends setting up a knowledge management and learning system so accumulated knowledge on everything to do with the market, technology, processes and past ventures is made available for sharing within the organisation.

One of the business leaders Samson interviewed had a motto: “Mistakes are okay, as long as your batting average is high.” However, it’s difficult to know whether you’re in the lead if you don’t know what your batting average is in the first place.

This raises another feature of Samson’s approach to systematic innovation: measurement.

“Measuring is a very important part of a systematic approach to anything,” says Samson.

He stresses that management needs to take an active approach to monitoring innovation, such as setting up KPIs and following up on them. It also means recognising and rewarding innovative contributions from individuals within the company. If someone’s improved process or schmick new product leads to a windfall, they ought to share in some of that boon, which will also encourage others to have a go.

Positive negativity

Another crucial feature of an organisation’s culture that influences innovation is how well it manages discussion, debate and dissent.

While many managers work tirelessly to keep things harmonious within groups by smoothing out tensions and defusing conflict, this might actually be stifling innovation, says Associate Professor Rebecca Mitchell, from the Newcastle Business School at the University of Newcastle.

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“There is a lot of evidence that debate and dissent are good for innovation,” she says. “Studies show that where you have people with different perspectives you get conflict, but out of that conflict you will get people sharing ideas that may not have been shared before, and that’s how you get new and novel and innovative approaches."

And she’s not talking about the polite “agree-to-disagree” stuff, but rather genuine conflict that even contributes to a negative mood within the group.

“My work is not about the ‘nice’ disagreement. My work is actually about what people would refer to as negative disagreement, hostility and tension, where people are unhappy.

”According to Mitchell, this negative mood is sometimes what it takes to overcome entrenched deference to authority or a culture that doesn’t normally encourage genuine debate. After all, conformity and deference are the natural enemies of innovation.

“Maybe being a bit annoyed with somebody, or seeing somebody being annoyed with them, motivates them to speak up and challenge the hierarchy when perhaps they might not have spoken otherwise.

”This approach doesn’t work with all groups though. During Mitchell’s research she identified two broad kinds of group dynamic. The first is one that already encourages discussion and debate internally. In that context, introducing conflict and negative mood will likely only be destructive.

It’s always better to compete with yourself and win rather than compete with another company and lose.

However, many groups are not like this, at least to begin with. Mitchell’s own background was in healthcare, where there tends to be a very entrenched hierarchy. In this context, even an experienced nurse might be reluctant to challenge the opinions of a relatively inexperienced doctor, for example.

Similar hierarchies exist in many businesses too. Mitchell found that as long as the group was motivated to work together and achieve some objective, then allowing some hostility and tension could actually be very beneficial for innovation because it enabled new ideas to challenge authority and the status quo.

However, like any tool, hostility and conflict need to be managed carefully.

“It’s a balancing act. If you let conflict go wild, or let people fight, it’s obviously going to be negative. But if you have people who are determined not to rock the boat, and are pursuing harmony, and who don’t want to disagree or challenge anybody, then that’s not going to lead to any newness.

“A good leader has to do the very difficult thing of trying to balance those two to maintain some level of interaction where things aren’t hostile to the extent that personal attacks are made, but make sure that there isn’t any pressure not to disagree or challenge,” says Mitchell.

“The first step is for leaders to understand where their teams are at. If their team is currently engaging in a lot of challenge and dissent, they’re already doing well. You don’t want to introduce any hostility or questioning of authority. But if the team is cooperating and agreeing prematurely, and they’re not challenging even when they have a dissenting perspective, the leader needs to recognise that.”

Box of tricks

Another trap when it comes to innovation is failing to implement some new brainwave because it disrupts your existing business equilibrium.

If a competitor introduces a new product or process that threatens to undercut your approach – or if someone in your own organisation comes up with a new disruptive idea – you have at least two broad options: you can attempt to resist the innovation by buttressing your existing approach and hoping for the best or you can embrace the innovation, even if it means undercutting your existing cash cow.

However attractive the first approach might be in the short term, if the new innovation is genuinely disruptive it’s only a matter of time before your current offering will be obsolete anyway.

It’s always better to compete with yourself and win rather than compete with another company and lose.

Ultimately, a culture of innovation needs to start at the very top of the organisation and seep through to all levels. 

“The board and senior executive set the tone of an organisation,” says Samson. “When it comes to innovation, they need to actually walk the talk. They need to show interest in innovation, ask questions about it, create and approve budgets, and make sure there’s time and money for innovation.

"Embracing innovation isn’t simply a matter of praising creativity and hoping for a brainwave. It’s not only about what you say you value, but also how you put that into practice and how that pervades your organisation. A box full of toys might get some creative juices flowing, but without the right systems and culture in place, those juices will simply go to waste.

Tim dean is a Sydney-based science writer with a PhD in philosophy. This article first appeared in the March 2015 issue of Acuity magazine, which can be read online in full for free here.