Creating the Innovation the Innovation Culture: Geniuses, Champions, and Leaders An InnovationLabs White Paper • Page 3 Culture and Innovation Culture A culture is

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Creating theInnovationCultureGeniuses, Champions, and LeadersBy Langdon MorrisAn InnovationLabs White Paper InnovationLabs 2007Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 2IntroductionAs the business world becomes increasingly complex and still moreastonishingly competitive, companies are turning to innovation as one of thefew durable sources of competitive advantage. Innovation is now among thetop priorities for the majority of the worlds large companies.The necessity of innovation is now universally accepted, but beyond theirenthusiasm for bright ideas, most leaders know that to be successful over thelong term they have to develop a strong innovation culture.Such a culture can be recognized as an organization that is known externallyin the marketplace as a genuine innovator, and equally that it is knowninternally among the people in the organization as a dynamic, innovation-friendly place to be.Organizations that have attained this culture produce innovations of all types -breakthroughs, useful incremental changes, and even radically new ways ofdoing business, and they do so with regularity.And actually, the concept of regularity is a good test to see if a companyreally has an innovation culture. How frequently interesting new ideas,concepts, products, or services are produced? If new stuff seems to becoming out all the time, in different ways, and if the internal discussion in theorganization is focused largely on innovation, then its likely that aninnovation culture exists there.But supposing an innovation culture doesnt yet exist in your organization.Then how can you make it happen? How do organizations develop aninnovation culture? Who should be involved in the innovation process?What roles should they play?Answering these questions is the purpose of this white paper.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 3Culture and Innovation CultureA culture is an expression of a group of people. Every culture reflects thecurrent beliefs and behaviors of its people, as well as the history that shapedthem. History is an essential attribute of culture because one of culturesdefining characteristics is that it persists over time; it gets transmitted fromthe present to the future with notable continuity. Hence, when we reflect onour own situation today, we can see that the past interacts with new forcesfrom our own times, and the aggregate picture is exactly what constitutes ourculture right now.The innovation culture, of course, is likewise an expression of people, theirpast, and their current beliefs, ideas, and behaviors. They make innovationhappen, and they do so consistently over time.Since the innovation culture is not all that common among todaysorganizations, we know that its not so easy to create one. A key reason forthis is that the characteristics needed to achieve an innovation culture are notseen as the some ones that are needed in successful companies.For example, its only a slight exaggeration to say that companies lovestability and predictability because these factors make it easier to earn profits;innovation, however, is about adaptation and change, which can be verydifficult to live with or to profit from.Companies seem to adore repetition because it suggests business scalability,but innovation is all about novelty and the unexpected.People in companies get engrossed in corporate politics and whats in it forme, while innovators upset the apple cart, and move the cheese!Overall, the broad trend of modern management is toward standardization,rationalization, and simplification, to make things run smoothly andefficiently. None of these factors necessarily favor innovation, and all ofthem together can conspire to drive out innovation entirely. It doesnt have tobe that way, but often it is. Innovation, after all, can also be a powerful forcein support of simplification and efficiency.This, actually, is where the genius of firms like Apple, Cisco, and Toyota lies,because their leaders seem to have found a way to standardize the process ofinnovation. I know that the last sentence seems to express a contradiction -how do you standardize innovation? But thats exactly the point (and thatsthe same point that is made in the title of my book Permanent Innovation).They have created a true innovation culture, which is precisely what it meansto make the creation of novelty a consistent output of an organizationsculture. At Toyota, the fruits of innovation in manufacturing have beentremendous breakthroughs in simplification, resulting in a company that isuniversally recognized as the most efficient auto manufacturer on the planet.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 4The means of doing this, and likewisethe commitment to doing it, haveoriginated at the very topmanagement of the company. It is aremarkably rare feat, and very feworganizations have matched it.In contrast to innovation-as-normalcy,laggards tend to recognize the needfor innovation only in crisis situationswhen it becomes evident thatstandardization has failed. Innovationpursued in this context means that wechange only when we have to. Andwhen we have to do it, we generallyhate it, because it means we have togive something up that we prefer tokeep. Quite often, what we want tokeep is the old way, even though themarket is telling us that the old wayisnt good enough any more. Hencethe strategic power of capitalism, aremarkable self-organizing process ofintroducing novelty into marketsthrough the dynamics of competition.Companies die in this process; theyget thrown out entirely when they failto adapt. When standardization hastriumphed totally over innovation,then it may just be too late.In the language of systems thinking,the function of management is toeliminate variation, which is,broadly, the tendency of things to gooff uncontrolled in all directions.Excessive variation is absolutely theenemy of profitability; indeed, theentire function of quality control andsix sigma are focused on eliminatingunwanted variety.In contrast, the purpose of innovationis precisely to create a particular formof variation, variety that is valuablenovelty. Too often, however, thevalued baby variety is thrown out with the unwanted bathwater variation.Innovation or Acquisition?I mentioned Cisco as an example ofthe innovation culture, but if you knowthe company that might raise aquestion in your mind, because ifCiscos operating model is known foranything, its the fervent path ofgrowth-by-acquisition that thecompany has followed for more than adecade. Since it was founded in 1984,Cisco has acquired more than 100companies (and reports that more than70% of these acquisitions have met orexceeded expectations). Ciscos acquisition strategy generallytargets smaller companies that havedeveloped innovative new products,but the key to making theseacquisitions pay over the long term isthe companys ability to retain thetalented engineers and managers fromthe acquired companies. Theyve beenvery successful at this, bolstered ofcourse by the companys increasingstock value. Ciscos innovation culture also helps,and with R&D investment of more than$3 billion per year, the company strikesan effective balance between internally-driven and externally-driven innovation.As the dominant player in its industry,Cisco is better positioned than mostcompanies to grow throughacquisitions, as most of its smallercompetitors simply dont have thecapital strength and market dominanceto be attractive acquirers. In response,the venture capital industry routinelyfunds start-up companies that addressnew market opportunities, in the hopesof becoming acquired by Cisco. This isan example of how an innovationculture extends into the broaderecosystem surrounding a successfulcompany.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 5In this case, management by variety elimination and innovation by varietycreation are mistakenly seen as the same.Hence, unless innovation is a priority of managers, it will be omitted frommanagement. And it very often is, either because managers fail to achieveinnovation, or because they fail to try. It takes a great deal of insight to attaininnovation on any kind, and to do so on a consistent basis in the face of somuch anti-innovation momentum is an outright triumph.Now, this does not mean that individual people - workers, managers, whomever -are against innovation. In fact, theyre probably for it; most people actually loveinnovation: new stuff, new movies, new music, new everything. But the veryspirit and process of contemporary organizations, as expressed in how weorganize large groups of people to work, often makes innovation extraordinarilydifficult, and hence the rarity of the innovation culture.Heres a little test. How many companies can you think of that genuinelyhave an innovation culture? Five? Ten?Its a subjective question, of course, and maybe you can think of 20, or even100. But I would venture to guess that you dont think of that manycompanies as innovative. And youd probably like your own company to bemore innovative than it is today. Which means you see the benefits ofinnovation and you want your company to be more innovative. You want,that is, to develop the innovation culture.How?The innovation culture comes into being when people throughout theorganization actively engage in filling three essential roles:We look for insights to develop into ideas, and then into value-adding innovations. This is what innovations Creative Geniusesdo.We support innovation by helping creative people overcome theobstacles that otherwise inevitably impede their innovationefforts. This is what Innovation Champions do.And we define our firms expectations and policies to favorinnovation. This is what Innovation Leaders do.Below, well look at each of these groups in turn.But first, to give you an overview of the challenges that the geniuses,champions, and leaders will probably face is shown in the table below. Theold, status quo-seeking worldview on the left, and the innovation culture onthe right.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 6Of course this chart simplifies many realities that are considerably morecomplex. Nevertheless, the intent is to highlight important underlyingconcepts to be thinking about as you set about to create the dynamic newculture in your organization.Scan through the list and see how many of the attributes shown on the leftreflect your thinking, or the behavior of your organization. On the right,youll see the corresponding idea of how it might become different in a settingthat favors innovationThe Innovation Culture TableStatus Quo Culture Innovation Culture1. Predictability Un-predictability2. Seek stability Seek novelty3. Focus on core competence Focus on edge competence4. High success rate High failure rate5. Reinforce the organizationalhierarchyReinforce organizationalnetworks6. Fear the hierarchy Focus on creative tension7. Avoid surprises Embrace surprises8. Focus on inside knowledge Combine inside and outsideknowledge9. Easy to live with Hard to live with10. Corporate politics Moving the cheese11. Efficiency throughstandardizationEfficiency through innovation12. Extend the status quo Abandon the status quo13. Avoid change Embrace change14. Measure stability Measure innovation15. Look for data to confirmexisting management modelsLook for data to contradictexisting management models16. Look for certainty Embrace ambiguityTo understand these three roles in more detail, lets take a look at teach ofthem in turn.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 7Innovations Creative GeniusesWho comes up with the critical insights that are innovations beginnings, andthen turns these insights into ideas, and ideas into innovations? The peoplewho do this are Creative Geniuses, and they work everywhere in theorganization. They may also work outside, in the extended ecosystem ofsuppliers, partners, and advisors. They may also be customers, as in someindustries customers provide the vast majority of innovation ideas. They mayalso be and even non-customers; tapping into their beliefs and behaviors canbe a powerful growth strategy.Creative geniuses are often the individuals who bridge the gap between theorganization and its customers, front line workers. They may also be seniormanagers, who, after all, have plenty of exposure to new trends and newideas. And they may also be middle managers, who are uniquely positionedat the crossroads of many information flows to spot innovation opportunitiesthat others may have missed.If it seems like a stretch to label these people as geniuses, let me explain therationale for this term. We will not innovate if we fall into the trap ofaccepting everything the way it is today, so making innovations requires thatwe see things differently. Hence, we have to overcome institutional andbureaucratic inertia that may burden our thinking process, and challengeourselves to see beyond the conventional viewpoint. This fits perfectly withthe dictionary, where genius is defined as exceptional natural capacity shownin creative and original work.Your idea of a creative genius could be Leonardo or Michelangelo, butchances are you dont have many of them in your firm. So you may wonderhow, among so many workers in your firm, youll identify the creative ones?Who are the creative geniuses? But this, actually, is the wrong approach.A more useful viewpoint is to assume that given the opportunity and thecontext, just about everyone in the organization can be a creative genius.Starting from this premise means that its up to the leaders and champions toremove the obstacles that are holding others back.This idea that everyone in the organization is a creative genius is certainly asignificant departure from how things used to be. In the past, people in frontline roles were often specifically instructed not to be thinkers, not to haveideas, and certainly not to ask questions. They were supposed to perform pre-defined roles in a repetitive way.Today, of course, its the opposite. Today we know that front line workershave a unique and invaluable perspective that, with the properencouragement, can lead to innovation in many dimensions. Hence, theaverage Toyota worker, including those working on the assembly lines, is saidto contribute on average more than one hundred ideas each year. This is howCreating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 8creative genius gets tapped, and how it contributes to the greatness of a greatcompany.The key enabler of creative genius is the ability and willingness to see thingsnot only for what they are, but for what they could be. This difference isoften called creative tension, and it has been a powerful force of creativeendeavor throughout human history. In the arts, the sciences, and in businesspeople who feel creative tension are intrinsically motivated and often feelcompelled to make change. They long to bring to reality that which they haveimagined or envisioned, and they work with dedication and persistence toovercome the obstacles they may encounter along the way.For example, Jeff Bezos articulated a vision of a radically different onlineconsumer marketplace that took many years to prove; Fred Smith establishedFedex over many years and countless obstacles; and Chester Carlson, theinventor of xerography, labored for years to achieve his vision, and then formany more years to commercialize it, overcoming massive obstacles in bothphases of his project. Entrepreneurs like these exemplify entrepreneurial insightbecause they see how a business, a product, a service can be different and betterthan what currently exists, and they have the drive to make it happen.Hence, overcoming obstacles may be as critical a part of their genius as aretheir visionary insights, but what if theyre not entrepreneurs or they donthave the political skills to take on the bureaucracy? Then its up to innovationchampions to help them.Another attribute that often helps geniuses is that they have a deep insiderknowledge of an industry, but they also bring an outsiders perspective to it.That is, because they are not willing to be satisfied merely with what currentlyexists, they often look for new knowledge outside of their own fields, and thisoutsider perspective helps them to see things differently, to recognizeopportunities that others have missed.In fact, just about every breakthrough business idea in recent history reflects thisinsider-outsider duality. The overwhelming global success of Starbucks, forexample, was not driven by the companys original founders, who had in fact anarrow view of their business, but by outsider Howard Schultz, who came toStarbucks with a vision of a much broader market than the founders hadimagined.Another example is Southwest Airlines, which was not created by airlinepeople, but by a pair of lawyers who understood a need that their competitorshad not recognized.Likewise, many great companies including Toyotas Scion, GMs Saturn,Home Depot, McDonalds, as well as Amazon and Fedex, were originated bypeople who combined insiders knowledge with an outsiders willingness todo things differently. Their universal goal was to meet customer needs betterthan they had previously been met.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 9Most executives know that outsideknowledge is critical, and a recentMcKinsey study notes that 75% of themreport getting new ideas as a result ofinteraction with outsiders such assuppliers, peers, and partners. You canapply the same underlying principle byensuring that creative geniuses inside yourfirm have access to a broad range ofexperiences beyond the boundaries of thetheir department or their organization; thatthey have opportunities to explore into theedges where new experiences and newinsights are often be found.The details of creative work comeintuitively to some people, while othersneed coaching and perhaps also training tomaster it. But even those who approachcreativity with ease can still benefit from asmall bit of structure to help themorganize their efforts. The purpose of theinnovation cycle, described to the right, isto help guide the process, keeping in mindthat its best not to approach itdogmatically, but simply as a guidelinethat will probably never be followed in arigid fashion.The practice required to master thecreative cycle takes time, and thus acritical element that supports theflowering of creative genius is time topursue insights, and likewise time to workon the resulting ideas. If the pressure ofthe day-to-day is so great that theres notime for new ideas, then the flow ofinnovation will dry up. But if people havetime to explore, to learn, and to discuss,then they can create great things, which iswhy companies like Google and 3M have,as a matter of company policy, invitepeople to spend up to 20% of their timeworking on projects of their ownchoosing. For there is creative genius ineach of us, and it may take only the rightmix context, curiosity, support andenvironment for it to come abundantlyforth.The Innovation CycleTo turn creative insights into value,creative geniuses can benefit by theapplication of four specific innovationtools that are particularly important forharnessing creativity in the innovationprocess: needfinding, framing, creativecombination and prototyping. Thesefour constitute the Innovation Cycle.The Innovation CycleNeedfinding is a process of looking fornew opportunities. When researcherswant to understand the customersexperience, they want to know it ascustomers themselves experience it.They look for situations such as gaps inservice, needs that are not met, andworkarounds where people have to goto unusual extremes to solve aproblem, because all of thesesituations constitute possibleopportunities. An important dimension of effectiveneedfinding has to do with where youchoose to search. Here we make thedistinction between core and edge.Core refers to markets, services,products, and customers that are wellunderstood, typical, and alreadytargeted. Edge refers to extreme usersand non-users, those whose needs oruses are not considered typical at all.In traditional practice, we want tounderstand our core customers, justlike we want to master our corecompetences.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 10impressions are gathered together and thediscussion turns to creating the best optionsto address the identified needs and theconceptualized frames. Here the innovationprocess moves beyond individual efforts tobroader teams, because when talkingthrough the options a group of people almostalways achieves better outcomes than whenindividuals try to sort it out alone.Diversity in these teams is important, becausetesting ideas against many different points ofview will result in more robust concepts andsolutions, leading to stronger businessopportunities.Ideas that emerge as worthy of detailed studyare then prototyped. The goal is to prototypeas quickly as possible so that the learningprocess can be accelerated, and you find outas quickly as possible that either its an ideaworth more investment, or one that should beshelved. Every idea worthy of further development willfind its way through the cycle many times, asprogressive refinement comes through manyiterations of thought, design, and testing.The first prototypes are never the final ones,but as the work proceeds the nature of theinquiry naturally evolves to finer and finerlevels of detail. Along the way, needs andframes are tested, new areas are explored forcreative combination opportunities, and thefinal prototypes approach the level of afinished product or service concept.The common root underlying all the steps inthe innovation cycle is know-how. These areskills that can be learned, and as with anypractical skill, the route to better performanceis practice.The innovation cycle described here is a veryspecific case of the much broader topic ofcreativity. There are many different models ofthe creative process, and a lot of them providehelpful guidance once you get deeply involved inthe search for innovation. As people progresstoward the mastery of innovation, many willnaturally become interested in learning moreabout creativity itself, and they will certainly findthat there is an abundance of useful resources.The Innovation CyclecontinuedIn the forward-looking process ofneedfinding, however, we expect to learnmuch more from the edge than we can fromthe core. Learning about the edge may require us tospend time with people that were not usedto being with, and require us to understandwhat may be a much different thinkingprocess.An example of looking on the edge isToyotas Scion brand, which is targeted notat mainstream baby boomers, but at the theirrebellious Gen Y children and grandchildren.Before launching the brand, the Sciondevelopment team studied these newconsumers in their own environments,including edge environments like tattooparlors. And then after the brand wasintroduced, the company reinforced its rebelpositioning by becoming the (only) officialsponsor of a major American tattoo festival,among many other promotional efforts. Thecompany was wildly successful, exceeding itsfirst-year sales forecast by 300%.In times of rapid change, as these times are,it can be quite dangerous to remain focusedonly on the core, because the core candissolve with surprising speed. The edge, onthe other hand, may foretell the future, andhelp you to target innovations that will enablethe firm to adapt to emerging marketrequirements.Framing is the next step in the innovationcycle. Its what happens when you gather aset of observations and look for the importantpatterns. The term framing refers to theprocess of choosing the most useful frame,as in framework, through which to interpretthe customers experience.After you develop some frames, some waysto interpret what youve seen, then theprocess turns to creative combination, whichhappens when needfinding and framingcome together, when the images andCreating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 11Innovation ChampionsAn Innovation Champion is an individual or a team of people who work atinnovation by promoting, encouraging, prodding, supporting, and drivinginnovation in their organizations. They do this in spontaneous moments ofinsight and in ad-hoc initiatives, as well as in highly structured innovationprograms.Hence, innovation champions build the practical means for effectiveinnovation. They take direct responsibility for finding creative thinkers andencouraging them to think and work in new ways; they help people seek newexperiences that may spark new ideas; and they create a regular operationscontext in which sharing and developing new ideas is the norm.The core of what Champions do to support and attain innovation thus revolvesaround two linked activities, building collaboration, and building the trustupon which effective collaboration occurs. In fact, its not an exaggeration tosay that the culture of innovation is built upon a culture of collaboration,because innovation is a collaborative endeavor, one that requires theparticipation of many different people who may be working inside and outsidethe organization. Or stated from the opposite perspective, there is littleinnovation without collaboration, and there is no collaboration without trust.While they may be anywhere in the organization, including in seniormanagement positions, line management roles, staff, or front line operationsroles, the specific nature of the Innovation Champions role is to function inthe middle, to provide the bridge between the strategic directives of seniormanagers and the day to day focus of front line workers.In smaller or more compact organizations, and occasionally in larger ones,too, innovation champions are often senior leaders themselves, who havestrategic roles as well as operational management responsibilities. Therenowned HP practice of management-by-walking-around, MBWA, was agreat innovation champion technique for learning about innovation efforts,and supporting them. One of the reasons it worked so well is that thefounders of the company were the ones doing it. MBWA kept Hewlett andPackard in touch with what was happening in the core of the company, andhelped them link their strategic thinking with day-to-day thoughts, questions,and opportunities of a great many people around them.But regardless of the size of the firm or where you may sit in the org chart, thekey is that champions provide practical support and guidance for innovation.Thus, champions are enablers who work as facilitators and supporters andplay a critical, hands-on role in nurturing innovation efforts throughout theirorganizations.Champions are usually persistent networkers who are in contact with manypeople and who know whats going on many levels. They know who hasCreating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 12skills, talents and resources, and they findout who needs them, and then they putthem together to accelerate innovationprogress. They also want to know aboutneeds, and they spend a lot of time learningabout whats not working so that they canpoint innovators toward likely innovationopportunities.They spend a lot of their time helpingothers to develop their skills throughcoaching and mentoring. They also lookfor learning opportunities to share withothers, in the form of meetings,discussions, external events, and perhapseven trainings. They gather interestingmaterials - books, web sites, papers,articles - and they distribute them broadly,helping people to discover useful newinformation. One R&D director that weknew became the unofficial book dealerfor his executive team, keeping multiplecopies of about 25 different books, articles,and magazines in his inventory so he wasready to respond to questions andconversations with helpful resources.Every time I went to see him, I wouldleave with one or two things to read thatwere extremely well chosen for theconcerns of moment.In the language of Malcolm GladwellsThe Tipping Point, Innovation Championsfunction in all three roles that are essentialto the spread of new ideas: they aremavens, who have deep knowledge thatthey are keen to share, salesman whoinfluence others to take action, andconnectors who have strong relationshipswith many people. [For a review of The TippingPoint please go tohttp://www.innovationlabs.com/tipping_point.html.]Another key role for Champions isbuilding the infrastructure that supportsinnovation. This infrastructure mayinvolve various types of collaboration andcommunication tools, including online idearepositories and wikis, knowledgeInnovation & FailureAs managers, Innovation Championsmay be involved in the oversight andreview of particular projects. Here theyhave a critical role to play, because theeffective pursuit of innovation shouldnecessarily involve a significant degreeof failure, and failure is usually a verysensitive issue in organizations. Will itbe avoided, scorned, tolerated, orembraced? If it is avoided, scorned, ormerely tolerated, then the underlyingmessage is that our organizationprefers to remain within its comfortzone, and were not willing to acceptthe challenge of finding new solutions.This path, of course, contains theseeds of self-destruction becauseexternally-driven change may thenoverwhelm it. Hence, innovationchampions embody the enthusiasm forfailure, intelligent failure, that is,because failure is an extraordinarylearning opportunity.Similarly, innovation champions arealways ready to learn about surprises,since surprises may be earlyindications of market change andinnovation opportunity. Further, innovation champions carry anenthusiasm for new data, andparticularly data that contradict whatwe used to know, as these data mayalso be harbingers of change.By exemplifying these attitudes in theirinteractions with a wide variety ofpeople, Innovation Champions carryboth a powerful message and theyexemplify an important practical set ofattitudes: innovation is important inthis company, they proclaim, and allthe factors that support innovation arealigned to enable the creative geniusesdescribed above to achieve theirmaximum potential as innovativecontributors to the evolution of ourcompany.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 13management tools, and social networking tools.In Don Tapscotts latest book, Wikinomics, he makes a persuasive argumentthat the emerging global economic model is shifting away from what wemight call traditional business models, and towards new approaches thattake advantage of the internets emerging tools for knowledge aggregationand social networking, as exemplified by sites like Google, YouTube,FaceBook, and Wikipedia.Tapscott identifies four core principles common to these examples of the newmodel, which are that its a global phenomenon that is not limited by nationalboundaries, that it is based non the sharing of information, that it growsthrough peer relationships, and that it is fostered through openness ofprocesses, content, and style.The innovation infrastructure should build on these same principles to fostereffective collaboration that connects insiders and outsiders. This needs tohappen not only in the virtual world, but also in the real one. Hence, anotheruseful tool for the innovation infrastructure is the face to face collaborationenvironment.Unfortunately, the architecture profession, abetted by the office furnitureindustry, has standardized on a drab concept of the conference room andyouve probably spent countless hours sitting around a conference table inmany different versions of the same tired design. The style is derived fromthe corporate board room, and with a single chair for the boss at the head ofthe table, its primary social purpose is certainly to reinforce hierarchicalauthority. This is not a particularly good environment for innovation orcreativity, and it can be absolutely deadly.As an alternative, many companies have found that facilities specificallydesigned for collaboration can be a very beneficial enhancement to theirinnovation infrastructure, especially when used for high-performancecollaborative workshops such as InnovationLabs. [For more information onthis please see my white paper High Performance Organizations in a WickedProblem World; http://www.innovationlabs.com/high_performance.html.]Innovation Champions are often the ones who shepherd these environmentsinto reality to enhance their organizations attainment of high performance.In summary, if we were to choose a single word to describe what InnovationChampions do, that word would be practice. Innovation Championsimplement the practical tools to foster innovation through effectiveinteraction, helpful attitudes, and practical means.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 14Innovation LeadersAn Innovation Leader is someone who influences the core structures and thebasic operations of an organization, all with a clear focus on supportinginnovation.Core structures include the design of the organization itself, as well as itspolicies and their underlying principles. Metrics and rewards can also be corestructures. None of these factors are absolute givens, and all of them can bechanged, and thats the point: they are all subject to design, to thoughtfulchoice about what is best. Its generally within the power of senior managersto change them, and when they impede innovation they should be changed tofavor it.Basic operations include budgets and work processes, and they also can besupportive of innovation, or obstacles to it.All these elements together broadly constitute the internally-defined rules ofthe game, and leaders are the people who define a lot of them, either byexplicit statement of policy, or by the tacit expression of their own behaviors.Other rules are defined by the market, and still others are made by thegovernment. But a lot of the rules are made by managers, and they haveconsiderable choice about it.Do you think, for example, that the rules at Toyota are different than the rulesat GM or Ford? You bet they are. Toyotas rules have favored innovation fora long time; GMs rules have definitely hindered it.The actions and attitudes of senior managers are based, ultimately, on theirphilosophies about management, which is also referred to sometimes as theirtheory of business. Do leaders believe in a win-win model, or win-lose?Win-lose organizations usually are not trusting environments, and becausetrust is so important to innovation, when its missing then innovation suffers.Similarly, what do the leaders see in the outside world? Do they recognizethe immanence of accelerating change? If not, then they may not understandthe critical role that innovation can play in their own firms survival.Because of all of these factors, leadership engagement is essential toinnovation. Conversely, without leaderships direct participation,encouragement, and indeed expectation, innovation cannot and does nothappen. Building on this idea, my recent book Permanent Innovation definedten principles of innovation, and the 10th states simply that there is noinnovation without leadership. It goes on to explain the reason why:Companies are amazing expressions of human society. The fact oforganizing thousands of people to create and deliver products andservices around the world to thousands or millions of customers is aCreating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 15remarkable thing. But the ability to do this brings unique challenges. Inparticular, the impact of organizational hierarchy has tremendousinfluence on the culture of every company, on its ways of working, andthe results it achieves. Thus, top managers can be powerful championsof innovation, or dark clouds of suppression. Its up to leaders toensure that their words and their actions support and enhanceinnovation efforts and methods, and that at the same time they workdiligently to eliminate the many obstacles that otherwise impede or evencrush both creativity and innovation.Lets take a few specific examples. How about budgets? Do your budgetsinclude a line item like investment in innovation? If not, are you sure thatinnovation is getting any investment at all? If theres no budget forinnovation, then the likelihood that it will happen declines significantly.Or is there a seed fund to invest in promising new ideas, or a team of peopleto manage ideas that do not fit inside of the existing business units? Thenhow will such ideas find support?Without these tools in place, when innovation does happen its almost certainto be exclusively incremental, executed in the regular course of product andservice management. What will not happen is anything remotely related to abreakthrough innovation, or the development of a new business model or anew venture.According to a recent survey by McKinsey [How Companies ApproachInnovation, October 2007], top managers believe that breakthroughs willdeliver the greatest performance improvements, but without specificbudgetary focus theyre never going to get there.The same McKinsey survey exposes a huge disconnect, as only 24% of theresponding executives are actually involved in setting innovation budgets.And the same study found that only 22% of executives say that planning forinnovation is part of their annual planning cycle. If its neither budgeted norplanned for, then is it going to happen? Probably not.Or consider this scenario: Do you assess and reward P&L managers on theprofitability of their operations? Certainly. And do you also expect them tolead innovation? Probably.But if youre doing both, then youre probably giving them a mixed message,because innovation is not only a short term expense that reduces currentprofits, but it also carries the risk that there wont any medium or long termbenefit at all. Any investment in innovation therefore reduces the P&Lmanagers apparent performance, and hence the rewards.Have you seen companies fail because of lack of innovation? This P&Ldynamic is often a key factor, because when a P&L manager also hasCreating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 16responsibility for innovation, the decision to innovate must come from amoral, philosophical, or visionary commitment to doing so. The more short-term the incentive structure, the greater the threat to innovation. In mostcompanies, the game is generally rigged against innovation-promotingbehavior by the short-term structure of rewards.Lets look at other issue. Are business units measured on their innovationperformance? Are goals established for the contribution to value growthachieved through innovation? Or do you measure the contribution toinnovation made by individuals, teams, or departments?This reminds us of the truism that people do what theyre measured on andrewarded for, and if theyre not measured for their contribution to innovationthen their contribution will probably be less than it could be.Not that its easy to measure, though. Innovation almost always involves theefforts of many people, so setting up an innovation reward structure thatrecognizes the team element may be preferable to a process that onlyacknowledges individuals. (But this remains a controversial topic, as somepeople believe that the only suitable reward system is one that rewardseveryone in the firm. Reward for individuals can be seen as divisive.)Innovation leaders also set expectations, define priorities, celebrate andreward successes, and deal with failures, and all of these factors can be donein a way that makes innovation easier or more difficult, because each can bearranged to favor the status quo or to favor useful and effective change.The goals dont need to be modest, and in fact they can be outrightaggressive. By setting them high, managers emphasize the linkage betweenan organizations strategy and its pursuit of innovation, perhaps elevatinginnovation to a strategic concern, which is where it properly belongs.Conversely, if innovation is not articulated as a goal of top management, thenit probably wont be a goal of anyone else, either. Similarly, if policies are sorestrictive that they make it impossible to test new ideas, then there wont bemany new ideas.Hence, innovation leaders are typically, although not exclusively, seniormanagers who feel a compelling need to bring innovation to theirorganizations, and who have the authority to make key decisions about bothan organizations strategy and its operations. This puts them in a position toreduce or even eliminate obstacles that inhibit innovation performance. Itsthe overlap between commitment and authority that makes the innovationleaders role unique as well as indispensable.By their very nature organizations tend to reinforce the status quo. This, as Inoted, is not because of any shortcoming on the part of the people working inthe organization, but simply because success in the short term is usuallyenhanced by factors like stability, predictability, and repetition. These arecharacteristics that managers are trained to manage toward; in the title of hisCreating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 17recent book, Larry Bossidy, CEO of Honeywell, characterized this asexecution, perfecting the art of getting the job done well.The problem, of course, is that getting the job done well often locksinnovation out, and executing on the plan can also invoke another meaning ofexecuting on innovation, which is killing it. Hence, the definition ofexecution has to include the application of principles and policies thatenhance innovation efforts.In summary, the critical function of innovation leadership can be expressed ina single word, which is Policy. Innovation leaders determine organizationalpolicy to favor innovation. It sounds simple enough, but of course its not soeasy.Conclusion: The InnovationCultureWe all know that innovation is difficult for organizations to accomplish,especially on a consistent basis. There are many common reasons for this,and weve explored a lot of them.Structures, processes, and attitudes all can favor innovation or inhibit it.Other inhibitors can include lack of attention from top management, lack of aprecise innovation methodology, and lack of time to pursue new ideas.If youre among the many managers who have identified the innovationculture as a target for your organization to achieve, then getting rid of theobstacles by understanding and applying the three roles defined here shouldyield a significant improvement in your firms innovation performance. Thelatent innovation geniuses, champions, and leaders probably already exist inyour organization, and as you bring specific focus to defining and supportingthem in these roles, their work will be validated and their efforts are likely tobecome much more effective.In summary, then:Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 18Creative geniuses apply the know-how that resultsin insights, ideas, and ultimately in innovation.Creative geniuses produce innovation results.Innovation Champions define the practices that enableinnovation, eliminate those that impede it, and in sodoing enable the innovation culture.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 19Innovation Leaders define the policies that enableinnovation, and eliminate those that impede it,thereby taking a lead role in creating the innovationculture.Without know-how, without effective practice, or without policy, innovationwill be inhibited or stifled outright. Hence, each of these three makes animportant contribution to the development of the innovation culture, and allthree roles are essential to success. It doesnt matter so much which functionsoriginate with which individuals, but it matters a lot that everyone is involved,and that they have a clear understanding of their roles and how they cancontribute to the bigger picture of the emerging innovation culture.That nature of the shifts that are required is illustrated by the InnovationCulture Table, which is shown again here so you can reexamine the variouspaired concepts now that youve explored the rationale for the comparisons itproposes.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 20The Innovation Culture TableStatus Quo Culture Innovation Culture1. Predictability Un-predictability2. Seek stability Seek novelty3. Focus on core competence Focus on edge competence4. High success rate High failure rate5. Reinforce the organizationalhierarchyReinforce organizationalnetworks6. Fear the hierarchy Focus on creative tension7. Avoid surprises Embrace surprises8. Focus on inside knowledge Combine inside and outsideknowledge9. Easy to live with Hard to live with10. Corporate politics Moving the cheese11. Efficiency throughstandardizationEfficiency through innovation12. Extend the status quo Abandon the status quo13. Avoid change Embrace change14. Measure stability Measure innovation15. Look for data to confirmexisting management modelsLook for data to contradictexisting management models16. Look for certainty Embrace ambiguityWherever the Status Quo Culture is strong, making the transition to theInnovation Culture is not going to be easy, but it each line item offersopportunities to think and work differently, and each shift will help to bringthe new culture into being.Simply bringing these concepts into the awareness of the organization is itselfa powerful step forward, as it begins to foster an organizational climate ofopenness and exploration, which will in turn support the emergence of theinnovation culture.The Organizational ParadoxAs youve been reading you may have noticed that theres a bit of paradox tothis model, which is that on the one hand Ive been insistent that the hierarchy islargely inimical to innovation, while on the other hand the idea of leaders assenior managers, champions as middle managers, and geniuses as everyonefits pretty well into the hierarchical boxes were so familiar with. The reality of todays companies, particularly the larger ones, is that thehierarchy is seen as necessary to how they function, and to the legal obligationsthat they must fulfill. Its true that there are some remarkable non-hierarchicalcompanies, such W.L Gore and Brazils Semco. But they are the exception.Creating the Innovation Culture: Geniuses, Champions, and LeadersAn InnovationLabs White Paper Page 21NotesThe concepts presented in this white paper complement and extendthe frameworks and principles described in my book PermanentInnovation, published in August 2006.InnovationLabs has developed a series of Innovation Culture Seminarsto help organizations understand and apply the concepts anddistinctions presented in this white paper and in Permanent Innovation.Please visit www.innovationlabs.com for more information.Your feedback on this white paper is welcome. Please contactLangdon Morris with your comments: lmorris@innovationlabs.comBut even among the overtly hierarchical companies, the tone of organization canreflect stifling obedience to the hierarchy or it can have a much different feelingof openness, trust, and learning. For example, a senior manager at Toyota recently spoke about a project teamhe was heading up, and he mentioned how he went about choosing the peopleto be on the team. The primary selection criterion, beyond talent, of course,was that everyone on the team had to be willing to speak up and say if theythought he was wrong. He refused, in other words, to have anyone on the teamwho just went along with whatever he, as boss, believed. The team, needlessto say, was tremendously successful.That same team, it turns out, embodied just about every item listed in TheInnovation Table under the category of Innovation Culture.