Many of today’s business leaders believe that innovation, which is more open, collaborative, multidisciplinary and global than ever before, holds the key to business success for the foreseeable future. Some 65 percent of global leaders believe they will need to make fundamental changes to their business within two years and increasingly view sustained innovation as the path to organic growth and increased brand value.
A 2006 IBM survey of nearly 800 CEOs in 20 countries probed leadership attitudes toward and strategies to enhance innovation. Among the top barriers to innovation CEOs cited was an unsupportive culture and climate. One might argue that CEOs are ultimately responsible for creating and sustaining that culture. However, even when leaders believe in the power of new ideas and risk-taking, they may find themselves unable to motivate and support people to take those risks and promulgate those ideas.
In the first part of this article, we will look at ways that senior leadership, across line and staff functions, can create and sustain a culture of innovation within their organizations. These include:
• Offering incentives and rewards.
• Shaping the right perceptions about risk-taking.
• Infusing diversity into the organization.
• Capitalizing on internal networks.
• Improving external collaboration.
In the second part of this article, we address the increasingly important relationship between innovation, culture and learning. Given its focus on the exchange of knowledge, ideas and experience, the learning function needs to be at the forefront of developing and executing strategies to enhance innovation. CLOs must think outside their traditional area of focus and, in so doing, define a more strategic role in the future of their organizations.
Creating a Culture of Innovation
Organizations should consider a structured, two-stage framework to start eliminating the barriers to innovation and creating a more innovative environment:
Stage One: Setting the Stage
“Setting the stage” means more than just endorsing innovation as a concept or mentioning it in speeches and letters to shareholders. For the past two decades, employees at most large organizations have witnessed relentless cost-cutting, a deep focus on productivity and efficiency, continual merger-and-acquisition activity, and the movement of once-prized jobs to outsourcing and offshoring. In this environment, risk-taking has become decidedly out of fashion.
Indeed, employees have seen too many careers stagnate or end altogether from failed innovation initiatives. In such a climate, caution usually prevails.
For CEOs to stimulate innovation, they need to build a compelling case for change, that, while grounded in the financial realities of the company and its competitive position, still gets employees excited about risk-taking again. They need to constantly communicate that case to their skeptical employees, especially if there is a track record of innovation false starts. At large companies in particular, the battle for the hearts and minds of employees can be long, but it is vital if the stage is to be set.
Leaders must be prepared to communicate a commitment to innovation constantly and across multiple channels. They must make their commitment personal and tangible, through face-to-face conversations, small group meetings and even handwritten notes. They must put their communications in context, explaining the importance of innovation in the competitive landscape. And they must be sure to link innovation efforts to strategic initiatives and continually connect those efforts to the big picture.
True leadership paints a picture that is expansive enough to encourage people to think big and take risks, while never losing sight of the objectives of the corporation.
Even with an excellent communications program, many would-be innovators take a skeptical view when leaders begin touting innovation. Employees simply don’t believe that they have the freedom to fail within their company. While many people would love to play a part in projects that could generate breakthrough results, they’ve seen too often the career damage that can occur when those projects fail. As a result, they only sign on to projects they believe are safe.
People also don’t believe that the intelligent pursuit of risk is valued by the company. The best intentions are often derailed by the efforts of overly cautious bureaucrats and turf warriors who hold would-be innovators at bay or punish informed risk-taking that fails.
Finally, people perceive their leaders as being too short-term focused, lacking both the financial commitment and courage to stake their careers on long-term “game-changing” convictions. Leaders who lack the courage of strong convictions tend to lead people who themselves are hesitant to invest in innovation initiatives. Therefore, it is the role of leadership to stamp out the fear that inhibits innovation.
They can do so in a number of ways, such as:
• Recognizing people for well-executed risks, even if the result was unsuccessful.
• Valuing and recognizing project execution from conception through completion, not just the outcome.
• Turning “failures” into learning experiences, even structured learning activities. If an innovation failed, what went well in the process? Who displayed innovativeness? Collaboration? Leadership?
• Promoting “idea people” and risk-takers to highly visible roles to show that innovation is as important as more traditional metrics like sales or profit margin.
• Rewarding and celebrating innovators who get it right the second time, casting earlier failures as part of a growth continuum.
• Using small, inexpensive trials to reduce the risk associated with any single idea.
Leaders also must embrace diversity. An employee population represents a rich mine of diverse knowledge and ideas, and employees stand ready to volunteer that information in a climate that encourages diversity. Leaders need to build diverse leadership teams and promote institutional values that reflect the global nature of leadership and represent differing points of view. They must ensure that their workforce reflects customer segments, and they must show through rewards and recognition that ideas and their diverse origins are valued by leadership. To best support innovation, leaders must recognize that peer groups often generate “groupthink” and that innovation springs from different perspectives.
Stage Two: Taking Action
In a knowledge economy where small insights can quickly shift the competitive landscape and where capabilities can rapidly be bought, borrowed or built, leaders must optimize their employees’ ability to take action quickly and effectively. They need to get innovators working together within their organization, as well as reaching outside to collaborate with others. Innovating organizations must make ideas visible with enabling processes and technologies, and provide incentives and recognition for their top performers.
In any large company, individuals and groups take on informal roles in a social network that — when understood and leveraged — can improve innovation effectiveness. Sam may be a connector, with a wealth of contacts across business units. Carla, on the other hand, may have vital knowledge for a given initiative, but because she functions as an “isolate” removed from most others, her potential contributions may go untapped. Too often, teams are staffed with little consideration of such informal capital.
To mitigate this weakness, leaders need to “connect the dots,” and more are recognizing the value in informal networks. They’re employing techniques and technology that enable detailed network analyses and avoiding common problems, such as fragmentation and insularity, which inhibit optimal innovation.
Beyond analysis, organizations are developing metrics to promote teaming that brings together the best and the brightest from different functions or business units. They are hosting forums, such as knowledge fairs and training courses, to build connections that are critical to the flow of new ideas across the organization.
At the team level, organizations are focusing on making sure that projects are staffed by individuals from different functions and even different backgrounds. Teams also can serve to engage those new to the organization or whose knowledge is underutilized in their normal roles. At the individual level, mentoring programs and rotational assignments may help increase the visibility of people with good ideas and encourage the flow of ideas across functions and business units.
Increasingly, leaders must look both inside and outside to create their “A-teams” before their competitors can do the same. Seventy-five percent of CEOs believe that collaboration and partnering are very important to innovation. Yet, only half believe their organization to be collaborating beyond a moderate level. Why? Because today’s collaborator may be tomorrow’s competitor.
Organizations lack the expertise to build the trust, manage the intellectual property and craft the mutually beneficial opportunities they need to collaborate effectively. Our research shows the gap also results from cultures that are resistant to external collaboration. To foster external collaboration, organizations can:
• Develop commercial relationships through initial face-to-face interactions.
• Be clear up front about knowledge exchange and intellectual property guidelines.
• Specify the learning objectives for each party.
• Manage the institutional knowledge created or used in multiple partnerships.
• Develop internal mechanisms for coordinating relationships across partnerships and with customer communities.
• Create assessment criteria for measuring partnership performance on an ongoing basis.
• Balance the portfolio of partnerships.
• Leverage emerging Web technologies to enable
Shifting the Strategic Focus of Learning
Learning can — and must — play a central role in creating and implementing the culture of innovation outlined above. Three key ways that the learning organization supports innovation include:
1. Facilitating the development of new business models, particularly those that are global in nature.
2. Fostering the creation and deployment of new products, services and operational improvements.
3. Innovating within the learning function itself, including the development of internal services and new delivery channels.
The learning function should take the lead in defining, identifying and locating worldwide workforce skills and capabilities to enable new business models. As companies source their key knowledge and talent from both developed and emerging economies, they must be expert in:
• Classifying the types of skills they are looking to bring into their organizations.
• Identifying and prioritizing gaps at a local and a global level.
• Linking career development and learning priorities to those skill gaps.
• Locating individuals and/or partners with the right expertise and making that expertise visible throughout the broader organization.
However, the classification of skills and capabilities can be very challenging. Efforts often flounder because organizations develop a taxonomy that is too detailed and cumbersome to manage on an ongoing basis. Others underestimate the amount of change management required to inform and engage the organization regarding the importance and value of such skills classification.
Despite these issues, a global view of skills management helps ensure that the organization can source the right skills in the right location at the right time for the right price. It also enables the organization to reallocate learning resources to rapidly build “hot” skills, essential in a rapidly changing business environment.
Business strategy provides the mandate for innovation, in the form of new products and services. Learning leaders can deploy a number of practices to foster idea generation and distribution in their organizations. These include:
• Action learning, which brings people together from different parts of the business to provide learning in the context of solving an actual business problem. Action learning also manifests itself in the return of the apprenticeship model. Focusing on real-world situations, the apprentice learns not only primary job skills but also the nuances that come from working with an experienced practitioner.
• Cross-unit, face-to-face collaborative sessions that build community, even as e-learning becomes more embedded within corporate cultures. These collaborative sessions provide a place for individuals working in similar disciplines across different geographies to meet and learn, face to face. These sessions often prove a hotbed for new ideas and make it easier for employees to build the trust that allows new ideas to flow more freely.
• Bringing the outside in when learning departments partner with other segments of the business to make connections and seek insights from beyond the firewall. Programs such as quarterly innovation sessions, sponsored by the CEO, bring together both internal experts and outside speakers, creating both a learning event and an opportunity for the CEO to demonstrate his or her commitment to an innovation agenda.
Finally, CLOs must innovate within their own functions in order to address two of the most critical learning needs today: reducing the time it takes to develop key competencies and supporting a multigenerational workforce.
Learning and Innovation: Building a Common Agenda
With innovation rising to the top of the leadership agenda, learning executives have a significant opportunity to play a new strategic role in the organization. The time is right for learning professionals to think beyond their traditional roles and to facilitate the creation, development and spread of a culture of innovation. Whether through the facilitation of organizational communities, the preservation of institutional knowledge or the ability to rapidly develop leaders in a global environment, the learning function can help set the stage for and activate innovation within their organization.
Innovation is no longer a choice. It is the engine through which an organization will either thrive or wilt. Likewise, innovation will enable the learning function either to make a lasting contribution to organizational success or to operate on the outskirts of corporate relevance.