Constructive Culture, Innovation and Adaptability

Innovation is now back at the top of corporate agendas, and for good reason. Despite the increased investment by organizations in a.o. research and development, measures of productivity growth in many counties around the world indicate that organizations are struggles to realize the benefits of these investments. According to statistics, annualized ‘labor productivity growth’ is decreasing. In some countries, the “total factor productivity”, a proxy for innovation that measures growth due to more efficient use of labor and capital, is even lower. While differences across countries are attributed to many factors (including individualistic societal values), the important point is that the global rates of innovation and productivity are generally low.

 

Analysts note that the increasingly wide disparity in productivity between organizations indicates that the development and diffusion of innovations just are not distributed among organizations as they should be. The advantages of certain very large organizations - such as their patents on technological innovations - make it difficult for the average organizations to keep up. Strategy professor Anne Marie Knott points out that the problem is not so much that research & development (R&D) is getting harder as it is that companies are just getting worse at it. Her research shows that managers as well as investors tend to have misconceptions about innovation (such as assuming it is small companies that are the most innovative) and that most do not know how to measure it. That said, “creating a culture for innovation” is currently seen by C-suite members as the most important strategy to improve innovation.

 

Everett M. Rogers, author of the seminal book on innovation, defines innovation as “an idea, practice, or object that is perceived as new by an individual or other unit of adaptation”. Accordingly, innovations can be big or small, come from any source (not just R&D), and be tangible (like a product) or intangible (like a process, technique, service, or experience). An organization can benefit not only from developing innovations but also from being early adopter of innovations developed by others - which is one of the reasons we are focusing on external adaptability as we look at innovation.

 

Research shows, that high-scoring companies in innovation and adaptability tended to establish special structures and practices that helped people generate and contribute ideas. Their employees were more motivated in those companies to put in extra effort than in the low-scoring companies. The payoff was significant, with the top-quartile companies achieving five times the revenue growth of the bottom-quartile companies.

 

Companies need to ‘open up their mindset’ about what employees can offer in the way of new ideas. Leaders that do not see that, are going to miss out. Using the language of Human Synergistics Circumplex, cultures that supports innovation is described this way: an innovative culture encourages learning behaviors such as asking questions, seeking feedback, experimenting, reflecting on results, and openly discussing errors or unexpected outcomes. It creates a safe environment that promotes creativity. An innovative culture discourages aggressive-defensive attitudes such as perfectionism, criticism, and authoritarianism. An innovative culture also discourages passive-defensive attitudes such as conformism, conventionalism, and traditionalism.

 

In this vein, early research by Deborah Weber and Peter Sorenson provided critical insights into how constructive norms enable organizations to be more adaptive and innovative. They identified several activities that distinguished organizations that had successfully implemented and sustained changes and improvements from those that had not. Those organizations:

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1. Set baselines for implementation of change initiatives from the start

2. Adopted a common language around their goals

3. Focused on both internal and external customers (in other words, they paid attention to both their external relationship

    with customers and internal relationships among units)

4. Relied on cross-functional teams to continue to identify and make improvements

5. Made good use of survey feedback (as opposed to shoving it in a drawer)

 

These activities reflect the constructive (as opposed to defensive) thinking and behavioral styles that were expected and rewarded in these organizations.

 

Constructive norms promote acceptance and therefore lead to more effective solutions that are more likely to be implemented. The same is true with respect to innovations. As reported by employees, organizations with stronger constructive cultures had significantly lower rates of employee turnover; lower rates of stress and higher rates of engagement; and better cooperation and teamwork within work groups and better coordination between groups. In addition, constructive norms were positively related to profitability. Innovative organizations also have a clear strategy that informed everything they did and a culture that support both strategy and diversity in teams.

 

Constructive thinking and behaviors at the leadership level help to solidify constructive behavioral norms across the company, which in turn rejuvenate the agility and innovativeness of organizations. As this investment of effort continues, organizations can develop and introduce more new products more quickly and successfully than ever before. As well, its members are exploring new areas and trying new ways of doing things that collectively will elevate organization’s brand and reputation both as employer and competitor.

 

Source: ‘Creating Constructive Cultures; Leading People and Organizations to Effectively Solve Problems and achieve Goals, by J. L. Szumal and R.A. Cooke.