Corporate Innovation/Innovation How To/Analysis/ Innovation culture has a dark side you need to embrace To avoid culture becoming a cliché you have to keep it grounded, says Harvard professor Gary Pisano, kicking off the #FutureProofonculture series By Thomas Brown 9 November 2021 \Corporate Innovation Why venture clienting is like innovation DJing By Alejandro Tauber 28 June 2022 Corporate Innovation/Innovation How To/Analysis/ Innovation culture has a dark side you need to embrace To avoid culture becoming a cliché you have to keep it grounded, says Harvard professor Gary Pisano, kicking off the #FutureProofonculture series By Thomas Brown 9 November 2021 If you’re looking to drive real innovation — the kind that can be sustained over time, rather than one-hit wonders — aspects of how your organisation operates are going to have to change. And that’s going to mean change for the people within it. Want to embrace failure? Sounds eminently sensible, in theory, if you want to try new things. But if your organisation succeeds in creating value for today’s customers by relentlessly focus on quality and rigorous standards (for instance), “accepting failure” will probably sound like a gamble at best. Want to make faster investment decisions without bureaucracy? Agility is great, but if your organisation is measured and managed through governance, business case processes and diligent allocation of capital (and has shareholders or other stakeholders who monitor this), gambling might be one of the nicer terms your people use to describe the desired shift. “Culture is how you behave when no-one’s looking” Change may be drastic or a gentle evolution. It may come in the face of an existential threat or be a long time in anticipation. Either way, for innovation to become a mainstay of your organisation you’re going to need to ask your people — from the top team down through the organisation — to think and act differently. How might you do that? “There are two basic ways to influence or control people’s behaviour in an organisation that have been a key part of management doctrine for years,” says Gary Pisano, professor at Harvard Business School. “The first is a formal incentive system, where behaviour and performance is monitored, and rewards are established when what you want to happen, happens.” The problem with incentives is that not everything is measurable (especially when it comes to innovation) and that monitoring and incentives alone are unlikely to form an ideal strategy. “There are lots of behaviours that are important when it comes to innovation, but that are just hard to see or hard to measure. Or that take time to bear fruit in terms of performance. This is where culture comes in as the second major lever for shaping behaviour in organisations,” Pisano says. Culture is the creation of a social contract, a set of norms where people behave in a way that you want them to — even before it can be measured or rewarded. “They say that culture is how you behave when no-one’s looking,” he adds. “Culture is the norms you have for what it means to be a part of your organisation. And if you’re not thinking about how to harness that, you’re left only with the first lever — but you’ll expend far too much resource measuring and monitoring, trying to define increasingly complex incentive systems… it would just become untenable.” Pisano says it’s not an either/or choice. That organisations need to draw on both levers. First, formal measurement, monitoring, incentives and rewards that combine to establish expectations. Second, leaders’ attention to the underlying cultural code that one could call the soul of the organisation. Nothing particularly radical or contentious so far. Why, then, does innovation culture still attract evangelists and detractors alike? People have grown sceptical Talk about the tangible side of your innovation programme — the labs, the budget, the expected financial returns and everyone is interested and has an opinion. Shift the conversation to culture, however, and you’ll likely face a different reception. Pisano says: “I think there’s a lot of scepticism about innovation culture, largely because of the work that’s been done on it and the fact that many leadership teams feel that it has failed to deliver an impact”. “People gravitate towards the nice side of culture. They overlook the harder, or darker, side” Popular aspects of an innovation culture include tolerance for failure, freedom to experiment, an emphasis on collaboration and flat organisational structures. “These characteristics are all great, but many organisations found that they didn’t work or didn’t yield any attributable impact,” adds Pisano. “Why? Not because they’re wrong, but because people gravitate towards the nice side of culture. The easy side. And in doing so, they overlook the harder, or darker, side of culture.” Take a look at the dark side Being innovative doesn’t mean doing away with discipline, rigour or governance. It doesn’t make planning, measurement or oversight redundant. And an innovation culture doesn’t have to have “chaos” as one of its defining characteristics. The problem is that the concept of an ‘innovation culture’ has become somewhat popularised, faddish, or clichéd. We’ve allowed the easy or attractive traits to take centre-stage, and in doing so have perhaps undermined the hard work it takes to get to them. And this has led to intense cynicism, “not just among leaders,” adds Pisano, “but among the people involved in innovation throughout an organisation.” “The concept of an ‘innovation culture’ has become clichéd” Professor Pisano urges innovation leaders — and indeed, all senior executives interested in playing a role in growth strategy — to apply balance when thinking about innovation culture. In particular, he presents the typically rosy characteristics of an innovative culture with their paradoxical, but important, counterweights: A tolerance for failure — but with an intolerance for incompetence A willingness to experiment — but combined with extreme discipline Collaboration — but tied with crystal-clear individual accountability Freedom to speak up –— but an embracing of candour A flat structure — but coupled with strong leadership “Building an innovative culture isn’t going to be a walk in the park” “These traits can sometimes seem contradictory or paradoxical, but the idea of an innovative culture has to be looked at differently,” concludes Pisano. “We have to recognise that building an innovative culture isn’t going to be a walk in the park… it’s going to be tough, but if we embrace that, we stand a good chance of getting over some of the scepticism that currently confronts us.” Ask yourself three questions What’s the recent history of innovation in your organisation — could your leaders, management ranks or front-line colleagues be suffering from culture change fatigue? If so, are you planning for how to tackle this in your early communications? Have you articulated the desired traits for an innovation culture in your organisation? If so, have you defined their “counter-weight” to keep them grounded, disciplined and attainable? Be honest with yourself — are you and/or your team painting an overly rosy picture of innovation and the culture that will enable it? Have you faced up to the darker sides, and are you willing to be up front with your stakeholders about this? Next, on #FutureProofonculture From now until early February, #FutureProofonculture is exploring and unpacking culture, and how it can make or break innovation ambitions. Next week, we look at the top myths and missteps of innovation culture, with a little help and expertise from Stanford University’s Professor Yossi Feinberg, Strategyzer’s Tendayi Viki and Deloitte Ventures’ Catherine Wallwork. In the meantime, search #FutureProofonculture on Twitter or LinkedIn to see what’s sparking conversations among your peers — and join in. Thomas Brown is Sifted’s Corporate Innovation Reporter and a freelance journalist, award-winning author and consultant, specialising in digital transformation, innovation, organisational culture and consumer behaviour. You’ll find him tweeting from @ThinkStuff. Gary P. Pisano is the Harry E. Figgie Jr. Professor of Business Administration and the senior associate dean of faculty development at Harvard Business School. He is the author of Creative Construction: The DNA of Sustained Innovation. 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