The struggle of creating an innovation culture, a culture that supports innovative thinking and output as compared to an innovative culture (one marked by internal differentiation), can readily be framed as a structural dilemma. There are two seemingly contradictory operating instincts that must be reconciled in order for an innovation culture to be sustained. The first is the bias, especially in larger, older organizations, towards definition and control of all aspects of organization life. The second bias, a start-up or entrepreneurial mindset, tends towards differentiation and creativity. As you can imagine this reconciliation process requires tough trade-offs.
Definition & Control
As organizations grow and evolve over time their business functions and processes formalize in support of bringing their products and services to market. Over time authority consolidates so that there are agreed upon channels for communication and decision making. The strategic goals of the organization are driven from the top down into the organization through goal-setting and often those goals are directly tied to individuals’ performance expectations. Business processes and systems are defined and marked for vigilant management and incremental improvement. The organization becomes solid, tightly integrated, and an excellent platform for delivering a relatively stable mission.
It is possible to have too much of a good thing and when taken to their limits within these performance biases there are inherent drawbacks.
In the consolidation of authority the speed of decision making often decreases. The reason for this is that communication regarding the nature of the decision needs to rise to the appropriate level of the organization with the decision making authority. The further away from the point at which the decision needs to be made, the increase in the amount of information that needs to be provided to ensure that the decision is made with the appropriate data. This doesn’t take into account the communication styles of those requesting the decision, making a recommendation, or making the final decision. Often this communication process results in delay and missing information is provided and the decision intent is clarified.
The ownership of the strategy at the top of the organization may also be an impediment to effective innovation. If an organization’s strategy is primarily understood at the senior management level and enacted at lower levels in the organization hierarchy there may be a disconnection between environmental and marketplace awareness and the ongoing suitability of a particular strategy. A strategic blindness pervades. If clients’ needs change or technology shifts the chances are those most closely engaged with clients and the marketplace will see that first. If what they are seeing is at counterpoint to the organization’s established strategy the process of raising the alarm in order to modify performance to address the changing conditions in the field may be wanting.
The inability to respond swiftly has long been a hallmark of larger, well-established organizations. When faced with well-defined business processes and systems it can be a challenge to modify or remove them in the face of a need to change an organization’s business model. The beauty of a large organization is the ability to focus the appropriate allocation of limited resources to the best effect. Often management focuses on incremental improvement and the elimination of errors rather than wholesale change, especially when performance goals drive toward certain returns. This practice leaves little room for the exploration, let alone failure, required for meaningful and effective innovation. It is simply too hard to change the direction of a organization like this when everything about its configuration is designed to reinforce the structural integrity of that configuration.
The world’s largest oil tanker is the Knock Nevis; its size beggars belief*. It takes five and half miles to stop with a turning circle of over two miles. It takes nearly fifteen minutes to turn 180 degrees. Now, while you would rarely want to turn an oil tanker 180 degrees, as the likelihood of your going in completely the wrong direction is low, the effort involved is enormous. For a large organization their sheer size and complexity makes changing their culture a similarly challenging prospect. That does not mean that they are incapable of innovation, far from it. There are too many examples for large companies changing their culture to increase their innovation effectiveness; Proctor & Gamble and GE come to mind immediately. But accounts of their changes describe years-long efforts. Effective? Certainly. Nimble? Not so much.
Differentiation & Creativity
The start-up organization has its own set of embedded performance patterns. A prime mindset is that when work is to be done, “all hands are on deck.” The implication being both, that many hands make for lighter work and that given the organization’s small size there is no room for the functional specialization that is the hallmark of the larger organization. The smaller organization is a much (much) flatter organization, which means decision making is often left to the person facing the decision and that decisions when made are executed quickly. This nimble and agile behavior is a vital ingredient in the start-up organization’s effectiveness. They are geared towards responsiveness. They can take ideas to market and test them rapidly, iterating their products and services as they incorporate live feedback.
A challenge with the “all hands” mindset and practice is the tendency towards chaos. Without clearly defined roles sometimes the inconsequential can rapidly grow into large-scale problems because no single person owned the resolution of an issue. This behavior can also give rise to increased conflict as people “cherry-pick” their duties, grabbing the most interesting and visible projects and issues while leaving the mundane but necessary (e.g., keeping the network operational) to the next person. As the unloved and unwanted tasks pile up, they too can turn into full-scale emergencies requiring an all-hands approach simply to bring them to resolution.
This approach also fosters keeping decision making at the lowest level of the organization. The speed of decisions being made and enacted can be incredibly swift in this context. The problems arise when decisions become contradictory, due to lack of formal cross-organization communication, or perhaps commit resources and time that has already been committed to other activities in the organization. Without clear decision making authority being made visible to the organization innovation can occur but capitalization on that innovation will be haphazard at best. That haphazard practice leads us to the drawbacks associated with the responsiveness of the smaller enterprises.
A rapid response rate should be a good thing shouldn’t it? What should be a virtue may become a vice as the very limited resources of the organization are spread too thinly by trying to address the needs of all available opportunities. Every customer is a good one. Every feature request should be incorporated. All channels to market should be accessed. The strategy for most start-ups is to capitalize on their product or service as rapidly as possible and that means they will often be trying to find the right approach to the meeting their intended clients’ needs on the fly. Unfortunately, in the desire to over-deliver on the innovation front, the smaller outfit can perform like a hummingbird with an attention deficit disorder. Many efforts are started but seeing them to a reasonable conclusion is not the highest of priorities.
An Integrated Approach
All is not lost. There is a path that can take the better qualities of each type of organizations structural biases and turn them into assets. It requires introducing a new set of skills into the organization that facilitate innovation. Roger Martin, Dean at the Rotman School of Management at the University of Toronto, offers an approach called “integrative thinking” that can help create the mental framework for bringing innovation to life in any organization. Outlined in his book The Opposable Mind, Martin offers three thinking tools: generative reasoning (a thinking pattern that inquires into what might be rather than what is); causal modeling (the building of a holistic view of the relationship between variables in a system); and, assertive inquiry (the search for other’s views in order to seek common ground between conflicting models). Integrative thinking provides a discipline for considering the limits of existing systems and ways to address their deficiencies. This approach creates the space for innovation to take place regardless of an organization’s structure.
To Martin’s thinking process I add a concept called “social orienteering”. Social orienteering involves the identification of the social network at play, both internal and immediately external to the organization, and the key checkpoints across that network to be met and passed in order for innovation to be successful. It offers a path for action across an organization, regardless of the functional structure in place, enabling innovations to have the greatest chance for success.
Determining how roles and responsibilities are defined is only one small part of an organization’s structural design that must be addressed. The processes and systems through which innovation is created and delivered, as well as the supporting artifacts and language, must also be addressed. By introducing thinking tools and methods that supersede the organization structures and their inherent challenges, innovation can be given the space and commitment to take root and thrive.
* The Knock Nevis was built with a capacity of 564,763 DWT, a length overall of 458.45 metres (1,504.1 ft) and a draft of 24.611 metres (80.74 ft).