innovation culture the big elephant in the room

8/12/2019 Innovation Culture the Big Elephant in the Room

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Introduction

As the window of opportunity for capitalizing on innovations becomes

ever shorter and the pace of innovation moves ever faster, becoming

competitively unpredictable is the key to business success in the coming

decades. The bedrock of being able to outmaneuver the competition

in ways they never see coming is, of course, a strong innovation

culture that sets the right framework and conditions for fast-paced,

breakthrough innovation to thrive.

A strong innovation culture helps the organization work equally well

(and comfortably) with internal and external input, and it relies on strong

networks to bring even better innovation to market faster. Such a culture

not only rewards outcomes, but also behaviors as this is a key driver for

supporting more risk taking, encouraging experimentation, and learning

from failure.

Yet all is not well on this front in far too many global companies. Each

year, the global consulting firm Booz & Company does a survey of R&D

spending at 1,000 public companies from around the world. Along

with tracking spending trends, their annual report, Global Innovation

1,000, provides insights into what makes companies truly innovative. In

their 2011 report, they tackled the importance of an innovative culture.

After defining the elements of an innovative company as a focused

innovation strategy, a winning overall business strategy, deep customer

insights, great talent, and the right set of capabilities to achieve successful

execution, they go on to say that more important than any of the indi-

vidual elements, however, is the role played by corporate culture theorganizations self-sustaining patterns of behaving, feeling, thinking, and

believing in tying them together.1Yet, strikingly, only about half of all

companies surveyed said their corporate culture robustly supports their

innovation strategy.

Wherein lies the disconnect? Everyone agrees that having a corporate

culture that supports innovation is imperative. Business leaders talk

about it all the time; in fact, theyve been talking in this vein for at least

three decades, if not more. Yet as the Booz & Company study reveals,

Innovation Culture: The Big Elephant

in the Room

An innovative culture is

key to outperforming yourcompetitors. Having the

appropriate mindset and

behaviors engrained in the

organization is especially

essential for companies

pursuing open innovation.

This white paper describes

how an innovative culture

operates and provides

advice on how to move

toward creating such a

culture in your company.

EXECUTIVE WHITE PAPER

?

EXECUTIVE WHITE PAPER


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Innovation Culture: The Big Elephant in the Room

only a minority of corporate cultures are capable of pulling together the

essential elements of innovation and propelling the company ahead of

competitors.

One key cause of the alarming distance between talking about the

importance of an innovative culture and actually building one is that key

aspects of a companys culture are often carved in stone during the first

few years of its existence. Thus, it is quite dangerous, for example, for an

organization that has been around for a while to be inspired by programs

like Googles 20 Percent Time project, in which employees can work on

their own projects for 20 percent of the time. This worked at Google in

the early years, but it will be very difficult to implement such a concept

in anything other than a start-up. The mindset and processes needed

to support this are simply not in place, thereby making the outcomes

highly unpredictable. Furthermore, employees will have a hard time sim-

ply finding the time as they are already very busy doing their day jobs.

Creating any significant change in complex organizations is difficult, butcultural change is particularly challenging. Generally, only two things can

really change a culture quickly. One is a true burning platform in which

everyone realizes that they need to change more or less everything to

survive (not many companies are in such a condition, which is actually a

good thing). The other is the full support of the top executives, and not

just one or two who really understand innovation, but a clear majority

led by the CEO. Unfortunately, this is very rare, although things are

changing for the better as a new generation of executives with a better

understanding of innovation climb the corporate ranks.

Innovative Culture ElementsBefore diving into ideas on how to drive cultural change, lets first look

at the elements of a culture that will support becoming competitively

unpredictable:

People who have strong networking skills and can successfully

manage relationships with customers and partners.This requires

agile and flexible people who have the soft skills of emotionalintelligence fundamental social skills such as self-awareness,

self-fulfillment, and empathy in addition to traditional intelligenceskills. These skills enable companies to build the type of openglobal communities both virtual and real-life that are essential

for pursuing and achieving breakthrough innovation.

Recognition that not all the smart people work for your company,

or even in your department, and a willingness to find and work

with smart people both inside and outside the company. Many

of the ideas that will help organizations become competitivelyunpredictable will come from the outside via open innovation and

crowdsourcing. A culture that features a strong hubris about itsoverall intellectual capabilities closes itself off from possible ideas,answers, and opportunities coming from the outside.

Generally, only two thingscan really change a culture

quickly. One is a true

burning platform in which

everyone realizes that they

need to change more or less

everything to survive. The

other is the full support of

the top executives, and not

just one or two who really

understand innovation,

but a clear majority led

by the CEO.

Many of the ideas that will

help organizations become

competitively unpredictable

will come from the outsidevia open innovation and

crowdsourcing.


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This type of thinking can even block people from working

across departments to find innovative solutions. Comments likethese are all too common: Those people over in the marketing

department are all dopes or Dont ask Engineering; they dontknow anything. This type of thinking blocks innovation and oftenrequires job rotation programs or similar initiatives to help expand

the mindset and the empathy for other business functions. Withopen innovation, these types of programs can even cross over

to partners and customers.

Understanding that failures represent opportunities to learn, and

a willingness to reward those efforts and that way of learning.

Failure is a fact of life for companies that pursue innovation

seriously, and a leaders response has a huge effect on companyculture and therefore on future projects. An innovative cultureallows the organization to embrace experimentation and the

failures that come with it.

Dismissing NIH (Not Invented Here). The organizations that make

the best use of internal and external ideas, and do not need to own

everything and keep it under tight wraps, will win. Companies needto learn how to profit from others innovations, and intellectualproperty should be bought whenever it advances the goals of the

business.

Willingness to strive for balance between internal and external

R&D. External R&D can create significant value; internal R&D isneeded to claim some portion of that value. It is impossible to

overstate the value of embracing open innovation in the drive tooutpace competitors. It is, simply put, the only way forward.

Be constructive around intellectual property issues in relation to

open innovation.Legal teams can either choose to play offense or

defense. Hopefully, they will adopt a constructive approach that

supports progress toward the companys business developmentgoals. Too often, however, legal teams establish barriers that

impede progress. This needs to change.

Understand that open innovation requires open communication.

Companies need to work around confidentiality and intellectual

property rights issues to create an environment built on trust. Itis not only the legal team that hinders open innovation progress.

As companies need to communicate more openly and muchmore frequently with external partners, there will be clashes with

traditional-thinking corporate communication teams that wantto control the flow of information. This shows up when corporatecommunication teams do not understand innovation; this is an

issue that corporate innovation teams must address by educatingcommunicators about open innovation.

The organizations that make

the best use of internal and

external ideas, and do not

need to own everything and

keep it under tight wraps,

will win.

Legal teams can either

choose to play offense or

defense. Hopefully, they

will adopt a constructive

approach that supports

progress toward the

companys business

development goals.


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LEGO Embraces Open Innovation and Cultural Change

The LEGO Group is a good example of a company that has begun embracing

open innovation while recognizing that it requires cultural change. As Erik

Hansen, senior director of Technology and Open Innovation, made clear in a

presentation at last years European Open Innovation Summit, the companys

ability to leverage the power of open innovation rests on building a culturethat accepts key elements of the culture described in this white paper.

For example, LEGO is working to foster the belief that people dont have to

work for us to work with us. The company is also forming stronger relation-

ships than ever with its huge customer base, knowing that consumers of

today are intelligent, they are creative, and they have an opinionAnd they

expect you to listen!

LEGO has over 20 million adult fans, called Adult Fans of LEGO (AFOLs).

There are also thousands of companies wanting to work with LEGO. There is

an enormous potential pool of innovative ideas and the company recognizes

that building a reputation for being open brings high expectations among

AFOLs as well as their B2B partners. Yet, LEGO is dedicated to pursuingopen innovation because it believes participation is the new brand.

Today, LEGO runs open innovation pilots in the production area, solving the

hard unsolvable problems. They are also using open innovation to find

ways to improve the LEGO core experience and improve core HR processes.

To get to this point, LEGO did some very smart things early on, including

doing a thorough job of researching open innovation and setting a clear

strategy. LEGO began by establishing a taskforce to:

Assess the opportunities, needs, and benefits of introducing new prac-

tices of open innovation across LEGO

Define what next practice would look like while building on internal

practice as well as insight from the best open innovation practitioners in

the world

Make a firm and evidence-based recommendation on what and where

the value could be, how this could be delivered, and what would be

needed to achieve this

Set out a viable roadmap based on how to move forward, balancing

risk and rewards, etc.

As Hansen set out to learn more about open innovation, he focused on three

elements:

Learning from others by conducting a dozen interviews with leading

open innovation companies

Learning from LEGO through collecting input from over thirty

practitioners

Learning by doing by setting up four micro pilots to test capabilities,

culture, and appetite

Today, LEGO runs open

innovation pilots in the

production area, solving the

hard unsolvable problems.

They are also using open

innovation to find ways to

improve the LEGO core

experience and improve

core HR processes.


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This helped Hansen express the goals for the open innovation program at

LEGO this way:

GOING FROM TOWARD

Creativity from the few Systematic creativity from the

many

Select strengths put to play Full potential realized

Succeeding together Succeeding more together with

more people

A relatively closed culture A culture of openness

Another LEGO fellow, Stiven Kerstegian, senior manager of Open Innovation,

also spoke about the companys approach to open innovation. He said their

adoption strategy is based on broad communication (humor), knocking

door-to-door (private groups), role models (from CEO to the line worker),

gifts and prizes (cake), and HR (KPIs and employee reviews).

Also according to Kerstegian, LEGO divides its innovation objectives intocategories and levels such as business, product, communication, and pro-

cess, and works to extract value from four pools of people: employees,

entrepreneurs, kids and AFOLs, and companies and institutions.

LEGO is clearly on the right track both with regards to open innovation and,

more importantly, on building a strong and sustainable innovation culture.

Achieving Cultural Change

The further away an organization is from the Innovative Culture Elements

described above, the greater the change that will be required. Here aresome ideas on how to achieve that change:

Embrace a grassroots approach.Commitment from the top as well

as the bottom is required. If the former is lacking, then engageemployees to create a grassroots effect in which more and more

employees (followed by managers and perhaps even executives)get involved in innovation initiatives. Examples include initiatives

related to intrapreneurship, business plan competitions, and skunkworks.

A helpful framework for thinking about how to generate commit-ment from all levels is called the TBX model. In this model, T stands

for top down. It is all about the need to get executives on boardand require their personal commitment to the innovation activities.

Without executive support, no change occurs.

The B in TBX stands for bottom up. Value creation begins with

people one by one, team by team. Nothing happens unlessemployees are engaged, involved, and trusting that their voices

are heard by those higher in the organization. If ideas just seem tofall into a sinkhole, never to re-emerge, or if leaders are not ableto commit resources to any ideas, trust of the employees will most

certainly erode.

A helpful framework for

thinking about how to

generate commitment from

all levels of the organization

is called the TBX model: Top

down, bottom up, across.


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The X represents across. The biggest challenges will come from

the middle managers placed across the organization, becausethey typically have a narrow focus on their own profit-and-loss

responsibility. They do not often see the full picture, and thus willnot give up resources when doing so does not benefit them in theshort run, even though it may be the right thing for the company

in the long run. If not dealt with appropriately and effectively, theycan bring innovation to a grinding halt, which will destroy the trust

of both executives and those doing the actual work of innovation.The irony is that they actually do so by just doing their jobs.

Incentive structures may well have to change to overcome this

challenge.

Understanding the overall corporate strategy better. It is oftensaid that culture eats strategy for breakfast. However, it is

important for corporate innovation teams to gain a very solidunderstand of the overall corporate strategy, then identify a

number of important corporate moves (near future) and try topull the current innovation resources in this direction.

This could help bring more awareness, recognition, and perhapseven respect to the innovation team just for their efforts and in

particular if it results in some early wins. Over time, this can helpchange the culture for the better.

Focus on a single business unit, at least initially. Large multi-national companies most likely have pockets of the rightinnovation culture. Try to identify these pockets and then secure

full commitment from the leadership and work together todevelop and launch strong initiatives. If this works well, then build

out further throughout the company with similar initiatives.

Educate upwards. It is the responsibility of corporate innovation

teams to educate their executives. Yet many teams miss out on

this or they do not really know how to do it. The challenge is tofind the ways that work in a given situation. Executives may wantto learn, at which point establishing a training program would beappropriate. If they do not seem interested, then finding the

unique triggers is important. This often involves identifying waysin which the executives can benefit personally from a stronger

innovation culture.

Senior executives often think about what their peers in othercompanies are doing. Thus, it might also be relevant for a corporate

innovation team to set up sessions in which executives fromdifferent companies learn from one another. As the organizer, itis possible to control or at least influence which companies to

invite and thus help select companies that can build further on theinnovation agenda that the corporate innovation team is pursuing.

Step up the communication efforts.Every company already hassome good initiatives going on and this can be used to start

building the perception that the company already is innovative(although there is a lot of room for improvement). Communicate

internally in order to get the support needed to make innovationhappen and communicate externally to be able to bring in the

best external resources to the innovation process.

Educate upwards: It is the

responsibility of corporate

innovation teams to educate

their executives. Yet many

teams miss out on this

or they do not really know

how to do it.


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Getting Started at General Mills

First in an article in IndustryWeek, and later in a guest post on 15inno.

com, Jeff Bellairs, senior director of Connected Innovation for the General

Mills Worldwide Innovation Network, wrote: In my role overseeing open

innovation efforts at General Mills, Ive learned that when you start an open

innovation program, its critically important to expect, address, and em-brace significant culture change within your organization to establish a

successful program.

Jeff went on to provide tips for jumpstarting an open innovation program;

here is a shortened version of his advice:

Benchmark Others.Do not underestimate the challenge in beginning to

shift your culture toward one of more connectedness. Look to other

companies that already have done so and learn from them. When plan-

ning our open innovation strategy, we sought insight from organizations

both outside the consumer-goods industry as well as from our peers.

We talked to many best-in-class open innovation practitioners, from

Henry Chesbrough to Procter & Gamble, and the learning we gatheredfrom them helped us jumpstart our program.

Tailor to Your Existing Culture.There is no one-size-fits-all solution

to open innovation. Rather, its important to build an open innovation

program that works in your companys culture.

To start our open innovation focus, we needed to ignite a cultural shift

to transform from an internally focused to an externally focused orga-

nization. What worked for us was creating a dedicated team, which we

named The X Squad, to facilitate the organization in finding and tap-

ping into external innovation. The X Squad is charged to catalyze this

new thinking, to help people think differently about their overall skill sets.

We are actually building on what we have done in the past. But today,

this full-time team travels around the globe looking for potential part-

ners that have a product or technology solution that would fit within

our existing businesses.

Go Where Youre Wanted.Not everyone is going to jump on board

right away. So as an innovation group, you have to focus on the biggest

potential opportunities, and also the biggest risks.

Your open innovation group, above all else, is a resource for your busi-

ness teams. Youre not there to launch your own new products, but to

engage and support the various leaders in your business and get them

committed to tapping open innovation as one way to meet their

business needs.

Certain groups and certain leaders will be more enthusiastic about open

innovation than others, and that is okay. Help the people who want your

help, and do not waste time worrying about those who do not.

Appreciate and Communicate Early Wins.When you have an early

success, shout it from the rooftops to help build your case for open

innovation. One of the first wins for open innovation at General Mills was

a natural fruit bar that we brought in from a partner in Canada. At that

When planning our open

innovation strategy,

we sought insight from

organizations both outside

the consumer-goods

industry as well as from

our peers.

Certain groups and certainleaders will be more

enthusiastic about open

innovation than others, and

that is okay. Help the people

who want your help, and

do not waste time worrying

about those who do not.


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point, we had customers who were looking for more innovation in the

fruit category, a very willing business partner, and a marketing manager

who really wanted to demonstrate how nimble General Mills could be.

We ended up launching the Nature Valley fruit bar from that effort. Itonly took about six months from the time we agreed on our approach to

the time of launch. For us to develop the product from scratch internallycould have required millions of dollars and potentially two years. Even

though the product is no longer on the market, we have continued to

build the relationship with that partner, and they have been an ongoing

source of new-product innovation for General Mills.

The more your employees, vendors, partners, potential partners, com-

petitors and so on learn about the initial success of your open innovation

strategy, the better your chances for sustained success.

Great Innovators Are Great Communicators

Communication in the broader sense story-telling, networking, stake-

holder management, and traditional communication efforts is a key

element for corporate innovation teams in general and in particular when

they work with their colleagues to change the innovation culture for the

better. Here are some suggestions on how to ramp up communications

efforts that will support the culture needed to become competitively

unpredictable:

Get started:This sounds obvious, but it is kind of scary to witnessthe number of corporate innovation teams with no focus on the

communication aspect of their corporate innovation capabilities.

They have no idea why this even matters and as such they do nothave any strategy or tactical tools with which to work. They donot develop their skills and mindset either.

Have a clear message that resonates with the audience:Too often,corporate functions involved with innovation efforts are too caught

up in their own world and thus they communicate with their ownterms and words even though this might not resonate with theaudience. Therefore, seeing the bigger picture is important. Some

might argue that this is why corporate communications teamsshould do the work as they are trained for this. This is true, but

only to some degree. The biggest problem here is that corporatecommunication people do not really know about innovation and

how it happens. This lack of understanding can create problems

internally as well as externally.

Use a range of communication tools:Since most corporateinnovation teams are not trained communicators (and definitely

not in the broad sense advocated for in this paper), they mightassume this is just about exposure on their intranet and in tradi-

tional media channels. They need to go beyond this, and threeunconventional ways for many would be the use of stakeholder

management, networking, and social media. The first two can becategorized as communication tools if used properly. And, donot forget to explore your innovation business partners capability

Too often, corporate

functions involved with

innovation efforts are

too caught up in their

own world and thus theycommunicate with their

own terms and words

even though this might

not resonate with the

audience. Therefore,

seeing the bigger picture

is important.


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Good things can happen

faster if employees believe

that they are being

innovative. Perception

is a powerful elementwhen creating a strong

innovation culture.

No matter the industry

or sector, competitorsare either already or

soon will be pursuing

innovation partnerships

and initiatives with all

sorts of external innovation

sources, including

intermediaries, academics,

entrepreneurs, and

domain experts from

around the world.

to help you both develop and deliver your messages effectively.

Combine internal and external focus: Communication hasbecome trickier for corporate innovation teams in the era of open

innovation as they need to communicate internally as well asexternally. A key reason for internal communication is that good

things can happen faster if employees believe that they are being

innovative. A key reason for external communication is the needto court potential innovation partners in the organizations efforts

to become the preferred partner of choice within the innovationecosystems in a particular industry. Perception is a powerful

element when creating a strong innovation culture.

Conclusion

The pursuit of competitive unpredictability is an organization-wide, nev-

er-ending journey that requires smart leadership, clear strategies, con-

stant focus, and a willingness to embrace change. Above all, it requires

a culture that supports innovation that in the future will be more open

and externally-focused than ever before. No matter the industry or sec-

tor, competitors are either already or soon will be pursuing innovation

partnerships and initiatives with all sorts of external innovation sources,

including intermediaries, academics, entrepreneurs, and domain experts

from around the world.

Keep this external perspective top of mind to improve culture within

your organization. Failure to do so will most likely require a start-over in

a couple of years, and in the meantime, competitors will have gotten a

big jump. So, why not prepare your innovation structure and culture for

the future today? This is not something that can be achieved overnight,

so the journey should start now.

About the Author

Stefan Lindegaard is an author, speaker, and

strategic advisor. His focus on the topics of open

innovation, social media tools and entrapreneur-

ship has propelled him into being a trusted advi-

sor to many large corporations. He believes open

innovation requires a global perspective and he

has given talks and worked with companies on

open innovation in Europe, South America, the

U.S., and Asia. Stefan Lindegaard has written three books: Social Media for

Corporate Innovators and Entrepreneurs: Add Power to Your Innovation

Efforts (August 2012), Making Open Innovation Work (October 2011),

and The Open Innovation Revolution (May 2010). His blog is a global-

ly recognized destination on open innovation. You can read further at

www.15inno.com.

Endnotes1. Barry Jaruzelski, John Loehr, and Richard Holman, The Global Innovation 1000:

Why Culture Is Key, http://www.booz.com/media/file/BoozCo-Global-Innovation-1000-2011-Culture-Key.pdf, p. 2.

Want to solve pressing

problems or build

a sustainable open

innovation capability?

Contact InnoCentiveonline or call

1-855-CROWDNOW to

learn more.
http://www.innocentive.com/contact-us/sales-innovation-consultinghttp://www.innocentive.com/contact-us/sales-innovation-consultinghttp://www.innocentive.com/contact-us/sales-innovation-consultinghttp://www.innocentive.com/contact-us/sales-innovation-consulting


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Appendix

On15inno.com, you can download a free copy ofInnovation Insights and

Exercisesby Stefan Lindegaard, which is a workbook with more than 40

exercises on topics such as open innovation, innovation culture, commu-

nication, the corporate innovation team, and networking. Here are some

of the exercises that you will find.

Internal Readiness Overview

Common Language

The starting point for undertaking culture

change is to analyze how close to (or far

away from) your organization currently

is to possessing a culture that supports

the level of innovation required to become

competitively unpredictable. Here is an

exercise that will help you perform the

needed analysis. Rate your organization

on all 18 points, using the 1 to 6 scale,

with 6 being the strongest.

With this analysis of your current position

in hand, as you begin to determine next

steps, it is important to bear in mind that

the fast pace of change that exists today

means there is no real blueprint to follow.

This is because conditions are changing

so rapidly that any blueprint quickly

becomes obsolete. So your objective is

to create the framework and attitudes

that will enable your organization to be

agile, fast, and fearless in its pursuit of

innovation.

Companies need to develop a common

language on innovation so their employees

and external partners can better

understand and frame the issues related

to innovation.
http://www.15inno.com/http://www.15inno.com/http://www.15inno.com/


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Innovation Killers / Boosters

Which innovation initiatives work within in

your organization? The more informed you

are, the better decisions you can make.

Which innovation initiatives do not work

within in your organization? The more

informed you are, the better decisions you

can make.


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People and Projects

Foundation and Perception

Dont ever tell your employees they are

not innovative! It is better to identify the

pockets of innovation in your organization,

build further on this to create a stronger

foundation, and then let perception

become proof.

Many companies focus too much on ideas

and projects. They should also develop

people pools and learn how to best match

the right people with the right projects at

the right time.


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mentioned herein are the trademarks of their respective owners. 2013-0718

Toolbox and Mindset

Need for EducationOnce you have identified the mindset

and the skills needed for the future

of innovation, you can begin to look into

innovation training programs that are

becoming increasingly important.

What is the mindset and toolbox needed

for your company to be successful with

innovation? Do you have them?

innovation culture the big elephant in the room

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