The need for constant reinvention is a given in today’s business environment. And while an innovative product or concept can catapult an organization ahead of its competitors, in these fast-paced times, that advantage is often short-lived.
While major product or service breakthroughs make headlines, it’s the constant incremental innovations made by employees every day that give an organization the sustained growth it needs.
Sustained innovation comes from developing a collective sense of purpose; to unleash the creativity of people throughout your organization and teach them how to recognize unconventional opportunities.
As innovative ideas emerge, a clear sense of mission empowers frontline employees to act on new ideas that advance their company’s purpose.
Start at the top
Leaders create the psychological environment that fosters sustained innovation at all levels. The challenge is that as an organization grows, management structures and bureaucracies designed to channel growth tend to create barriers to small-scale improvements.
While there are exceptions, in larger organizations employees tend to feel cut off from the innovation function and are less likely to take independent action or offer breakthrough ideas.
The commitment to establish the right psychological conditions for innovation must start at the top. This means that, as a leader, you need to consider your own assumptions about innovation and your role in creating and changing your organization’s culture.
You must appreciate the value of both incremental and major innovations, understand the psychology of innovation, and take the lead in promoting an innovative culture. Otherwise, it’s just not going to happen.
While your organization’s innovative capacity depends on multiple factors, there are several steps you can take to create the psychological conditions for inventive thinking, regardless of your industry or the size of your organization.
Establish a clear sense of direction
Changing cultures means changing minds, and that takes time. But as with any initiative, a clear sense of purpose helps speed the journey.
Your organization’s mission helps organize and direct the creativity of your people. What is the purpose of constant innovation in your company? Is it to add customer value to existing products and services… to speed delivery… to increase on-time arrivals?
Having a clearly articulated message allows everyone to focus on innovation where it can deliver the most value. Innovation, as Peter Drucker has defined it, means creating a new dimension of performance. A sense of mission clarifies the direction of performance and helps determine which new ideas to focus on.
open communication
Open communication between management and employees sets the stage for an atmosphere of trust. But if you want to establish a new, more trusting culture, you can’t expect employees to make the first move.
Company leadership initiates the open communication process by sharing information with employees on a regular basis. This includes good and bad news.
Southwest Airlines’ information sharing policy allowed the company to weather the surge in fuel costs during the 1990-1991 Gulf War. The company kept everyone informed as fuel prices rose. Southwest CEO Herb Kelleher sent a memo to the pilots asking for their help. Through inventive thinking, the pilots found ways to quickly reduce fuel consumption without compromising safety or service.
Leaders of organizations that support innovation offer multiple communication opportunities.
While not all companies can offer an open door policy for their top executives, or even the opportunity for regular face-to-face contact, all organizations can institute programs that allow frontline workers to feel heard. From CEO luncheons with employee cross sections, to monthly divisional meetings between employees and the CEO, and open intranet forums for sharing ideas and feedback, leaders can communicate their openness to hearing innovative ideas from those closest to the customer. .
reduce bureaucracy
While larger organizations are often seen as less entrepreneurial and inventive than their smaller counterparts, it’s not the size of your company that inhibits innovation, it’s the systems. Bureaucracy slows down action and is a serious impediment to innovation.
Smaller organizations can often move faster in implementing innovative ideas because they have less bureaucracy. When Jack Welch was redesigning General Electric, he said, “My goal is to get the soul of the small business and the speed of the small business into our great company.”
Faster implementation encourages more inventive thinking. Think for a minute. If you had an idea for an innovation, and it required 6 weeks to clear the channels and another 3 weeks to get funding, would you have lost the momentum to keep contributing?
Instill a sense of ownership
A proprietary mindset creates a powerful incentive for inventive thinking. When a person is clearly aware of how his interests align with those of the company, he has a solid reason to “go the extra mile” to further the mission.
Stock ownership is a significant, if not essential, incentive for employees. However, by itself, profit sharing does not guarantee that your employees will think like owners.
When employees don’t see how their individual efforts affect the company’s profitability, they tend to be passive and reactive. To encourage greater participation, make sure each employee knows how her job affects the company’s performance.
Southwest gave the pilots the freedom to design and implement a plan to reduce fuel consumption because they were in the best position to determine what would be effective. The pilots jumped in with enthusiasm because they understood the impact their actions had on the bottom line and ultimately their own future.
Make sure recognition and rewards are consistent
While financial rewards are often tied to innovations, rewarding only the individual or team responsible for the “big idea” or its implementation creates a subtle competitive atmosphere that discourages smaller, less dramatic improvements.
Even team-based compensation can backfire if teams are set up to compete against each other for rewards. These incentives discourage cross-functional collaboration so critical to maximum performance.
Companies that successfully foster a culture of innovation design rewards that reinforce the culture they want to establish. If your organization values integrated solutions, you can’t compensate team leaders based on unit performance. If your company values developing new leaders, you can’t base rewards on short-term performance.
Tolerance for risk and failure
Tolerating some degree of failure as a necessary part of growth is an important part of fostering innovation. Innovation is a risk. Employees will not take risks unless they clearly understand the objectives, have a clear but flexible framework in which to operate, and understand that failures are recognized as mere steps in the learning process.
The Toyota Production System transfers authority for innovation and quality management to front-line plant workers. Workers can make adjustments to their job if they see an opportunity for improvement. If the innovation works, it is incorporated into operations, if not, it is attributed to experience.
An important psychological benefit of the Toyota Method is the development of trust. Employees who trust their bosses are more likely to take smart risks that have potential benefit to the company.
Eliminate projects and processes that do not work
As your organization innovates, you need to practice what Peter Drucker calls “creative abandon.” Projects and processes that no longer contribute should be abandoned to make room for new and progressive activities.
While no organization wants to waste financial resources on unprofitable activities, it is actually the irreplaceable resource of employee time and energy that is wasted if a company clings to the old way of doing things.
Innovation requires optimism. It is an attitude of continually reaching for higher performance. You can’t expect employees to maintain an optimistic attitude if they feel compelled to continue activities that are going nowhere.
© 2007 Dr. Robert Karlsberg and Dr. Jane Adler
