The following ten years will be what we at InnovationOne (Dobni and Klassen (2020)) describe as the decade of innovation execution, which is now the central challenge organizations face. Executing innovation agendas is not easy. McKinsey (2022) reported that 84 percent of executives tout innovation as critical to the future success of their organizations, yet only six percent of these same executives were satisfied with their efforts to develop a sustainable innovation culture.
We wonder why executives report such a gap. The answer lies in six questions to ask your workforce about the behaviors and actions they hear from management. These questions and your organization’s competitive and financial context will set the path for being more innovative and financially successful.
NOTE: This column is based on the published academic paper, ”Measuring cultural readiness for innovation: six essential questions,” by C. Brooke Dobni, and Grant Alexander Wilson, published in the Journal of Business Strategy, DOI 10.1108/JBS-09-2022-0168 © Emerald Publishing Limited, ISSN 0275-6668 j JOURNAL OF BUSINESS STRATEGY. https://www.emerald.com/insight/content/doi/10.1108/JBS-09-2022-0168/full/html?skipTracking=true.
The busy highway or the road less traveled
Organizations generally take one of two roads when pursuing innovation: the busy highway or the road less traveled. The busy highway appears to be full of detours, and the destination is either unclear or seldom met. The busy highway is informal, supporting actions are piecemeal and uncoordinated, and the outcomes are often not evident. As a result, implementation stalls. These organizations treat innovation as an initiative.
Conversely, the road less traveled includes organizations that have made innovation a strategic imperative. The approach in these organizations is formal, and their actions are deliberate, strategic, and informed by innovation. Employees in these organizations are more likely to know how their specific actions and behaviors contribute to innovation and the overall strategy. Innovation is palpable and more than just words.
What is more concerning than the busy highway strategy is that many organizations have yet to choose a path. We can only speculate why more organizations do not take the road less traveled. We argue it relates to the effort, costs, timeframes, perception of risk and lack of knowledge. This road less traveled also represents a detour from what is comfortable, and easy, as we are now talking about a change in the organization’s culture to support innovation.
Many leaders perceive this journey as being risky. We argue that the absence of a strategy and the busy highway approach pose greater risks to the organization.
Commonalities and differences
When we examined how companies developed sustainable innovation cultures, we found that there is no “one best approach.” Mass customization approaches work. Yet, the frameworks and processes to support and drive innovation are stubborn and challenging. However, for those organizations that establish the proper cadence, innovation can be transformational. Second, innovation is a culture and can be measured (Wilson and Dobni, 2022). Therefore, if innovation culture can be measured, it can be managed (Drucker, 1954). To this end, structured or formal innovation activities work better than informal approaches over the longer term.
Next, there is also no single “panacea” innovation marker. There are a number of factors that drive innovation, all of which can be measured and managed. Finally, strong leadership and resource commitments are required to drive innovation forward. It is not a “side of the desk” project. We also consider the differences between high and low innovators by bifurcating our database based on innovation metric scores. We discovered six commonalities (or common factors) that high innovators possess that are nonexistent among low innovators. These common factors form the basis of our framework and are discussed below.
Threading the innovation needle: the InnovationOne innovation framework.
Six questions: In order of priority (statistically, it is the variance explained), the six common factors that support an innovation culture include 1) processes, 2) leadership, 3) resources, 4) knowledge management, 5) creativity, and 6) incentives. Figure 1 shows InnovationOne’s framework for improving innovation and culture. They are:
- The goals and KPI dashboard of the organization
- Required employee behaviors and actions
- The competitive and financial context of the organization to drive behaviors and achieve alignment with the organization’s goals and innovation vision. This context clearly defines the questions leaders must ask their employees to measure and manage innovation culture.
- Finally, the map to move forward and to measure and manage progress
In the framework, we have identified these contextual factors, provided:
- Each factor explains the amount of priority (or variance) in the model. For example, process drives 21 percent of the variance.
- The question for employees used to measure the factor. For example, Question 1 is, “I am empowered to use my creativity for the benefit of the organization.”
- A brief descriptor for each factor. For example, in Question 1, “Creativity of employees is unleashed.”
This framework defines the contextual foundation to drive innovation from the employee perspective. Specifically, if an organization wants to align employee behaviors and actions to accommodate innovation and enhance strategy, one needs to strategically and purposefully manage these levers.
Cultures of innovation matter.
In an era where organizations need to reinvent themselves every four or five years, many are reinventing their business models and looking for innovation as the contractor. Cultures of innovation matter. It has been shown that innovation cultures are correlated with methods, processes, and technologies. High-innovating organizations outperform low-innovators across most indicators of performance.
Developing an effective and sustainable innovation culture is not easy. We believe this is why many organizations have started down this road but took early exits. We appreciate that culture takes time to change, often years. This means that the performance impacts of innovation may not be realized for some time. However, quick wins are possible along the journey.
Going forward, longer time horizons must be prioritized, as innovation is the long-game strategy (Klassen et al., 2022). It ultimately comes down to where organizations want to make investments. Everyone likes the idea of change, but change is difficult. When considering the cost versus the benefit, it is also essential to understand that an innovation-driven strategy will always prevail over a “more of the same” strategy.
Innovation is no longer an option for organizations that want to be top performers. This all begins with leadership and culture. Old approaches no longer work. It is time for the next full measure. Six questions to measure and drive employee behaviors and actions for innovation will start you on your journey.
InnovationOne®, LLC helps organizations worldwide build a culture of innovation and make it sustainable. InnovationOne® uses a scientifically developed assessment to measure, benchmark, and improve your company’s culture and capability to innovate and enjoy better outcomes and financial results. Companies scoring in the top quartile of our InnovationOne Culture Index© reported higher financial performance than bottom quartile performers by 22 percent. Our latest research shows that R&D Labs can improve their performance by 20 to 30 percent with higher innovation culture scores. Measure and ignite your culture of innovation.