The Innovation Culture Balancing Act

Everyone agrees that organizational culture is a key driver of (or hindrance to!) innovation performance. It’s obvious on its face, given that culture affects things like how well teams work together, how fast decisions are made, and how much risk is tolerated. People even seem to agree on a handful of specific cultural traits that foster innovation. And yet organizational culture is one of those things that innovation leaders consistently worry about—45% of respondents to a 2018 survey by Innovation Leader and KPMG said cultural issues were their company’s single biggest obstacle to innovation.

If we agree that culture is important, and agree on what elements of culture matter most, why is culture still such an obstacle for so many of us? More importantly, how can we move things in the right direction—how can we help our colleagues lean into shared values and behaviors that drive, rather than stifle, innovation?

There's widespread agreement on some of the cultural traits that foster innovation.

From Google to Harvard to the Lean Startup, people agree on the traits that foster innovation. We tend to agree that innovative companies:

  • Foster psychological safety. When people feel psychologically safe, they’re more confident taking risks. They don’t worry about negative repercussions for asking questions or suggesting new ideas—both critical behaviors for innovation.
  • Are willing to experiment. Experimentation is central to innovation. Effective innovation teams develop hypotheses and devise experiments to systematically learn and gain clarity on paths forward.
  • Have a high tolerance for failure. Innovation requires exploration of the unfamiliar and uncertain. Companies that can’t persist through the attendant false starts, dead ends, and outright failures won’t be successful.

Those sound familiar, right? And it would be difficult to argue that innovation thrives in cultures that disdain new ways of thinking, discourage experimentation, and punish missteps. So what’s stopping us from implementing practices that support these values and habits?

Fear of those cultural traits, unchecked, leads some of us to reject them.

In large organizations, it’s easy to imagine the “dark” side of those traits—to envision one or all taken to the extreme. We might imagine a psychologically safe culture as devoid of productive debate or honest feedback. Constant experimentation devolves into aimless chaos. Tolerance for failure could result in a culture of low expectations or shoddy execution.

In Creative Construction, Gary Pisano talks about a certain amount of tension being necessary in innovative cultures—that you need certain practices to “oppose” the quintessential innovation traits. Psychologically safe but brutally candid. Willingness to experiment but highly disciplined. Tolerance for failure but no tolerance for incompetence.1

High-quality innovation performance measurement is the key to the culture balancing act.

In practice, those “opposing” practices can seem even more daunting to implement than their more familiar counterparts. But a high-quality innovation measurement system has them built in, like so:

Psychologically safe … for constructive debate. Your innovation measurement system should include the processes for selecting and periodically reviewing innovation projects. Too often, companies structure these meetings so project leaders are forced to advocate for and defend their work. Rather than pit the project leader against the review panel, it’s far more effective to foster constructive debate, e.g., about hypotheses, testing methods, results. With a foundation of psychological safety, you can invite necessary debate without worrying about discord.

Willing to experiment … while highly disciplined. High-quality innovation measurement provides the discipline that’s necessary for effective experimentation. The metrics you use should help teams select projects and design experiments based on value to the company, in terms of outcomes and/or learning. Knowing up front the criteria for advancing projects provides both clarity and speed in decision-making.

Tolerant of failure … without tolerating incompetence. High-quality innovation measurement systems can differentiate between failure of an innovation project because the idea was fully tested and found to be an unattractive option (acceptable) and failure due to incompetence (unacceptable). Getting the practices above right—constructive debate about highly disciplined experiments in a safe environment—will significantly mitigate the risk of incompetence. But measuring the effectiveness of experiment execution will also be important. That requires tracking output metrics, including measures of both learning and activity. There can also be a role for assessing the quality of execution through, for example, peer-based feedback.

If you’re trying to build or sustain a more innovative culture, a high-quality, complete measurement system will provide the guardrails and discipline you need.

Creative construction: the DNA of sustained innovation, Gary Pisano – Public Affairs, Hachette Book Group – 2019.

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