Innovation: Creating a Culture, not a Program

For many years I kept the over-sized coffee mug with the words THINK BIG imprinted on the front in bold, black letters. An attempt to encourage the team to think “outside of the box”, these cups were lavished across the organization along with token memo pads, awards, and a generalized awareness that yes, we could be doing things much differently.  It was a short-lived program.

Innovation is guaranteed to be short-lived and woefully shy on results if it is treated as a program. It must be part of the fabric of the organization – the way the company operates. What is the difference?  Both programs and culture transformation have specific objectives, measures and tactics, and require detailed execution and accountability.  However, a program has a beginning, middle, and an end.  When the departmental objectives have been reached (product has been launched, defect level attained, social media program implemented), the project is over and focus shifts.

Culture, on the other hand, is the accumulation of the daily habits and attitudes, norms and language of everyone in the organization.  It is the way employees feel about working there, the response that executives have toward mistakes that are made; it is how meetings are handled, and accountabilities established.   It is the attitude toward taking risks.  It is how differences are settled and employees rewarded.  It is found in the subtleties of tone, look, and everyday words.  It is tied to the mission, vision, and values of the organization.

For innovation to be effective, it must be part of the culture.    Below are a few critical steps to establishing, and maintaining a culture of innovation.

 

  • Solidify the Executive Team –   Culture change starts at the very top and is infused throughout the organization.  From the CEO down, leaders set the tone, and employees learn about what is really important by watching, not just by listening.  In order to foster a culture of innovation, executives must be willing to take risks, learn from “mistakes”, and be relentless in having an outward focus.  As President or CEO, the people you hire and surround yourself with MUST be able to support your vision. Your leaders need to embody an organization that values questioning, reflection, creativity, and collaboration.   If the entire executive team is not on board with developing a culture of innovation, it is less likely to happen and any one person can de-rail the transformation.

 

  •  Build Innovation into Company Mission, Vision and Values –  Top innovative companies question, observe, network, and experiment, drawing connections between unrelated fields, according to a Forbes’ recent survey.  These companies know that it is critical to build innovation into the mission, vision, and values of the organization, and they include language around creativity, collaboration, and the customer. Core values filter down throughout the organization to every department and every individual.  It can’t be something that is relegated to the Research & Development department or the Marketing department.   John Kotter, expert change agent from Harvard, suggests that 40% of the time, failure to change a culture can be traced to either lack of corporate vision or failure to communicate that vision adequately.

 

  •      Identify, Measure and Reward  Key Attributes of Innovation – Libby Wagner, author of The Influencing Option: the Art of Creating a Profit Culture in Business, recommends that executives looking to change to a culture of innovation first look closely at where innovation is happening within the organization.  “Identify where individuals are creatively solving problems, and where does creativity and collaboration need to be supported.  What are the practices in place that encourage innovation, and what are the practices that discourage innovation?  Identify those key attributes that can be measured and incorporate them into performance objectives”.  Set expectations of being open-minded, asking questions, suspending judgement, and working closely with others across the organization and with outside partners.  Companies that punish employees for speaking out and taking risks will not succeed in creating the changes they envision.  

 

  •   Create a Customer Focus – Understanding how customers make decisions and what is important to them is critical to creating satisfying solutions or experiences.  Procter and Gamble (P&G) has developed a culture of “The consumer is boss” and innovation is at the heart of their business model.  The company has put significant resources into understanding exactly who their consumers are and what motivates them. The result has been a steady stream of both disruptive and incremental innovations that address the needs and desires of consumers around the world, and has placed P&G in Booz and Co.’s list of Global Top 10 Innovators for the last three years running.

Starbucks launched its light-roast coffee, Blonde, recognizing that 40% of consumers like a light-roast.  Via, its single-serve instant coffee stick packs, became a $250M brand in 2011, despite the fact that Starbucks has built their brand on the retail experience.  The company found another usage occasion and melded it with leading technology to update an old, dated category.  Consumer research is not just for billion dollar organizations, though.  There are ways to scale it down to fit any company. Understand who your customers are and find out what is important to them.  Product benefits, usage experience, and packaging all play a part in part in determining consumer trial, use, and re-purchase. 

 

  •      Become a Learning Organization – In 2002 P&G created specific consumer immersion programs, where employees live with consumers for several days, experiencing everyday life with families.  It provided a much deeper understanding of how consumers interacted with their social networks, what products they buy, and how they use their time.  One result has been the highly successful Naturella brand of feminine hygiene, built on the values core to the women of Mexico, which were different from those of the US.  Figure out how to create your own learning program to identify what it is that your consumers really value.

Top companies build opportunities for learning into every project.  A wrap-up meeting at the end of every project enables everyone to share what went well and what didn’t, and allows the team to learn from the experience so that the next one is more successful—if it is safe for everyone to share.

And don’t be afraid to bring in outside partners.   The expertise to solve real problems and create a profitable future rarely lies in the conference room.  Innovation requires teamwork – between suppliers, universities, leading industry experts, and sometimes even competitors.

 

  •  Think Broadly – The most innovative product introductions are adaptations of what is being done in alternate spaces, industries, and countries.  Brazil-based Natura Cosmeticos SA has an innovation team that includes psychologists and sociologists as well as biologists and engineers.  If you don’t include experts from different backgrounds, then ensure that your core team includes a group of well-rounded, well-read, well-traveled individuals that can bring breadth and vision to a culture of innovation.

In the book Reverse Innovation, the authors make a compelling argument that while US companies tend to focus on exporting new versions of successful products to developing countries, there is a huge opportunity to take what is being done in developing countries and bring it into the US.  Gatorade has grown to a multi-billion dollar brand, built from insights on how doctors successfully treated cholera patients in Bangladesh with a concoction that included coconut water, carrot juice, rice water, carob flour and dehydrated bananas.  More recently, we have seen coconut water itself become a serious hydration category, and one that big brands are investing heavily in.

Chobani has grown into a billion dollar brand in five years by taking a ubiquitous concept in Turkey, strained yogurt, and Americanizing it by adding sweet fruit, and marketing it to a growing set of consumers hungry for high-protein, healthy breakfast options.

 

Finally, creating a culture of innovation requires a unique blend of patience and urgency. Changing habits takes time, but if a sense of real necessity is not built in across the company, it won’t happen.   As I watched my son recently turn a pile of 500 Lego pieces into a Star Wars “Starfire” rocket, I was reminded that changing culture is similar.  We attach one piece at a time, re-attaching pieces that fall off from mishandling, and re-doing whole sections later if they don’t look like they fit.  And we do it with the urgency of a six-year old who wants to play with it now.

Published in Nutrition Industry Executive Jan/Feb 2013