Innovation Culture - Myths & Truths

Watch my interview on this topic with Nadine Zeinoun, PCC here: https://www.youtube.com/live/wxhnk3dqrS8

Myths vs. Research

Every company wants to be innovative nowadays, but it's difficult to transform the culture if we are unclear what to change it to. "Innovative culture" has become one of the most frequently used buzzwords, just behind "innovation" and "disruptive." And yet, we cannot deny that innovation is essential for the growth of companies and economies.

There are several myths and misconceptions about the innovation culture. Here are the top three:

Myth #1: Innovation equals invention

For many companies, innovation is about inventing a better product, like a faster electric vehicle, a new fruit variety, or a breakthrough vaccine. This myth has two misunderstandings. First, an innovation is a successfully implemented invention. Without successful commercialization, it is not yet an innovation. Second, an innovation may be a new business model or manufacturing process; it doesn't have to be a product.

Myth #2: The hardest part of innovation is finding the right ideas

Companies spend time and effort developing the Next Big Thing and then run out of steam when the time comes to select and develop these ideas. In fact, companies are full of creative people, and ideas are relatively easy to generate. The tough part is selecting and developing the right ideas into a commercially successful reality.

Myth #3: We should adopt the same culture as startup companies

Even though some aspects of startup company culture might be helpful, such as more extensive worker autonomy or cross-functional collaboration, there is no "one culture fits all." Companies have different strategic goals, histories, and organizational designs; therefore, many solutions are possible.

Fortunately, extensive research has been conducted on the cultural drivers of innovation, so we can use evidence for cultural transformation.

The study by BCG, "How Diverse Leadership Teams Boost Innovation," published in 2018, surveyed 1,681 organizations and found that companies with more diverse leadership teams report higher innovation revenue. The impact of diversity on innovation was further enhanced by digitalization. However, based on McKinsey research from the same year, companies should put more emphasis on inclusion, even if they are already relatively diverse. The study of healthcare, financial, and technology industries found that inclusion lags behind diversity by about 30%. Without inclusion, the diverse workforce doesn't have a voice and cannot contribute to the innovation process.

So, what companies can do to improve inclusivity? In addition to increasing diverse representation, particularly in leadership and critical roles, they can:

• Enable equality of opportunity through fairness and transparency.
• Promote openness, tackling bias and discrimination.
• Foster belonging through support for multivariate diversity.

Inclusivity influences innovation primarily by providing more diverse ideas and perspectives. It can be done classically through well-designed brainstorming sessions focusing on equal representation and considering everybody's ideas. However, it still will not eliminate unconscious biases or cultural and personality differences, making some people less vocal. I prefer a combination of online and offline methods that allow crowdsourcing ideas from a much bigger group of people, internal and external to the company. We call it asynchronous ideation, which means working independently instead of being online or in a room simultaneously. There are benefits of this approach, such as:

Flexibility. Everyone contributes ideas at their own pace and on their schedule, which is especially helpful for teams with members in different time zones or who are not easily available.

Diversity and?inclusion?provide a more diverse range of ideas, eliminating the group dynamic and empowering team members who may typically be quieter.

Cost efficiency. There is no need to rent rooms or fly employees in, while the number of participants is practically unlimited.

Novel systems can help run these online ideation sessions effectively with a practically unlimited number of people and then, with the help of AI, cluster ideas for easier review and selection.

?Leadership Styles & Innovation

Another aspect of successful innovation management is leadership styles that support different types of innovations. Data from the most extensive business innovation database, InnoSurvey?, including 10,000 companies in 105 countries, indicate that there is a strong correlation between a company's growth and five particular leadership styles:

Current Business (Horizon 1)

Teams focusing on current business, such as commercializing a new product or service or improving the manufacturing process here and now, would benefit from a leadership style called?the Spiral Staircase. In this style, you climb steadily upwards without losing the overall goal and focusing only on the next few steps. Leaders with this style can align their teams around an inspiring vision and action plan. An example is the successful launch of a new product.

Next Growth (Horizon 2)

Teams that focus on the growth in the next business cycle could use three different leadership styles:

The Cauldron is an entrepreneurial leadership style. The team frequently challenges the business model, which is reinvented, and products are prototyped and tested. Pivots are welcome based on test results. Examples include new software development with a pivot based on customer feedback or the ability to develop a new medical device through multiple iterations.

The Fertile Field is a style in which the organization uses existing capabilities and resources differently. The best examples are successful spinoffs, such as divesting a part of the business or startups originating from universities and medical schools.

Pac-Man?is a leadership style in which you invent, outsource, and finance startups. Acquiring a new technology by buying a startup company is a frequent example of the Pac-Man leadership style in the pharmaceutical market.

Uncertain Future (Horizon 3)

Some organizations have teams that monitor emerging, uncertain market forces that may affect the company in the future. Their job is to lower the level of uncertainty and bring solid data and insights to help management decide what new solutions to focus on in the next growth cycle. This is the Explorer leadership style, where you explore possibilities and invest a small amount of time and resources in them without demanding short-term profits.

Companies with a systematic approach to innovation should deploy various leadership styles, each appropriate for a different innovation horizon.

In summary:

• Innovation doesn't happen spontaneously but requires a systematic approach.
• The company culture, capabilities, and leadership style should be carefully assessed to identify strengths and untapped potential and close gaps.
• Robust evidence is available to help companies in their quest to become better innovators.

Kasia Hein-Peters, MD, is a founder of Abante Scientific in Las Vegas, NV (www.abantescientific.com). Every business has different challenges, and the approach to company growth strategy and innovation management may differ. Dr. Hein-Peters is an accredited Innovation Management Practitioner and can help you improve your company's performance through cultural transformation. Please don't hesitate to schedule a meeting at https://calendly.com/kasia-hein-peters-md/abante-scientific.

Sources:

https://chiefexecutive.net/3-great-innovation-myths-busted/

https://www.bcg.com/publications/2018/how-diverse-leadership-teams-boost-innovation

https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters

https://www.gartner.com/smarterwithgartner/diversity-and-inclusion-build-high-performance-teams

Magnus Penker "Play Bold" Leaders Press 2021

Tom Kelley, Jonathan Littman "The Ten Faces of Innovation" Currency Books 2006