Three hidden ways your corporate culture inhibits innovation (part 2: Metrics)

Virtually all companies now claim to have a culture of innovation, yet they often fail to recognize disconnects between the performance of teams and overall governing corporate culture that may be dampening or even distorting innovation.  Seeing these invisible cultural disconnects is similar to seeing the invisible biological disconnects that are revealed in a functional MRI. When the driving action of innovation teams is going on beneath the surface, it remains invisible, unspeakable and therefore unmanaged.

My work with teams aspiring to best-in-class innovation has revealed the nature of these disconnects. This reveal only occurs as you go deep into the real processes that produce innovation. These deep processes are more fundamental than whatever innovation framework is consciously adopted. There are many excellent, research-validated innovation frameworks to choose from but they almost to the fault fail to divulge this deeper dimension. 

Although organizational culture comprises a wide variety of factors, I believe three of them – strategy, metrics, and rewards - warrant closer scrutiny when the goal is to establish a “culture of innovation”. While these three factors are regularly deliberated, discussed and decided upon by the senior leadership teams, critical blind spots remain. Therefore, it is more likely that leadership creates innovation-inhibiting conditions by agreeing to:  

1. An innovation strategy that is not rooted in human experience,

2. Irrelevant or distracting innovation metrics, and

3. A reward system that doesn’t actually reward the deeper human needs. 

By having the courage to go deeper into the realm of “humanness” creates an innovation force multiplier and can dramatically improve the successful innovation culture.

Last week I wrote about how to connect your strategy with the human experience.  Here is what you can do about the inhibitor number 2:

2.     Connect your innovation metrics to the human experience

According to the old adage you can manage only what you measure, so choose carefully how you manage – and measure - innovation. Too many times KPIs measure what’s easy, not what’s needed. It takes rigor to clarify what good innovation metrics look like. McKinsey says that the number of filed patents is often the only innovation metric measured. Besides the number of patents, McKinsey recommends using two “conversion ratios” that consider the R&D spending, gross margins, and the shares of sales of spend coming from new-product sales.  

These are great methods to measure the value of innovation that every (especially larger) company should do. However, where is the living, breathing human being in all this? The metrics above are the outputs of the creative human process. These kinds of metrics are not measured in a vacuum – void of people. When the focus is on the measurable outcomes only, the human effort of the people who are actively working towards the innovation disappears. On a long run, you will have a better chance of success when you assess the sustainability of the human energy levels as well.  

Co-founder and former president of the Ritz-Carlton Hotel Company and mogul in the service world, Horst Schulze made an excellent point recently: “It’s easy to forget what the measurements are measuring. Every number — from productivity rates to salaries — is just a device contrived by people to measure the results of the enterprise of other people. For managers, the most important job is not measurement but motivation. And you can’t motivate numbers.” (Real Leaders 2/19/2019)

Make the Intangible Visible

So, then, what are the indications of productive levels of innovativess – creative energy that turns into innovative outputs? An ideal metric captures a way to determine the quality and quantity of the productive energy needed for finding and developing novel solutions. 

One way to do this is to make the invisible aspects of the performance culture measurable by regularly assessing the conditions that are necessary for teams to be productive and the factors that contribute to the emotional and relational wellness of the team.  An excellent globally tested method is Team DiagnosticTM which identifies a total of fourteen factors that make these intangible “feeling” elements quantifiable through a self-reporting assessment. This method puts the human experience at the center and creates a non-threating way to converse about it. Teams are entities that have similar needs as individuals. For instance, just like an individual needs to develop good habits to be effective and a supportive environment to feel good about themselves, teams need processes to create efficiencies and a culture where the team members feel safe and emotionally connected to each other and the mission of the team. 

When resources are diminishing, rather than taking bolder and more creative risks, I see teams playing it safe. Safe for the individuals on the team. This tells me immediately that the team’s psychological safety is lacking and the team members are more worried about their personal survival than they are committed to the team’s mission.

For example, is there enough safety for people to express their opinions, feelings and resistance? How can you measure risk-taking – and how do people know they are edgy enough? Is the slogan “we celebrate failures here” just an empty promise or a truly measurable sign of creativity? What are the signs of human ingenuity that you want to see and feel?

The answers to these questions can set the stage for the development of more specific emotional energy metrics. Metrics that can support the emotional energy for creation. For example, in one organization team members were allocated a number of “thinking” hours. Besides their share of training and other overhead function hours, they were able to also set aside a small portion of the labor hours for “thinking”. While it was recognized that ideas can surface at any time, the actual establishment of time for “thinking” operationalized the value of creativity of each team member. Interestingly, since not everyone used their allocation, they were able to pool the unused hours and thus allow some engineers with a larger propensity for idea generation to utilize more thinking time from the pool. 

In regards to developing the metrics, a question might arise that if these hours were not used, could that be a sign of innovativeness inhibitors being present in the environment?

Another example could be an emotional risk assessment metric. A probability of success is often attached to a project to define the probability of business risk. There is also an emotional risk inherent in a project’s undertaking, relative to each participant working on the project. Conversations that explore and look to help express and approximately define the potential personal risk for the individual member of the team can give another indication of the potential success of the project. When considering an individual team member’s personal emotional risk, business risk analysis becomes much more accurate. Where the overall safe conditions have been created to speak freely, the individual metric, personal risk factor, can be learned and understood. Since “innovativeness” can be fueled or dampened by the personal risk factor, it is useful to have it discussed and known.

Working in teams can be powerful and rewarding but also full of complexities and challenges. Whenever I work with teams I begin by asking everyone to describe the qualities of the best teams they’ve been on at work or elsewhere (school, sports, hobbies). In no time we collect a respectable number of team characteristics that energize the best performance. And although everyone knows what a good team looks like, it’s one of the most challenging tasks of a leader to actually create and sustain one.  

To summarize, there are useful, mechanical, objective metrics available and in use. To help empower innovativeness, though, first lay the groundwork by creating psychological safety to keep the communication channels open at visible and invisible levels.

Hold that thought. More on rewards that work next week.

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What propels me to think and write about innovation leadership is the existential crisis of our life on Earth. My hope is to see as many organizations as possible to be successful in innovating solutions to the world’s most wicked problems. I want every team who has the will, to be innovative and turn that will into life-enhancing solutions that we all benefit from.  

Happy to learn your thoughts - please comment below.

I work with companies who care about maximizing their positive impact on the planet and recognize that innovation is the main driver to maintain growth and profitable relevance.

I help companies expand their approach to innovation from focusing on just technological solutions to creating an environment that unleashes an organization's capacity and human potential to innovate.  

I do this by assessing and applying leadership psychology, interpersonal dynamics, and developing skills that deepen the innovation process.