A reader phoned me and asked if I could recommend one action item that he could do that would jumpstart a change in his organization and put them on the road to having a true culture of innovation.

I get asked that a lot and wrote abut it way back in 2006, so it seem like a good time to repost the original with a few additions here and there.

MAP and QF (questioning fundamentals)

Looking for a good way to make your company more innovative? Or to move it from where it is to where you want it to be?

Creating an innovation culture means encouraging your people to question the fundamentals (QF) of the company. This is one of the best ways to overcome the “…but we’ve always done it that way.” school of thought, as well as “not invented here” syndrome. Both are major stumbling blocks to innovation, productivity and a host of other positives moves.

• Start by identifying your company’s fundamentals, not so much the official ones, although they can also be problematic, as the unwritten/unspoken ones your employees deal with every day. It’s easy to find them, just ask—but ask knowing that you may not like the answers.

• Depending on the trust level in your current culture the identification process can be anything from a public brainstorming session with a whiteboard to some kind of truly anonymous “suggestion box.” Expect to be surprised at some of the perceptions that turn up. One client found that, contrary to its stated policy, their people believed that quality wasn’t as important as shoving the product out the door.

• Once you have a start on a list of fundamentals you want to open them up to debate—the more passionate the better—using a combination of technology (forum, wiki, etc.) and in person discussions. The object being to decide whether to modify/jettison/keep each one, as well as what to add.

Unless your MAP dictates a company that functions in Dilbertland, QF is an ongoing, proactive management task that encourages employees to question/rethink/revamp the company’s fundamentals.

Even when QF is deeply embedded in your culture you can’t assume your people will do so, since new people coming from other corporate cultures will need assurance that QF is indeed part of your company’s DNA.

Image credit: Marco Bellucci on flickr

Innovation is far more than the flavor du jour of the media world; it is the lifeblood of our planet. It is only through innovation that we will find the solutions to feed the hungry heal the sick and save the planet. And by “we” I mean the human race, not just Americans.

Today I have three fascinating articles on innovation that kick off a week of commentary on the subject.

Let’s start by looking at how Ratan Tata, Chariman of Tata Group, built a culture of innovation after India dropped its trade barriers. “… for his companies to survive and thrive in a global economy he had to make innovation a priority—and build it into the DNA of the Tata group so that every employee at every company might think and act like an innovator.” Notice it says ‘every employee‘, not just the stars, designers or engineers.

No matter the product or service, all companies are composed of two parts, one creative (informal) and the other operational (formal); this is also true for micropreneurs’ thinking even when they have no employees. Keeping the two functions equal so that one doesn’t dominate the other, whether in thought or resources, is a difficult balancing act—but one absolutely critical to innovation.

Last is the story of Symphony Services, an outsourced software developer who is taking the risky approach of outcome-based contracts. “Typically, clients pay Symphony a percentage of the contract upfront—the amount is negotiated based on their needs and circumstances—but withhold a percentage based on the outcome. This usually means delivering the promised product, in addition to other results such as improved efficiency, profits, and margins. As an incentive for the vendor to deliver the product on time, on target, with the promised effect, the partners might share the financial benefits, such as savings or profits, after the project is completed.” A gutsy, innovative approach, to say the least.

Be sure not to miss Monday’s post on IBM’s extreme innovation gamble.

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I received and email in response to last Tuesday’s post about the value of adding QF to your culture’s DNA that absolutely floored me.

“Jess” said that “the disruption caused by indulging in QF” was expensive and difficult considering today’s economy. He said that this wasn’t the time to look for innovation, but to focus on survival; and that even in good times innovation was expensive and not all companies could afford that level of brain power.

Granted, a lot of CEOs have a hunker down mentality right now, but even casual reading will show that the smartest companies, whether large or small, are using this time to innovate and build, so they can move swiftly when things turn around.

But it was the special brain power for innovation that blew me away.

Innovation isn’t about hiring a Steve Jobs think-alike, but about tapping into the people you have and creating a culture that encourages and rewards ideas—even if they upset the status quo.

One of the most innovative and creative business segments these days (and historically) is the wholesale drug trade, AKA, drug lords.

The constant innovation required to smuggle their product is amazing and I doubt that the innovators have special training or degrees from Ivy League schools (other than their financial and legal talent).

The innovation is driven by market forces and necessity.

Creativity is a mindset that can be cultivated in everybody IF the company’s culture supports it and managers have skin in the game.

The requirements for a culture of innovation are already well represented here and in numerous other places.

Skin is accomplished by tying part of managers’ compensation to the group’s innovation.

This requires a well publicized set of measurements, not a boss’ opinion that changes with mood or whim.

(Hat tip to Biz Levity for the drug link. Subscribe if you want to add some business-irreverent laughter to your life).

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Image credit: ZedBee|Zoë Power on flickr

How much longer do you think it will take corporate Earth to get off their terrified, or comfortable, collective asses and embrace a real, live, authentic, proven solution to most of their problems?

Jaideep C Prabhu, Jawaharlal Nehru Professor of Indian Business and Enterprise at Judge Business School, Cambridge University, and innovation fellow at the Advanced Institute of Management (AIM) Research, is the latest to write passionately about the need for a culture of innovation.

“But businesses bold enough to develop a forward-looking, risk-taking corporate culture and brave enough to cannibalise existing successful products, in order to commercialise radically new ones, are more likely to dominate world markets and increase the competitiveness of their national economies.”

Bold and forward-looking, aren’t those the traits that every over-paid CEO on the planet claims to be their expertise along with how they will ‘lead’ their company into a bright new world…blah, blah, blah.

Are you as tired of hearing them as I am? They talk and talk…and talk.

Or they’re replaced by an impatient Board running from Wall Street’s demand for short-term profits.

Prabhu, along with a host of other experts, says his research shows that “Innovative companies appear to have a similar corporate culture, wherever they may be located in the world.”

“We have identified three specific attitudes and three practices within innovative firms that make them special and drive radical innovation. These are

• risk tolerance,
  
• a willingness to cannibalise existing products,
  
• future market orientation,
  
• empowering product champions,
  
• fostering internal competition and
  
• providing incentives for enterprise.”

Attention Wall Street, this stuff is not implemented overnight—or in a quarter.

Whoa. Do you think it’s possible that the silver lining in the current mess that was started and facilitated by Wall Street denizens might be a return to long(er) term thinking?

That CEOs will get canned for embracing quarterly numbers a la Jack Welch in place of radical innovation.

That investors will actually take Warren Buffet’s philosophy to heart and quit putting their faith in hedge funds, day trading and fast profits?

Whee, wanna share the stuff I found?

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Today I’m going to share with you articles about three folks whom I consider superb leadagers.

Let me know if you agree.

First is Dan DiMicco, CEO of Nucor Steel, who was just named Businessperson of the Year by the Charlotte Business Journal. I’ve followed Nucor for a long time and DiMicco just keeps impressing; more so since he always sidesteps taking personal credit, focusing instead on his senior staff and employees. He’s also produced one of the most forward thinking cultures in the corporate world, especially considering he’s heavy industry, producing a real product that has neither chips nor software, and created the largest steel company in the country by successfully acquiring and integrating 22 companies over the last eight years.

Next up are the collective CEOs of Corning, who, for the last 157 years, have nurtured and facilitated a culture of innovation allowing Corning to reinvent itself time and time again and thumbing its nose at every analyst and pundit who predicted its demise. Whoo hoo, these guys rock!

Third is Idris Jala, CEO of Malaysia Airlines, who did an initial turn around of the state-owned airline in three-and-a-half months because that was all the operating cash he had and no bailout was offered. I wrote about him a month ago and there’s a link to the full McKinsey interview (requires free registration) in the post. Well worth reading if you missed it the first time.

Finally, 24 short CEO profiles offered up by Business Week; their selection includes a dozen of the best along with a dozen of the worst. I think you’ll enjoy them.

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First up today is a review from Knowledge @ Wharton Of Dov Seidman’s HOW: Why How We Do Anything Means Everything … in Business (and in Life). The book focuses on building a corporate culture where “”how” matters more than “what” in business, and how “should” matters more than “can.”” Seidman believes that “companies and their people can operate in both a principled and profitable way.” He believes that “A leading company should be a company of leaders.”

Next, and interesting interview on IT World with CIO Tony Scott who is charged with creating a culture of innovation a la Google at Microsoft—wow, talk about a challenge!

Third, a look at Charles Liang, co-founder and chief executive of $600 million Super Micro Computer, a 15-year-old computer maker with 850 employees. Liang is a one-man management band, so the big question is what happens if he goes poof?

Finally, from Business Week, the opportunity to nominate your choice for the best—or worst—Manager of the Year. The worst category offers the most opportunity, but for a greater challenge think about who deserves best. Please share your nominations here, too.

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A lot has changed since I started RampUp Solutions a decade ago. Back then, getting a CEO to discuss corporate culture ranged from difficult to impossible in direct proportion to the size of the company.

Bosses often viewed culture as an abstract concept, a creation of consultants to increase billable hours, but not something that would/could impact on the bottom line.

But that was then, this is now.

“82 per cent of [Canadian] executives surveyed said culture has a strong, or very strong, impact on their company’s performance.”

Meanwhile, in the lower 48, from a new study on innovation, “Corporate culture is, above all, the most important factor in driving innovation,” said Rajesh Chandy, a professor of marketing at the University of Minnesota’s Carlson School of Management and a charter member of the U.S. Department of Commerce’s Advisory Committee on Measuring Innovation in the 21st Century Economy”

Innovation and healthy bottom lines go hand in hand. While innovation may not be the quick bottom line fix that layoffs and other cost cutting actions are, it is the preferred choice of CEOs who understand that surviving isn’t enough.

What weight do other factors have in driving innovation?

“…among traditional drivers of innovation such as government policy, labor, capital and culture at the country level, the strongest driver of radical innovation across nations is corporate culture.”

Chandy goes on to say, “It is important to realize that all innovative companies look alike. They share a common culture no matter where they are located.”

Nearly three years ago I wrote about what people want and don’t want and it hasn’t changed much, if at all.

There are many cultural traits to consider, but here are the four basics that are required, although the words used to describe them keep changing, if you want to foster a culture of innovation.

• Open, honest, constant communications
• Never kill the messenger
• Accept and act on input from all levels
• Walk your talk

And the next time someone tells you that corporate culture is a myth composed of smoke and mirrors, remind them that there are still people out there who believe the Earth is flat.

Click for a direct download of “Radical Innovation in Firms Across Nations: The Pre-eminence of Corporate Culture.”

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Image credit: eschu1952

Creating and sustaining a culture of innovation isn’t easy in the best of times, but what do you do when ‘best’ is a distant memory and the times are well on their way to ‘worst’?

According to Wall Street “wisdom” you throw your strategy out the window, cut your staff beyond the bone and focus on now—since even a quarter is too long-term.

The Wall Street approach is to pull in your head and limbs like a turtle and spend as little as possible—and that means getting rid of people.

But not so fast. Statistics show what any employee can tell you, including the ones who aren’t directly affected, that layoffs don’t motivate.

According to Think Before You Fire in Business Week,

“For companies, layoffs are a quick, albeit unpleasant, way to trim costs, right? Not necessarily. A recent study of 200 enterprises found that even a modest downsizing can unleash an exodus of valuable employees. For instance, companies that laid off 0.5% of their staff experienced, on average, a turnover rate of 13%—compared with an average turnover rate of 10.4% at companies that didn’t do layoffs. (Academy of Management Journal)”

And that additional 2.6% of turnover are rarely the folks you’d choose to lose.

Way back in 2001, when thousands were being laid off, Frederick Reichheld, author of The Loyalty Factor (1996) and Loyalty Rules! (2001) showed in carefully researched studies that a 5% improvement in employee retention translates to a 25%-100% gain in earnings.

So what are the advantages of layoffs?

They take the least creative effort from management and Wall Street approves.

Keeping your people and juicing innovation and productivity when times are tough takes work—lots of it.

Which are you choosing?

Post from Leadership Turn Image credit: lusi

As mentioned, today starts a seven part series discussing Warren Bennis’ 13 differences between leaders and managers in light of today’s modern workforce. The series will address two items each day and runs through May 9 (except for Sunday and Wednesday, they have their own agendas).

To give us common ground, I’m using these descriptions of leadership as the basis of my comments, but feel free to disagree. Unfortunately, I haven’t found comparable descriptions of managers—if you know of any please share them—so my thoughts are based on the best managers I’ve read about and known.

I sincerely hope that many of you will weigh in with your own thoughts.

The manager administers; the leader innovates

Given the pressure to raise productivity, reduce attrition, cut costs, encourage a “culture of innovation” and in general do more with less how can a manager manage today’s highly mobile, independent workforce without innovating? Nobody can supply the sheer quantity of innovation needed to thrive in today’s global economy, because there is no way for to be knowledgeable of every process, facet, product, market, etc. that is ripe for innovation.

The manager is a copy; the leader is an original.

Copy of what? The nearest leader? Every human has his/her own MAP (mindset, attitude, philosophy™) which is a product of their life experiences and therefore unique; everything they learn is learned through the prism of their MAP. Over the years companies have tried to clone both managers and leaders with little success, while today’s enlightened workforce makes the possibility even more remote.

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Tuesday I wrote that corporate culture was the new black and here’s yet more proof for that notion.Over at Enterprise Innovation, IBM’s Linda Sanford writes that more than anything else it’s corporate culture that fosters innovation and ‘innovation can transform business, create new markets and drive economic growth.’

Innovation, as opposed to invention, is critical in a slowing economy—‘Invention is the creation of something new… Innovation is the application of invention to business or societal needs.’

Management is finally coming to the realization that cost containment—dominantly i n the form of layoffs—isn’t going to cut it anymore.

‘This was supported in the findings of IBM’s recent Global CEO studies showed that four out of five CEOs pointed to revenue growth – not cost containment – as their top priority for boosting financial performance.’

Not only that, but they’re finally figuring out what many of us ‘little people’ have been saying for years—it’s the people, stupid.

‘The CEOs said the best way to drive new growth is through increasingly differentiated products and services – but they also said that this type of innovation will be impossible without a renewed focus on people, including retention and re-education to keep vital knowledge within the organization and to develop new skills to compete in a more demanding and fast-changing global economy.’

Sanford goes on to say that collaboration is the critical behavioral key, that it involves much more than new IT tools and that it’s not something just for the rank and file.

‘Senior management needs to model the type of collaborative behavior they’re trying to encourage. Performance reviews, bonus and incentive plans must be aligned with the goals of creating a collaborative, high-performance culture of innovation.’

That’s it. You can buy all the Web 2.0 technology available and talk about it until you’re blue in the face, but without true behavioral changes starting at the top and backed by putting your money where your mouth is it just won’t happen.

What are you doing to develop a culture of innovation in your company?

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