Companies only get smarter by challenging the way they do things.
Peter Drucker, probably the most insightful management guru ever, deems innovation the one business competency needed for the future. Fortune magazine’s advice to companies who want to make its Most Admired List? Innovate, innovate, innovate. Innovation currently accounts for more than half of all growth.
When the American Management Association asked 500 chief executive officers, what they need to do to survive in the 21st century, they answered innovate.
The objective is clear, but for the most part the question remains: why do so many companies have such a dismal track record of trying to harness creativity? It’s because organizations resist anything new.
AT&T couldn’t see the future in cellular phones. GE spent years trying to prove that transistors wouldn’t work because the vacuum tube (the precursor of the transistor) was its most profitable line. They are neither incompetent nor short-sighted but had trouble understanding a basic principle of innovation — that organizations get smarter by constantly challenging operating norms.
The development of Sony’s Playstation illustrates this. Sony’s Ken Kutaragi was playing with his daughter’s Nintendo (Sony’s bitter rival) in the mid-1980s. He realized it would be much better with a Sony digital audio chip.
He started secret negotiations with Nintendo. When his bosses found out, they were understandably furious. But he had one far-sighted champion in the then-president (now CEO and chair) Norio Ogha, who protected him from their wrath and mandated going ahead with the project. Playstation is today a breakthrough product for Sony.
Innovators and dissenters bring new ideas from the very fringes of the organization, and shake up the old tried and true ways of doing business, sending ripples through the firm. They are “wild ducks” because they won’t fly in formation. One of the most important ways to start an organization down the innovation road is to honour those who naturally seek their own route — these troublemakers, visionaries, and dissenters.
But while dissenters can be an exciting source of innovation, they can also cause many problems for managers who have to manage other people and processes.
So how can HR professionals help the organization leverage these “useful troublemakers?” They can make it easy for new ideas to be adopted and brought to market — to create an environment where innovation occurs because of the culture and not in spite of it. This will be a significant shift for most organizations.
C.J. Nemeth of the Institute of Management, Innovation and Technology believes that “creativity and innovation may require a culture different from and opposed to that which encourages cohesion and loyalty.”
But you can’t build Rome in a day so while the following recommendations aren’t the total answer to this change, they provide a starting point.
Train dissenters
At 3-M, new employees take a course with their supervisors and are told they must be willing to defy them. But training on its own will not create the environment needed for change. The rubber hits the road back on the job. An employee won’t speak his mind if he gets stomped on when he tries. So training is important but think of it like Spanish lessons — a necessary first step.
Reward innovation
In most organizations, compensation plans reward stewards — people who use money, time and other company resources in a responsible way. Excellent idea. But innovators and stewards don’t have much in common.
Using resources in what seem like irresponsible ways may even be a hallmark of innovators. It takes a different system to reward these people. But rather than have compensation specialists huddle in a room to come up with a great new plan, consider Fortune columnist Michael Schrage’s suggestion that you “let people decide what portion salary will take up of their total benefits, let them trade vacation days, let innovators create incentive packages for innovating.” This way, you provide the incentive in a way that appeals to innovators because it allows maximum autonomy.
Rewards shouldn’t be just money. Hewlett-Packard has an “award of defiance” for those who have gone the extra dissent mile. The president of another company (who asked to remain anonymous to protect the identity of the employee) recognized the achievement of an employee simply by paying attention to her. The president asked her employee who had developed an exceptionally innovative technology to give a formal presentation to staff while at the same time the employee was in the midst of suing the organization on an unrelated matter.
She signalled her willingness to tolerate some level of “troublemaking” if it is coupled with innovativeness.
Make it easy to move around
If it’s easy to leave a conservative boss or move toward an exciting new project, you have a more innovative environment. At Enron, one of the most admired companies in Fortune’s survey, people can choose projects that appeal to them. The company’s trading site, EnronOnline, had 350 staff before senior executives even knew what hit them. EnronOnline did $100 billion in trades in its first year of operation.
Enron lets people keep their titles, no matter where they move. Once a VP, always a VP. Same for compensation. Thus, people are more willing to move to a new or risky venture because it’s not a demotion and they don’t suffer monetarily.
Also, committees of 24 people do Enron’s performance evaluations. That way, says Jeffrey Skilling, Enron COO, “your performance rating comes from the organization, not your boss, so you have very little risk to mobility.”
Provide access for dissenters
Encouraging dissent without a way to allow its expression just creates frustrated employees. At Motorola, any employee can file a “minority report” above their supervisor’s head to present a different point of view. But this system works only if these reports don’t result in retribution for employees. If they do, you’re going to get precious few dissenters.
Needless to say, if all it took to create an innovative culture were these four changes, we all would have done it long ago. But they are an important beginning and the skills and expertise of HR professionals will be critical in moving organizations to the level of innovation they need to stay competitive.
Frances Horibe is the author of Creating the Innovation Culture: Leveraging Visionaries, Dissenters and Other Useful Troublemakers In Your Organization. She speaks and consults frequently with corporate clients and can be reached at www.franceshoribe.com.
When the American Management Association asked 500 chief executive officers, what they need to do to survive in the 21st century, they answered innovate.
The objective is clear, but for the most part the question remains: why do so many companies have such a dismal track record of trying to harness creativity? It’s because organizations resist anything new.
AT&T couldn’t see the future in cellular phones. GE spent years trying to prove that transistors wouldn’t work because the vacuum tube (the precursor of the transistor) was its most profitable line. They are neither incompetent nor short-sighted but had trouble understanding a basic principle of innovation — that organizations get smarter by constantly challenging operating norms.
The development of Sony’s Playstation illustrates this. Sony’s Ken Kutaragi was playing with his daughter’s Nintendo (Sony’s bitter rival) in the mid-1980s. He realized it would be much better with a Sony digital audio chip.
He started secret negotiations with Nintendo. When his bosses found out, they were understandably furious. But he had one far-sighted champion in the then-president (now CEO and chair) Norio Ogha, who protected him from their wrath and mandated going ahead with the project. Playstation is today a breakthrough product for Sony.
Innovators and dissenters bring new ideas from the very fringes of the organization, and shake up the old tried and true ways of doing business, sending ripples through the firm. They are “wild ducks” because they won’t fly in formation. One of the most important ways to start an organization down the innovation road is to honour those who naturally seek their own route — these troublemakers, visionaries, and dissenters.
But while dissenters can be an exciting source of innovation, they can also cause many problems for managers who have to manage other people and processes.
So how can HR professionals help the organization leverage these “useful troublemakers?” They can make it easy for new ideas to be adopted and brought to market — to create an environment where innovation occurs because of the culture and not in spite of it. This will be a significant shift for most organizations.
C.J. Nemeth of the Institute of Management, Innovation and Technology believes that “creativity and innovation may require a culture different from and opposed to that which encourages cohesion and loyalty.”
But you can’t build Rome in a day so while the following recommendations aren’t the total answer to this change, they provide a starting point.
Train dissenters
At 3-M, new employees take a course with their supervisors and are told they must be willing to defy them. But training on its own will not create the environment needed for change. The rubber hits the road back on the job. An employee won’t speak his mind if he gets stomped on when he tries. So training is important but think of it like Spanish lessons — a necessary first step.
Reward innovation
In most organizations, compensation plans reward stewards — people who use money, time and other company resources in a responsible way. Excellent idea. But innovators and stewards don’t have much in common.
Using resources in what seem like irresponsible ways may even be a hallmark of innovators. It takes a different system to reward these people. But rather than have compensation specialists huddle in a room to come up with a great new plan, consider Fortune columnist Michael Schrage’s suggestion that you “let people decide what portion salary will take up of their total benefits, let them trade vacation days, let innovators create incentive packages for innovating.” This way, you provide the incentive in a way that appeals to innovators because it allows maximum autonomy.
Rewards shouldn’t be just money. Hewlett-Packard has an “award of defiance” for those who have gone the extra dissent mile. The president of another company (who asked to remain anonymous to protect the identity of the employee) recognized the achievement of an employee simply by paying attention to her. The president asked her employee who had developed an exceptionally innovative technology to give a formal presentation to staff while at the same time the employee was in the midst of suing the organization on an unrelated matter.
She signalled her willingness to tolerate some level of “troublemaking” if it is coupled with innovativeness.
Make it easy to move around
If it’s easy to leave a conservative boss or move toward an exciting new project, you have a more innovative environment. At Enron, one of the most admired companies in Fortune’s survey, people can choose projects that appeal to them. The company’s trading site, EnronOnline, had 350 staff before senior executives even knew what hit them. EnronOnline did $100 billion in trades in its first year of operation.
Enron lets people keep their titles, no matter where they move. Once a VP, always a VP. Same for compensation. Thus, people are more willing to move to a new or risky venture because it’s not a demotion and they don’t suffer monetarily.
Also, committees of 24 people do Enron’s performance evaluations. That way, says Jeffrey Skilling, Enron COO, “your performance rating comes from the organization, not your boss, so you have very little risk to mobility.”
Provide access for dissenters
Encouraging dissent without a way to allow its expression just creates frustrated employees. At Motorola, any employee can file a “minority report” above their supervisor’s head to present a different point of view. But this system works only if these reports don’t result in retribution for employees. If they do, you’re going to get precious few dissenters.
Needless to say, if all it took to create an innovative culture were these four changes, we all would have done it long ago. But they are an important beginning and the skills and expertise of HR professionals will be critical in moving organizations to the level of innovation they need to stay competitive.
Frances Horibe is the author of Creating the Innovation Culture: Leveraging Visionaries, Dissenters and Other Useful Troublemakers In Your Organization. She speaks and consults frequently with corporate clients and can be reached at www.franceshoribe.com.
