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A culture conducive to innovation is something that both leaders and employees value in their organizations. And who can blame them: Innovative cultures are generally depicted as fun.
But despite the fact that innovative cultures are desirable and that most leaders claim to understand what they entail, they are hard to create and sustain. How can practices apparently so universally loved be so tricky to implement?
The reason, I believe, is that innovative cultures are misunderstood. The easy-to-like behaviors that get so much attention are only one side of the coin. They must be counterbalanced by some tougher and frankly less fun behaviors.
1. TOLERANCE FOR FAILURE BUT NO TOLERANCE FOR INCOMPETENCE
Given that innovation involves the exploration of unknown terrain, it is not surprising that a tolerance for failure is an important characteristic of innovative cultures.
And yet for all their focus on tolerance for failure, innovative organizations are intolerant of incompetence. They set high performance standards for their people. Exploring risky ideas that ultimately fail is fine, but mediocre technical skills and poor management are not. People who don’t meet expectations are either let go or moved into roles that better fit their abilities.
The truth is that a tolerance for failure requires having extremely competent people. Attempts to create novel technological or business models are fraught with uncertainty. You often have to learn as you go. “Failures” under these circumstances provide valuable lessons about paths forward. Google can encourage risk-taking and failure because it can be confident that most Google employees are very competent.
Creating a culture that simultaneously values learning through failure and outstanding performance is difficult in organizations with a history of neither. A good start is for senior leadership to articulate the difference between productive and unproductive failures: Productive failures yield valuable information relative to their cost. A failure should be celebrated only if it results in learning. A simple prototype that fails to perform as expected because of a previously unknown technical issue is a failure worth celebrating if that new knowledge can be applied to future designs.
Building a culture of competence requires clearly articulating expected standards of performance. If such standards are not well-understood, difficult personnel decisions can seem capricious or, worse, be misconstrued as punishment for a failure. Leaders should communicate expectations regularly. Hiring standards may need to be raised, even if that temporarily slows the growth of the company.
Managers are especially uncomfortable about firing or moving people when their “incompetence” is no fault of their own. Shifting technologies can render a person who’s very competent in one context incompetent in another. Consider how digitization has impacted the value of different skills in many industries. In some cases, people can be retrained to develop new competences. But that’s not always possible when really specialized skills are needed to do a job.
2. WILLINGNESS TO EXPERIMENT BUT HIGHLY DISCIPLINED
Organizations that embrace experimentation are comfortable with uncertainty. They experiment to learn rather than to produce an immediately marketable product or service.
But without discipline, almost anything can be justified as an experiment. Discipline-oriented cultures select experiments carefully on the basis of their potential learning value, and they design them rigorously to yield as much information as possible relative to the costs. And they face the facts generated by experiments. This may mean admitting that an initial hypothesis was wrong.
Disciplined experimentation is a balancing act. As a leader, you want to encourage people to entertain “unreasonable ideas” and give them time to formulate their hypotheses. Killing a hypothesis too quickly can squash the intellectual play that is necessary for creativity. Of course, not even the best-designed experiments always yield black-and-white results. Scientific and business judgments are required to figure out which ideas to move forward, which to reformulate and which to kill.
3. PSYCHOLOGICALLY SAFE BUT BRUTALLY CANDID
“Psychological safety” is an organizational climate in which individuals feel they can speak truthfully and openly about problems without fear of reprisal.
Psychological safety is a two-way street. If it is safe for me to criticize your ideas, it must also be safe for you to criticize mine — whether you’re higher or lower in the organization than I am. Unvarnished candor is critical to innovation because it is the means by which ideas evolve. In some organizations, people are comfortable confronting one another about their ideas. Criticism is sharp. People are expected to be able to defend their proposals with data.
In other places, the climate is more polite. Critiques are muffled. One manager at a large company where I worked as a consultant captured the essence of the culture when she said, “Our problem is that we are an incredibly nice organization.” When it comes to innovation, the candid organization will outperform the nice one every time. The latter confuses politeness with respect.
Building a culture of candid debate is challenging in organizations where people tend to shy away from confrontation. Leaders need to set the tone through their own behavior. They must be willing (and able) to critique others’ ideas without being abrasive.
4. COLLABORATION BUT WITH INDIVIDUAL ACCOUNTABILITY
Well-functioning innovation systems need information, input and integration of effort from a diverse array of contributors.
But too often, collaboration gets confused with consensus. And consensus is poison for rapid decision-making. Ultimately, someone has to make a decision and be accountable for it. An accountability culture is one where individuals are expected to make decisions and own the consequences. Committees might review decisions, but at the end of the day, specific individuals are charged with making critical choices.
5. FLAT BUT STRONG LEADERSHIP
An organizational chart gives you a pretty good idea of the structural flatness of a company but reveals little about its “cultural flatness” — how people behave and interact regardless of official position. In culturally flat organizations, people are given wide latitude to take actions and voice their opinions. Culturally flat organizations tend to generate a richer diversity of ideas than hierarchical ones, because they tap the knowledge of a broader community of contributors.
Paradoxically, flat organizations require stronger leadership than hierarchical ones. Flat organizations often devolve into chaos when leadership fails to set clear strategic priorities and directions.
Getting the balance right between flatness and strong leadership is hard on management and on employees. For leaders, it requires the capacity to articulate strategies while simultaneously being adept with technical and operational issues. For employees, flatness requires them to develop their own leadership capacities and be comfortable with taking action.
Gary P. Pisano is the Harry E. Figgie Jr. professor of business administration and the senior associate dean of faculty development at Harvard Business School. He is the author of “Creative Construction: The DNA of Sustained Innovation.”