A few years ago, my partners and I were hired by a Fortune 500 software firm to “reintroduce innovation back into the culture” of their company.
We enthusiastically accepted the challenge, and within six weeks had an accepted proposal for just how we would accomplish that in a firm of over 40,000 employees. The company had risen to prominence by aggressively innovating and developing groundbreaking software products in its industry over the course of its first 15 years. It had gone public, become incredibly profitable and at some point, had shifted unknowingly from a developer of new software to a servicer of legacy products. In short, it had quietly shifted from an innovator to a manager.
This evolution happens quite often in firms as they grow, and it happens somewhat out of necessity, as once you sell an innovative product, you have to service the end-users. That drift toward servicing often divides the focus of the organization. New product development never makes money (until a successful product is created and sold) and servicing paying customers keeps cash flow rolling, with predictable profit margins and predictable cash flow.
Therein lies the tension. What kind of structure does your culture support? Or does the structure dictate the cultural leanings of the organization? In the end, I believe you have to be innovative or service-oriented. It’s a delicate equation.
In the end, the company had grown tired of much smaller software companies developing products that it felt it should've created. Those smaller firms had nothing to service, and their structures and cultures were fully aligned: They had a limited amount of time and money to develop and sell a successful product, which was often their only product.
Where Culture And Structure Get Tricky
The firm we worked with instituted a pilot project that allowed any of its 40,000 employees to take up to 90 days away from their regular team to create, enhance or start a project that would help an existing product or system already in use, or develop a new one that they thought would create new forms of revenue. The employee would fill out a one-page application (simple, fast), and then, if their application was accepted, they'd take leave of their regular team until they finished their project or hit 90 days, whichever came first.
At the end of the sabbatical of sorts, the company would assess the value of the innovation and award a bonus on top of the employee's regular salary — a percentage of what the value of that innovation would bring in gross revenue. The CEO, COO and CFO loved the idea and developed one newly leased building to house the innovation lab. Employees enthusiastically applied. Everything seemed great until the team leaders stepped in and made the case against losing their team members, even for 90 days.
The program was halted after six months due to enormous pushback from the team leaders. Here’s why: The culture of this firm dictated “focus on innovation” as its second-highest mandate (behind “work with integrity”). It was very clear indeed. The problem, however, was that its bonus structure rewarded individual performance rather than team collaboration.
We pointed out what was wrong with this arrangement. Though you played on a team, the only way you could get a bonus was through individual (read: ball hog) performance. Realistically, that meant that you might withhold great ideas from the team, stifle other key players or even mislead team members who might shine brighter than you.
When we pointed this out, we did so with a proposed solution: If you want the culture to support innovation and teamwork, then encourage employees to share ideas with their teams, and then give the bonus to the entire team rather than to individuals and allow them to divide up how the bonus is allocated. We suggested that each team would set up their own structure, and we offered another idea as well: Offer one equal share of the bonus to every member of the team and then also allocate five shares for contributions to be recognized and voted on by the team. In that manner, the “best attitude” award would garner a second share, as would any other cultural attribute that the team wanted to highlight. Those additional awards could be talent-based or behavior-based. Either way, the structure of the compensation would align perfectly with the culture — innovation, in this case.
Does Your Structure Dictate Your Cultural Outcomes?
With our client, the firm had little chance of recreating a culture of team innovation when employees were paid to play as individual stars. It simply created a conflict between contributing to others on the team and their own needs.
Where does the structure of your team dictate unwanted cultural norms? Ask yourself some of these questions:
• Does the final decision always go the way of one person in the organization?
• Does human resources mandate policies that unknowingly create fear of reprisal?
• Does the biggest customer always get a much better deal than smaller customers?
• Does your “designed for convenience” automated phone system aggravate and frustrate those who call?
No company sets out to create confusing or conflicting structures that obliterate or overrule desired cultural outcomes. In the end, this trend tends to occur because as a firm grows, the culture gives way to more and more structure.
I've found that both are necessary to succeed. Double-check with your team about structures that you'd like to amend or create that contribute to the cultural outcomes you desire.
