Creating an innovation-friendly culture is one of the key challenges facing organizations today, and one that is especially difficult.
Innovation begins with diversity of thought and attitude. But large companies tend to focus on efficiency and control - and that breeds conformity and standardisation. How can they shift their focus to allow for more creativity, experimentation, and openness to change?
That’s the focus of Anna Simpson’s latest book, The Innovation-Friendly Organization. As Director and Chief Innovation Coach at Flux Compass, she helps companies and individuals navigate change and build long-term resilience. And at Innov8rs Bangkok, she’s going to show us how to “culture hack” our own organizations to unlock innovation.
We sat down to talk with Anna about the impetus behind her book, what real corporate innovation means, and what organizations must start doing now in order to become more innovation-friendly.
Your book is a roadmap for organizations who want to be more innovative. It seems, however, that even with a plan it’s not so easy. Do you believe that most organizations can make the shift and become innovation-friendly?
When I began writing the book and started talking to people in my network who were working on innovation, that’s one of the primary challenges I was presented with. Is it even possible?
To me, it seemed that big companies couldn’t innovate. All they could do is buy out small startups who then innovate for them. I really didn't want to leave it there. Look at the world as it is, and the extent of disruption that companies and sectors of all kinds are facing. If they can't innovate then it really is the end of the game. It’s important to note that I'm talking about bigger innovation here, systemic innovation, not just products.
My motivation with the book isn't to help companies endure in spite of change. I'm not so interested in whether companies endure or not. I’m motivated by our capacity as a society to shift to a sustainable way of working and to build sustainable systems. That's really what we we need to do.
If companies want to have a future they need to be part of that wider systemic shift. They need to be able to question how they work, what their purpose is, what their role is. And they need to be open to change. If they're not open to that wider shift in the landscape, as well as internal shifts, then they will be disrupted by other innovators.
And are big companies open to this way of thinking, to change?
I started from the premise that companies, when they recognize the scale of disruption around them, will want to be able to innovate - so how can they then embrace and thrive in change?
Which led me to ask: What inhibits change? That question came out of working with a lot of organizations that recognized the need for change and yet found it very difficult. Companies know that they need to change. Some companies who come to me are really working for innovation, but their culture isn't very change friendly. So my interest was trying to understand what inhibits change in an organization, and then how an organization can overcome that.
You mentioned that you’re talking about bigger innovation, not product innovation. Can you give an example?
I'm talking about system innovation, how a whole system changes. If you look at the food system, for instance, it's currently in an awakening phase. The move away from meat based diets to plant based diets. The rise of organic. The emergence of lab grown meat. There’s a huge amount of innovation in that industry. Some of that innovation is driven by a system recognizing that its future depends on having resources that aren't depleted, and that it's up against a lot of challenges - from pollination and pesticides to changes in consumer attitudes. And within that system, businesses are beginning to examine and redefine what their role is.
An extraordinary example of this is major meat and dairy producers, like Tyson and Volokh, investing heavily in non-meat and non-dairy products. Now their business model may not change - they will still make and sell products. But the whole emphasis of their business changes. That's more of a business level innovation, a strategic innovation.
It seems like many companies focus more on product innovation, and that’s where we end up seeing a lot of innovation theatre - lots of activity, labs, hackathons, but no real results. Is that partly why you focus more on systemic innovation? Is it more “real”, so to speak?
Once you have a strategic change then that obviously has implications for products. What I’m not interested in is the incremental, linear product innovation. This is basically playing within the same playground: We did this thing this time, maybe we'll get a few more consumers if we do this other thing another time. That sort of innovation fine for a basic growth model, but it's not going to help a company weather the scale of disruption that they're seeing in the landscape around them. That's why I focused on system innovation and business model innovation.
I'm not anti-lab. I think labs help inspire a culture of playfulness and openness to change, of experimentation and enabling failure. They are all elements of the innovative culture I explore and try to promote in my book.
Play is so important because it moves us away from one of the inhibitors of innovation, when we're stuck in a set agenda and encumbered by immediate achievables, so unable to take alternate paths. Even though it's not a solution in itself, it’s important to have visible permission to go and experiment and play. If labs are just about that, they become a bit of a gimmick. But when they’re one tool used by a company that's really serious about embracing change they become something useful.
In your experience, is this systemic innovation being triggered from the top?
It’s certainly most effective when the top recognizes the need, but I don't know if that's mostly where it starts. The awareness around system change can happen at all levels within an organization, and everyone will have different perspectives on it. If an organization really wants to be tuned in to the extent of systemic change around them, they should invite everyone at all levels of the organization to share the changes they're seeing.
One of the major inhibitors to change is obviously the top level of management. That can be both failing to recognize the need and also a fear of personal destabilisation through change. But in terms of driving change, one of the the other main problem areas is middle management. They’re the ones who are really caught between the mandate for change and the daily action, and often aren’t privy to the strategic need for change. So engaging middle management is very important as well.
Let's assume everyone agrees that companies need to shift and play a different role in society. Looking at the world as it is, where are we on on that journey? Are we at the beginning, somewhere in the middle, or are we close to the finish line?
I would say we're starting. I would say we're just at the point where companies are recognizing the need for systemic change. We innovators are in our own kind of bubble with other innovators, really. When you’re constantly reading about it or experiencing it or sharing stories of change, it’s easy to think this shift is happening at a much greater level than it is.
The extensive infrastructure we’ve built around the old models is very heavy. Everything from supermarkets, to roads, to offices and ways of working, oil, the way cities are designed. It's all built around models that are on the way out. There's a lot to change, but so much has been invested in what already exists, a lot of sunken assets. They’re real inhibitors.
We don’t have as much time as we think to make changes. When you look at climate change, for instance, change needs to happen much faster. But even at a basic business level, disruption is happening all the time. Companies are experiencing massive losses and in some cases going under. You may be several hundred years old as a company, but you certainly don’t have even half that much time ahead of you unless you start shifting now, and quickly.
Diversity is one of your key topics in the book. Why is diversity such a key ingredient in becoming an innovative organization?
Range of perspectives, for one. The more perspectives we have around what sort of change we need, the more opportunities we have. It's like having a whole palette to play with as a painter instead of just one color. Innovation is really about seeing things differently, and varied perspectives is is a great asset to that.
Diversity also gives an organization the ability to challenge the status quo. In the book I tell the story of Omar Ishaq - he was recruited into GE to help with a business model transformation. They wanted to promote and use the new parts of their business and they brought him in for his medical experience. So they onboarded him, and what happens - they told him how to work within GE's ways of working, such as learning the business language and the GE ways of doing things. And what are these? They are the things in our working world that support conformity. They are the things that inhibit us from bringing in what we really need, which is diversity of perspective.
The trigger for my book was an event I attended in London that was celebrating the impacts of migrant women, the positive changes they’d made to London society. I was struck by the extent of their changes. These women had been setting up organizations and legal structures and questioning a lot of current policy - really coming in with an outsider's view and thinking “No, that's not working for us. That needs to change.” And they were doing it with no real permission from society. They were active and motivated and they were making a huge positive impact. And I thought: organizations need people like this, who can come in with different perspective, see the need for change, and get on with it. If everyone is from the same school of thought, there's no chance of that.
I think everyone would agree with that conceptually, but they still have to hit their targets every month, every quarter. That sort of short-term performance orientation is still the norm. How do we shift away from this?
On the diversity side we do see some shifts. Ernst and Young, Random House Publishing, and Deloitte are moving away from the strict degree requirements in their recruiting process to recognizing they need people from more diverse backgrounds. So there are small shifts.
But your question is really about the balance of short termism and long termism - the drive for efficiency and quarterly results. Companies are still very much focused on short term targets.
We need a shift in metrics. What are we measuring, and why? That is also beginning to come about because of the Sustainable Development Goals. I am a huge fan of the potential impacts of these goals. They can help companies frame, in their regular annual reporting, what they are really about and what they're achieving beyond their financial metrics. That's really important.
If I am an innovation manager, leading a team of five or ten people, what can I do to make my team more innovative? How can I make my team, and hopefully my company, more innovation-friendly?
A key insight about the best leadership style for innovation comes from Amy Edmondson, who is a professor at Harvard. She stresses the importance of framing your tasks as a learning journey, and the leader themselves saying: I'm also learning. I can learn from you. I might make mistakes. Let's explore this together.
For me, the critical elements are curiosity, being open to diverse perspectives and encouraging daily reflection. So asking everyone: what is it we're setting out to achieve this week? Or: why are we having this meeting? Encouraging that helps everyone remember and connect to the greater purpose.
Innovative organizations tend to have a flatter structure, because it gives everyone a greater line to purpose - there's nothing in the way of them perceiving what needs to be done and then acting on it. We need to scale that up to more hierarchical organizations.
And is that what you’re going to help us do in your session at Innov8rs Bangkok?
Going back to your first question: you asked me if organizations can make this change. I believe they can. I believe organizations are malleable. What I do in my work is create processes and a safe space where the inhibitors to organizational change become visible. Once we identify what’s in our way, the fundamental myths or working practices, we play with them, have creative experiments in shifting the culture. We'll have a good go at that in my session at Innov8rs Bangkok, so I do invite your readers to join us there.
