For long, it has been said that measuring innovation culture can’t be done.
Culture is often described as a set of common values, beliefs, habits, attitudes, and behaviors attributable to a group of people or, to a larger extent, the whole organization. Most, if not all, organizations already measure culture – they might measure the performance or engagement of employees, and so on.
As soon as we throw innovation into the mix, we instantly make it more complex. There’s still no common and shared understanding of the components of “what good looks like”, it makes it even harder to define what to measure and how to measure it.
That doesn’t mean it can’t be done. As part of our recent Innov8rs Connect on Culture, Talent & Teams, Cris Beswick (Co-founder at OUTCOME) and Dan Toma (Co-author of the award-winning book “The Corporate Startup & Innovation Accounting) shared a process you can follow to measure the attributes of an innovation culture and your effort to develop those desired attributes. Here’s what we learned.
What’s The Definition Of Innovation?
According to Cris and Dan, innovation is an outcome. It's not something you have by default, or you can buy and somehow get more of it. Innovation is not a tangible thing. Instead, it's an outcome of all the work an organization does to pursue something different, new, or better for its customers.
Innovation is not a badge that we can bestow upon ourselves. Innovation is a badge only bestowed upon us by our customers.
Innovation is meant to solve a problem and deliver value, and it must also be doable and drive growth for its creator.We innovate when we create new or different solutions that solve genuine problems, which also add demonstrable value and return growth to us as creators.
You can even use this definition to sense-check your new ideas as soon as you go through the innovation process.
“The definition of innovation should be a usable tool, not just a bland statement. The definition itself should be unique to a company, and it should be able to be used as a sense-check mechanism as you're going through the innovation process”, warns Cris.
Measuring Culture Vs. Measuring Innovation Culture
To set things straight: it’s crucial to understand that measuring culture and measuring innovation culture are two different things.
Measuring innovation culture means taking into account how embedded innovation is in the organization as a subject, endeavor, practice, process, strategy, and day-to-day activity.
Accordingly, what business leaders need to consider when it comes to measuring innovation culture is how mature their organization is from both a cultural as well as a capability perspective – which is typically referred to as innovation maturity. “That's the crucial leap that most organizations don't make”, adds Cris.
Yet it's impossible to measure the innovation maturity of an organization if you only measure culture components, whether it's values, behaviors, habits, or all of the things that generically make up culture. A complete measure also includes the innovation components, i.e., clarity around strategy, tools, processes, and governance and their use, adoption, and how sophisticated they are.
Having a great culture with no embedded tools, clear strategy, processes, governance, etc., isn't going to get you very far down the road to innovation. Similarly, having a brilliant strategy, really clear metrics, and a brilliant innovation accounting system, but a poor culture or a culture that doesn't embrace innovation across all organizational levels, you're not going to get the results you want either.
Ultimately, measuring the components that innovation requires and then how embedded they are into culture is key. And that's what’s being referred to as innovation maturity.
Pinpoint Your Starting Point First
One of the biggest barriers to organizations shifting their culture towards an innovation-led one is not pinpointing their starting point (or not identifying it accurately enough).
To explain, Cris introduces the "Sat Nav Approach". The same way you put your destination into your satellite navigation system as soon as you get in your car and don't set off before your journey is plotted, an organization that begins a transformation journey to build a culture of innovation must pinpoint its starting point first.
Triangulating the exact position will make it clear what direction to set off in, what the timeframe it's likely to be, what the waypoints along that journey are likely to be, and also at what pace you need along that journey to get to the endpoint by a certain time. On the other side, not measuring the starting point or not measuring it accurately makes lots of change and transformation programs around building a culture of innovation fail.
When you're on the road with your car and there's a roadblock, a crash, or something else, your sat nav (constantly looking at all those hurdles) will promptly reroute and get you back on course. This is the type of feedback you want as well during your culture change journey.
Measuring (The Attributes Of An) Innovation Culture
By default, culture is very much specific and connected to the organization – you can't copy a culture from one company to the other. Accordingly, it's nearly impossible to put some KPIs in place and define a unique way to measure innovation culture.
Measuring innovation culture is not like measuring the progress of teams, or the performance of the innovation funnel, or the performance of a portfolio, where you can transfer indicators from one company to the other and even from one industry to the other.
Culture is like a cloud. You can see it exists, and you can feel its effects. However, you can’t touch it.
That’s why Dan and Cris haven’t focused on measuring innovation culture as such. Yet you can recognize the culture by looking at various attributes and the effects those attributes have on the results of the company itself. As such, they built a simple process to measure the attributes of an innovation-focused culture and the effort to develop those desired attributes.
Once you have carefully defined your starting point, you should:
- Understand your company’s result indicators and see how many of these are directly impacted by culture.
- Then, create a list of cultural attributes that impact these results and measure the presence of these attributes in your company.
- Once you have a good idea of the current attributes the culture in your company has, you can start measuring them.
- Take actions in order to improve those attributes.
- Go back and reanalyze the particular result where you started from.
- Do it again.
Concretely, examples of desired cultural attributes for breakthrough innovation are
- Tolerance to failure
- Diversity (cognitive, background, gender, opinion)
- The practice and encouragement of continuous improvement
- Ethics (honesty, integrity, promise-keeping and trustworthiness, fairness, concern for others, respect for others, law-abiding, accountability)
- Frictionless collaboration
- Adaptability
- Empathy
- Psychological safety
The Chicken And The Egg Dilemma
Many companies find it difficult to identify their starting point as only a few genuinely and objectively know their culture. Research has shown that 78% of senior leaders believe they already have a culture of creativity, entrepreneurship, and innovation. Yet only 28% of employees agree. That “polarization” is a big deal because if senior teams believe innovation initiatives are already in place, they don't put in interventions to change those particular attributes.
“It's pretty much the chicken and the egg dilemma”, as Dan explains. “Do we start with building a governance framework and then the culture results from that, or will we build a culture and then have a governance framework to support it? The answer is that you actually need both.
You can't just do one and totally ignore the other – it's like saying that you want to become an Olympic athlete, but you're only going to train the upper body.”
Obviously, one aspect might be more important in some organizations than the other. But, in general, there's no way that you can focus only on one and then wait for a miracle to happen, i.e., a governance framework that emerges out of the culture or a culture that magically appears out of a governance structure.
That means company leaders must own the innovation agenda, developing an understanding of how they need to navigate and lead for innovation to become a core capability of their organization. Despite their overwhelming passion for innovation it's almost impossible for a few people down the org chart to shift an organizational culture, if that ownership isn't there at the leadership level.
Yet whilst many senior executives have had hundreds of thousands of dollars invested in developing their leadership skills over their careers, in most cases they haven't learned how to lead for innovation, shape the future, and shift the culture in pursuit of innovation.
So, while they're asked to drive innovation, build a culture of innovation, and even measure it, most of them lack the “basic tool kit” needed. This is why we as innovation leaders play a crucial role in educating them.
In summary
Innovation maturity is the combination of how well-embedded innovation is as a part of the organizational culture, plus the capability an organization has and how well developed that capability is. Fundamentally, that's more important to measure than just the culture part.
What is crucial to know is that innovation maturity is a curve. It's not linear. Accordingly, when you're measuring these things, and this is exactly the difference around innovation culture and innovation maturity, you can't measure them in the standard way you’d use for other things in the organization.
The progress in that maturity from innovation capability and culture in a “beginner's level” organization, right up to high-performing innovation culture and fully embedded capability demonstrably driving quantifiable growth, is not linear.
Unless you understand that, you’ll end up measuring things more traditionally, and your measurements will always be off and inaccurate.