GUEST POST from Pete Foley

I left P&G about eight years ago, and one of my last jobs involved working on innovation culture.  It was a passion project, and the topic of one of my first blogs published outside of P&G.  It’s also something I keep coming back to, as I believe it is one of, if not the most important components of a successful innovation organization. But I’m writing this because I believe Covid19, together with recent socio-political dynamics has created a once in a lifetime window to effect cultural change in our organizations.  It’s a huge opportunity, but one that comes with commensurate risk.

Changing culture is hard.  A leadership team can often make a strategic change almost on a dime, but culture has much deeper roots, and so takes longer to change. Strategy is more about what we are doing, culture is more about how we do it.  It’s comprised of a multitude of little everyday things that ultimately much of our time.   It’s how we make decisions, take risks, act or procrastinate, how much we share, how much we listen. In other words it’s deeply linked to fundamental behavior and values, and is heavily influenced by habits and the unconscious decisions frameworks that Daniel Kahneman calls System 1 thinking.  As such, it cannot be changed by management decree.  It can be nudged by changing reward or organizational structure, something we tried every few years at P&G.  But ultimately changing culture means either changing people’s deeply rooted behaviors, or changing the people themselves.

That’s hard to do, and also inefficient, at least in the short-term.  If an innovation team is thinking about process, it’s not thinking about innovations. But Covid19 created a once in a lifetime opportunity.  I’d not wish the last 18 months on anyone, but like it or not, our cultures have been disrupted, and that gives us a semblance of a fresh start, and hence an opportunity for change.  Habits have already been broken, ‘givens’ challenged and new skills learned. And if the great resignation actually occurs, we can expect an elevated level of personnel movement both between and within companies to go along with broken habits and new skills.  A perfect storm for cultural change.  .

But how do we take advantage of this rare opportunity? Culture is a big, hairy topic, with a lot of moving parts, so one option is to be a little reductionist, and break it down into it’s component parts. My personal culture model is a hybrid derived from many sources, and comprises Capability, Space, Psychological Safety, Designed Serendipity and Motivation.  Let’s look at them in turn:

Capability– Innovation needs people with knowledge and experience.  But it also needs fresh perspective. Too much experience locks us into isolated pillars of expertise that make it hard embrace new technology.   But too little experience risks the merry-go-round of constantly reinventing the wheel.  We need to balance between the two.  But we can hit that balance far more effectively if we retain the right kind of experience, experts who are also cognitively agile, open to new experience, and so able to integrate fresh ideas with their hard earned knowledge.  The conundrum is that these experts are often the most likely to seek out new challenges, or to relish the risk of career changes. In other words, those most likely to participate in a ‘great resignation’.  This makes it imperative to proactively  identify, recruit or retain experts with high mental agility, or T-Shaped innovators who can bridge between different groups.

But it’s not enough to get the right mix at the organizational level, we need it to drill down into individual teams. Humans have a habit of self selecting groups that they feel comfortable working with, which can mean diversity within an organization translates into diversity between, rather than within teams. Curating teams to ensure each fully team reflects organizational diversity reduces factions, spreads knowledge, enables cross mentoring and thus creates a stable but not stagnant culture more quickly after a period of change.  It also grows the next generation of innovation leaders who have learnt bridging skills ‘on the job’, by working in cognitively diverse teams.

1. Space –Innovators need time and autonomy. Obviously this needs to be within some reasonable constraints, as businesses today cannot afford ivory towers.. But truly disruptive ideas take time, and some failure along the road to success. Build too much stage gate control into innovation, enforce unrealistic timelines, or talk about productive failure without actually embracing it, and the result will be mediocrity and increasingly smaller innovations.  Everything becomes disruptive in name, but not reality.  The good news is that this is perhaps the biggest opportunity to come out of Covid19, as for many, remote working has increased both time and autonomy.  Of course, remote working comes with downsides, some of which I discuss below, and not everybody has more time at home. But overall we’ve been given a gift of more time and more autonomy.  It’s critical that we take full advantage of this, and don’t lose it, or over-manage it in the name of efficiency.

2. Psychological Safety.  Failure is now widely acknowledged as part of the innovation process. But in reality, but when the rubber hits the road, it’s still often considered as a negative. After all, we build a culture that values capability and expertise so that we can anticipate ‘obvious’ pitfalls, and so avoid failure.  But if we’ve sufficient capability, that makes failures more valuable, as the unexpected is the single biggest source of disruptive and breakthrough innovation.  Furthermore, the scientific method, when employed correctly, designs tests to challenge our assumptions, not confirm them.  We run tests to uncover unexpected issues before we go to market. So as we rebuild innovation culture, it is critical that the psychology safety needed to fail productively is not just preserved, but enhanced. It really is the key to big ideas. But at the same time, it’s also critical not to confuse it with ‘safe spaces’.  Psychological safety has nothing to do with avoiding ideas we are uncomfortable with.  Instead it’s about creating an environment where people can safely challenge their own and others’ ideas, share unpopular opinions and failures, and be treated with respect when they do so.  That is fundamental to the scientific method, and hence to an effective innovation culture.

3. Designed Serendipity.  While this is a reductionist analysis, it’s impossible to avoid how interdependent these components are.  Capability needs space to operate, while space helps to create psychological safety.  That in turn makes it easier to fail, and share unexpected results.  And our most disruptive ideas typically come from those results experts weren’t expecting. Assuming that most competitors have similar pools of expertise, surprising results are the only way to break a close innovation race.  These can come from failures, as discussed above.  But they can also come from outside, either from someone viewing  our results through a different lens, and so seeing something we miss because of confirmation bias, or from somebody sharing information that they wouldn’t realize is relevant to us.  While we cannot force this type of cross- disciplinary interaction to occur per se, we can design organizations to facilitate it.  We can create spaces where people mix and communicate informally.  Or run training sessions that bring together mixed teams. A coffee bar in a work place, or an excellent cafeteria that encourages people to stay on site and mix all have benefits that are hard to quantify, but can also do an enormous amount to trigger an innovative culture.  But much of this requires people to be physically present.  Remote working provides time and convenience benefits, and works well for some tasks.  But we need to prevent the pendulum from swinging too far.  Whether it’s the serendipity of unexpected discussions at the water cooler, or the subtle body language that encourages someone to share a counter intuitive idea, or a failure, some personal interactions work better when people are physically in the same place.  We can certainly learn from our Covid experience, and reduce non productive time in the office.   But subtleties such as body language and microexpressions get lost on Facetime, making tough discussions tougher, sharing ‘bad’ results harder. And without physical presence, we’ll lose much of the serendipity of insight and information sharing in common physical spaces.  We don’t have to go back to where we were, but getting the balance right will drive competitive advantage by optimizing sharing, serendipity, and recruitment and retention.

4. Motivation. I’ve saved what I think is the hardest topic until last. Intrinsic motivation is absolutely key to an innovative culture.  If people love what they are doing  they will go the extra mile.   Passion means problems stay top of mind, increasing the chances of serendipitous innovation, or ‘Eureka moments’.  Money is important if you don’t have enough, but it’s intrinsic motivation that drives disruptive innovation. That motivation largely comes from one or all of three places; fascination with a problem, deep commitment to a team or authentic alignment between project and individual purpose.  The first two are fairly self-evident.  But the last one has always been tricky, and has become more difficult in our post Covid, more polarized world. Firstly, it must be authentic. For example, motivating a team to get behind a sustainability project that turns out to be largely greenwashing, or that evolves from authentic to greenwashing under timing or economic pressure can quickly turn motivation into indifference, or worse.  And the line between greenwashing and real environmental initiatives is often more fuzzy than we like to admit.  There are inevitably trade offs as we try and balance the needs of a business with the need to improve an environmental footprint, and often what starts as a major benefit gets trimmed en route to market.  And it’s not one size fit’s all, as one persons authentic is another persons greenwashing.   Furthermore, environmental is probably the easiest of the ‘purpose motivators’ to manage.

For more contentious social justice areas, it’s increasingly likely that not everyone in a team will be aligned with a project.  Even if they put aside their personal views, intrinsic motivation will inevitably fall in this situation.  Conversely, tap into a teams passions too well, and we risk  the core brand or product becoming secondary to the ‘cause’.  But even bigger risks as we look outward to the consumer.  Even if we have an organization that shares common values, taking a position on a contentious social justice issue is quite likely to alienate a significant segment of consumers.  Yet we know from Ehrenburg-Bass research that broad appeal and availability usually generates more volume than loyalty, and so even initiatives that enjoy short-term bumps in volume from socio-political positions can suffer long-term damage.  The short-term loyalty they create is often more short-lived than any emotional disconnection from a brand from consumers who disagree.   There are also additional issues with cognitive fluency, as while some brands are a good fit with environmental or social justice positions, many are not.  Consumers only associate about 1-3 attributes with a brand, and there is a significant risk of with subtraction by addition if a brand starts focusing on communications that are not a fluent fit with core equity.

None of this means we shouldn’t strive to create greener products, and indeed for many categories a healthy environmental profile is rapidly becoming price of entry.  The picture with social justice is more complex and more polarized, but again, all companies should strive to do the right thing, and be good corporate citizens.  But it’s important to do so carefully, ensure that we’re not alienating consumers, that initiatives are a fit with equity, and are sufficiently differentiated at a time when environmental and social justice communication is pervasive.  And there is always the question of source validity, and whether your brand has the perceived authority to  take a position on an issue.  And if our goal is to improve intrinsic motivation and employee satisfaction, it’s also worth considering that internal cultural benefits can often be achieved more effectively via inwardly facing initiatives that don’t risk  alienating consumers.

In conclusion, Covid19 has created opportunity for significant change in innovation culture, and in some cases, that change is already irreversible.  But it is sill important to step back, ask ourselves how much we want to change, and what parts of our culture we may want to protect.  If you are reading this, you are probably an innovator, and so change is in your blood.  But do keep in mind that the grass is always greener.  Whether we are innovating products, services or organizations, the new often looks better simply because we don’t know the issues we haven’t yet discovered.

I sometimes think innovation is like a giant game of wack-a-mole, where we innovate to improve one area, only to inadvertently create a new unexpected one along the way.  Sometimes these are minor, and just a part of the innovation process, sometimes they are much bigger, as in Boeings 737 Max.  This does not mean we should stagnate, or miss a once in a generation opportunity.  But just as culture is usually slow to change, it’s also slow to fix if we get it wrong.  So before messing too much with the DNA of an organization, it’s worth at least considering if the upside is worth the inevitable disruption, both anticipated and unanticipated. We have a once in a lifetime opportunity – don’t miss it, but don’t throw the baby out with the bathwater either!

Image credit: Pixabay

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