The Hard Truth About Innovative Cultures

Gary Pisano, professor of Business Administration at Harvard University, recently spoke on the HBR Ideacast podcast about his new article "The Hard Truth About Innovative Cultures." Both the podcast episode and article are worth your time.

Almost every organization I've worked at or with has stated "innovation" as a corporate or cultural goal. Gary says that almost every student in his class says they want to work for an innovative company. It's true that innovation (despite being one of the most overused words of this century so far), is the fuel that makes companies grow. It's also terribly hard to sustain as a cultural value.

Why? Innovative cultures always seem so fun. They're creating things for the future, they have foosball tables, they probably provide you lunch, and they'll likely (if their innovation is any good) make you a ton of money.

But Gary says that innovative cultures are misunderstood - or only looked at from one direction.

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. A tolerance for failure requires an intolerance for incompetence. A willingness to experiment requires rigorous discipline. Psychological safety requires comfort with brutal candor. Collaboration must be balanced with an individual accountability. And flatness requires strong leadership. Innovative cultures are paradoxical. Unless the tensions created by this paradox are carefully managed, attempts to create an innovative culture will fail.

In my experience, people say they want to work for an innovative company, but often can't hack some major components of the work required. Maybe they're creative and and struggle with honest feedback, or the directive to start over. Or they measure too many things and don't know when to stop counting and ship something. 

Because innovative cultures require a combination of seemingly contradictory behaviors, they risk creating confusion. A major project fails. Should we celebrate? Should the leader of that program be held accountable? The answer to these questions depends on the circumstances. 

If you truly believe your company needs to create a culture of innovation, Gary says three things are required to make the shift:

1. Leaders must be transparent with the organization about the harder realities of innovative cultures. Many people will be excited about the prospects of having more freedom to experiment, fail, collaborate, speak up, and make decisions. But they also have to recognize that with these freedoms come some tough responsibilities. It’s better to be up-front from the outset.
2. Leaders must recognize that there are no shortcuts in building an innovative culture. Too many leaders think that by breaking the organization into smaller units they can emulate an innovative start-up culture. This approach confuses scale with culture. Simply breaking a big bureaucratic organization into smaller units does not magically endow them with entrepreneurial spirit. Without strong management efforts to shape values, norms, and behaviors, these offspring units tend to inherit the culture of the parent organization that spawned them. (I've been in at least two places that did just this. You're on team "Mammoth" now!  Doesn't that sound CREATIVE and INNOVATIVE??)
3. Finally, because innovative cultures can be unstable, leaders need to be vigilant for signs of excess in any area and intervene to restore balance when necessary. Unbridled, a tolerance for failure can encourage slack thinking and excuse making, but too much intolerance for incompetence can create fear of risk taking. Neither of these extremes is helpful. Leaders need to be on the lookout for excessive tendencies, particularly in themselves. If you want your organization to strike the delicate balance required, then you as a leader must demonstrate the ability to strike that balance yourself.