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Three Pillars of a Culture of Innovation

As people are adjusting to the winds of populism and anti-globalization that currently are blowing in so many countries a fundamental shift towards simple everyday values is occurring. Some of those are honesty, trust and transparency. In the times when these values prevail, they are often glanced over as invisible, even though they are uncontested cornerstones of our modern societies. But as soon as they become threatened and perhaps even completely dismissed, people suddenly start to see how fundamentally important they are for our well-being.

einsteinFrom a micro-level perspective, the same holds true for human organizations. When the key values of honesty, trust and transparency are not respected, disengagement and powerlessness take hold, resulting in major tension within the organization. A plethora of evidence suggests that the majority of today’s organizations, whether private or publicly traded, suffers from these symptoms.

My own research team has done quite a lot of work in recent years trying to understand what makes certain organizations so innovative and thriving. We have closely examined companies with terrific performance records and others that are having trouble with performance and with engaging their employees. We asked what the ingredients are that build up an exceptional financial performance, along with a high customer satisfaction and top-level employee engagement? In other words, what builds up companies that really work well? What is the secret recipe?

The answer lies, it seems, in what I call the three pillars of a culture of innovation. We’ve identified three basic principles that all consistently successful organizations seem to adhere to over others. The level of adherence to these principles determines to what extent human factors are taken into account in the daily life of an organization.

The first principle honors the fact that people appreciate working in teams of equals. The size of the team should not exceed 12 members. Everybody within the team has a voice while expertise is simultaneously respected. There are no formal hierarchies, just different tasks for the each of the team members to focus on. To the extent that it is possible, all decision making power and responsibility resides within the team.

Why is this organizational model so effective? Because it allows the creativity of employees to be optimally unleashed. Using one’s capacity fully requires harnessing one’s creativity every day in a very practical way. That creates satisfaction unlike anything else. Plus it builds results. Team-like structures enable this. Successful companies like Dutch Buurtzorg utilize this model.

The second factor is all about communication. Open, honest and effective communication builds trust. Successful companies use various methods to enrich internal and external interaction: informal meetings, rapid recap sessions, new digital communication channels for focused chatting. Creating a culture where even difficult issues are easy to address is pivotal. In other words, creating psychological safety is crucial for open communication to occur. The Finnish company Reactor is particularly adept in this respect.

Why is open communication so important? Because it enables new learning experiences. In our educated, self-conscious form, we humans derive great motivation from learning something new. And we feel stagnant the moment we stop learning and are simply repeating old stuff.

The third key component for a culture of innovation is impact. What I mean by this is the following: where we feel we have knowledge and expertise, we want to be have an impact in the decision-making. Industrially arranged organizations do not necessarily allow this since the decision-making power is allocated to certain hierarchical positions. The higher you are in the hierarchy, the more you have decision-making power.

In the exceptionally successful organizations we’ve studied, this is no longer the case. Anybody can be a decision maker provided you can convince your colleagues and others impacted by your decision that what you are about to do makes sense. Thus, everybody becomes a decision maker.

Another aspect of this third principle is that people are given freedom to pursue what they feel is important. In the incredible success story of Patagonia, the US outdoor clothing company, people are free to volunteer for environmental causes, allowing for full human expression.

In the final analysis, the three principles we’ve identified as critical in creating a culture of innovation do seem commonsensical. Unfortunately, somewhere along the line we’ve lost the human touch in most of today’s organizations. I believe it is time to regain it.

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