Business Success: Tips from the Field

All my successes have been built on my failures.—Benjamin Disraeli, British statesman and literary figure

Cherry Woodburn, a business innovation consultant, attributes her passion for innovation to her first manager who encouraged her to try new ideas without fear of recrimination. “If an idea didn’t work,” Woodburn states. “We would analyze the process and learn from the experience.” Here she shares advice on creating a culture of innovation.
INNOVATION IN ACTION

Most companies fail to encourage innovation. Large companies in particular tend to be risk adverse and have a mind-set geared toward exploiting ways to control their processes through standardization. Process improvement is beneficial. But a company’s emphasis on reducing variation in its present systems can result in a lack of innovation over the long term. It is a paradox. While companies are increasing the quality of their product, they may be decreasing their ability to innovate.

Businesses need to cultivate innovation in order to compete in today’s fast-paced, innovation-driven economy. Since innovation is now recognized as necessary to keep a business viable and competitive, why doesn’t a culture of innovation spring up organically? Why does it need to be fostered? What keeps employees from naturally bubbling with creativity?

Obviously there are many variables, one of which is a cultural belief that there is one right answer. The natural outcome of this simplistic thinking is a reduction in the dialogue, thereby blocking the exploration of various alternate viewpoints and ideas. Meetings are held to find “the one right answer.” No one really listens to anyone else. Everyone is too busy preparing an opposing response. Underlying assumptions go unquestioned and unexamined. And too often, the person who speaks up or disagrees with the majority opinion is labeled as “not a team player.” Add in today’s hectic pace and a general disdain for meetings, and it is understandable that people look for closure rather than exposure to new ideas.light

However, innovation and expansive thinking emerge from nurturing different points of view. Doing so requires the pioneering spirit of exploring new territory. Innovation by its very nature requires experimentation and failure. Thomas Edison is the classic example. After more than 1,000 attempts to invent the first long-lasting electric light bulb, he was successful inventing bulbs that stayed lit for only a few minutes. One of his colleagues asked, “Mr. Edison, don’t you feel you are a failure?” Without reservation, he answered, “Not at all. Now I definitely know more than a thousand ways not to make a light bulb.”

Sadly, the culture in many organizations dictates that mistakes are bad and should be avoided at all costs. Employees are criticized or even ridiculed for mistakes. This stems from early learning in institutions where mistakes meant a lower grade and even possible consequences at home. Often this attitude continues into the workplace, where the aversion to mistakes is continued. Consider how these stultifying lessons continue to pile on: Sue gets reprimanded in front of peers for making errors and feels humiliated. Consequence: In the future, she will be prone to hide her mistakes and not deviate from business as usual. In the same company, Tom is written up for insubordination because he experimented with a new way of doing things, thereby not adhering to long-held company practices. As a result of these and similar incidents, people play it safe. Yet the greatest innovations can come from workers’ own initiatives, not just from an initiative pushed down from the top.

The need for innovation is nothing new, but the recognition that it needs to be a core competency—permeating all departments and all levels of the organization—is relatively recent. Much as leaders once believed that quality was primarily the responsibility of the quality department, so has innovation been primarily confined within the borders of research and development. Frans Johansson, author of the successful book The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts & Cultures , advocates that companies also be willing to take their efforts at innovation beyond the borders of their business to include other industries and disciplines. He called this cross-fertilization of ideas the Medici effect, after the fifteenth-century banking family that broke down traditional barriers separating disciplines and cultures to ignite the Renaissance.

A culture of innovation needs to be nurtured until it is deeply rooted into the psyche of every employee. However, this cannot be done successfully with announcements, slogans, or playing on people’s fear of competition. Ironically, innovative thinking also is needed to maintain traditional practices that still add value and to cultivate a daily crop of new ideas. The culture is about recognizing individual mind-sets and accepting perceived borders and limitations in order to question them. These mind-sets typically come from each employee’s individual experiences and culture. They are empowered by past experiences that have become hardwired into the brain. Couple that with the fact that brains are structured to simplify and categorize massive amounts of daily stimuli, and it is no wonder people get caught in a duality of right and wrong. The pattern becomes “Success is good; failure is bad.” When new information is compatible with what is known, it is accepted as the truth; when it does not mesh with preconceived ideas or past experiences, it receives little consideration. As a result, opportunities to innovate and change the status quo are missed. Research shows that the act of recognizing and surfacing unconscious beliefs offers the highest leverage for change.

Understanding and acknowledging the current situation in comparison to the desired state is the first step in any change initiative. It is impossible to change something that is not acknowledged or understood, which makes it difficult to grow into a future culture steeped in innovative thinking.

Begin with asking tough questions of everyone in the organization. Dig up deeply embedded beliefs and assumptions that are, more than likely, not in sync with the stated company vision and values. Here are some questions for starters.

• What are your own and your organization’s assumptions and beliefs related to innovation, particularly innovation that deals with new practices and methods? New product ideas tend to fare better, but, again are they encouraged and tested? Begin a dialogue with employees at all levels and in all departments to learn how steeped the company is in “Business as usual” and “That won’t work here.”

• Has an emphasis on process improvement, standardization, and reducing variation created a myopic focus on improving what you are already doing to the virtual exclusion of creativity and innovation? Think of the demise of the fully integrated steel mills versus today’s mini-mills; think of Kodak improving in film and print while virtually ignoring digital photography for years.

• What are your own and your organization’s assumptions and beliefs about risk taking, mistakes, and lack of immediate positive outcomes? Ask yourself if you stick with a new idea long enough to see results. Tally the number of initiatives that started over the past 5 to 10 years. Then honestly evaluate the number remaining—in other words, those that maintained their initial momentum. Study the gap between the organization’s actual behavior and the values it espouses about vision, growth, and innovation.

• Do you encourage experimentation, testing hypotheses, or do new ideas get quashed in meetings or die a slow death as they are analyzed, dissected, and debated?
Think of the ensuing dialogue as preparatory work for growing the innovative capabilities that have been lying fallow due to traditional business practices. When transforming a garden, it is not enough to plant verbal seeds. If the ground has been depleted of creative nutrients due to years of leaching the soil with criticism, tight control, and fear, announcing a new gardening program will not be successful.

By taking time to listen carefully and allow fears to emerge, the organization can begin to prepare the soil. Fertilizing with acceptance and courage allows an innovative culture to emerge. As leaders cultivate the vision, innovation will flourish and generate new ideas for years to come.

13 Behaviors of Business Success

It takes twenty years to build your reputation and five minutes to ruin it.
—Warren Buffett, Chairman & CEO, Berkshire Hathaway

As Covey describes it, the 13 behaviors reflect both character and competence. This is valuable to understand because “the quickest way to decrease trust is to violate a behavior of character, while the quickest way to increase trust is to demonstrate a behavior of competence.”

Behavior #1: Talk Straight
What we say is true and forthcoming—not just technically correct. —Dell Inc.’s Code of Conduct  Straight talk is really about honesty. The ability and integrity to speak the truth with great clarity is essential for success today. Too much is happening too fast to be delayed by confusion or deception. Strong leadership is necessary to create a culture of trust. Straight talk from top management is essential for success.

Behavior #2: Demonstrate Respect

I try to treat people as human beings….If they know you care, it brings out the best in them.
—Sir Richard Branson, founder and chairman, The Virgin Group
Demonstrating respect builds trust on all levels. Expansion into global markets brings exposure to new customs and manners that need to be understood and integrated. This creates the space for unparalleled innovation and collaboration.

Behavior #3: Create Transparency

Creating transparency involves telling the truth in a way that can be verified. This means not hiding mistakes and information. Leaders who come from a place of authenticity and transparency are rewarded with loyalty and trust.

Behavior #4: Right Wrongs

To be an effective leader, one must practice humility. Mistakes are expected in a dynamic, innovative company. And no one is immune from them. To admit mistakes and make restitution, when necessary, is a sign of great integrity.

Behavior #5: Show Loyalty

To retain those who are present, be loyal to those who are absent.—Steven M. R. Covey
To demonstrate and encourage loyalty, it is important to acknowledge the contributions of others and offer praise freely. Leaders who speak about people as though they were present and show respect for their privacy gain the trust of those who are present.

Behavior #6: Deliver Results

We judge ourselves by what we feel capable of doing, while others judge us by what we have already done. —Henry Wadsworth Longfellow
As a full participant in any organization, it is crucial to establish a track record of delivering results. However, it is also important to know what to deliver. This involves understanding how results will be implemented and making sure the results have value to the organization.
In a dynamic organization, individuals enjoy a lot more autonomy. Proactive behavior invigorates the system and moves the organization forward. It is good to underpromise and overdeliver.

Behavior #7: Get Better

The illiterate of the 21st century will not be those who cannot read and write but those who cannot learn, unlearn, and relearn.—Alvin Toffler, American writer and futurist
A practice of continual learning is essential for the growth of both the organization and the individual. Improving skills and knowledge in your current area of expertise as well as learning through collaboration with other areas leads to exponential growth. Developing formal and informal feedback systems also supports learning.

Behavior #8: Confront Reality

Leaders need to be more candid with those they purport to lead. Sharing good news is easy. When it comes to the more troublesome negative news, be candid and take responsibility. Don’t withhold unpleasant possibilities and don’t pass off bad news to subordinates to deliver. Level with employees about problems in a timely fashion.—Jon Huntsman, chairman, Huntsman Chemical
When times are tough, confronting reality requires obligated courage. True leaders share the truth at all times and address the difficult issues directly.

Behavior #9: Clarify Expectations

When communicating within an organization, clarity of word and deed is very powerful. Effective communication and feedback are essential for ensuring that everyone understands what is expected. It is dangerous to assume otherwise.

Behavior #10: Practice AccountabilityBusiness success

Personal accountability fuels trust and mobilizes an organization for growth. Leaders must set the standard by holding themselves accountable. Then they are in integrity and can hold others accountable. Avoid blaming others when things go wrong.

Behavior #11: Listen First
I have found that the two best qualities a CEO can have are the ability to listen and to assume the best motives in others.—Jack M. Greenberg, chairman and CEO, McDonald’s
As discussed Chapter 3, truly listening is an art that takes intention and effort. But the value of this practice is significant. To understand someone, it is necessary to listen with your eyes, ears, and heart. Seek to learn what is important to others. This is the first step toward accessing the plethora of untapped wisdom in organizations.

Behavior #12: Keep Commitments
Stand up for what’s right, in small matters and large ones, and always do what you promise.
—Reuben Mark, chairman and CEO, Colgate-Palmolive
Covey calls this the “Big Kahuna” of all behaviors. It is a fundamental building block of trust and is essential for effective collaboration.
Behavior #13: Extend Trust
Trust men and they will be true to you; treat them greatly and they will show themselves great.—Ralph Waldo Emerson
Great leaders demonstrate a propensity to trust. When members of an organization extend trust to others, it fosters a collaborative environment. Learn from those who break the bond of trust.

Business Success: Cultural Elements of Collaboration

For collaboration to flourish, the organization must take steps to create a collaborative culture. Evan Rosen (author of The Culture of Collaboration) suggests that there are 10 cultural elements of collaboration. Many of these elements are inherent qualities of an adaptive company:

Collaboration - Joined Hands1. Trust. Trust is a foundational feature of any team. Members who trust each other feel safe in sharing ideas. If people are afraid their ideas will be stolen or they will be criticized for mistakes, collaboration is difficult. Look for more discussion of trust later in the chapter.

2. Sharing. Some individuals resist sharing because they fear they will lose their value. It is important to demonstrate that by sharing, everyone’s value is increased.

3. Goals. Commonly created and shared goals are essential for vital collaboration.

4. Innovation. Collaboration stimulates innovation, which then fuels more collaboration.

5. Environment. The physical and virtual environment represents the nonverbal language of the company. Spaces that facilitate informal congregation lead to the natural sharing of ideas and issues. Virtual collaborative environments through technology advances are as important as real environments and are discussed in a later section.

6. Collaborative chaos. Chaos energizes the system. By facilitating the unstructured exchange of ideas, innovation flourishes.

7. Constructive confrontation. Respectful disagreement fuels the system to generate new ideas. When individuals feel safe to challenge each other’s ideas, innovation is unleashed.

8. Communication. Effective communication skills are fundamental to collaboration. Communication is the channel that builds trust while it facilitates inquiry and sharing.

9. Community. A sense of community is a natural outcome of collaboration. Shared goals, invigorating idea exchanges, and group problem solving build trust and community.

10. Value. Value from collaboration is realized in numerous ways. Companies have experienced business benefits, such as reduced processing times, shortened product development cycles, new markets identification, and more. There are also considerable cost savings realized through human benefits. When individuals feel engaged and valued as part of something larger than themselves, they have a more positive attitude about work. This leads to increased productivity, lower absenteeism, and more.

Stay tuned for more about implementing a culture of collaboration in your workplace.

A Dynamic Organization Principle #5

Link Transformation to Shareholder Value Creation

Shareholder value has long been the single measure of company value. However, as organizations are exposed to continuous uncertainty, they need to behave more like living systems to survive. The survival of living systems “is measured according to strict criteria of adaptability and fit with the sustainable environment.”[i] However, there are some challenges when managing shareholder value in a complex and unstable competitive environment:

  • In a highly volatile economy, the accuracy of measures such as discounted cash flow and expected losses is diminished. It is team_building_change1difficult for highly adaptive companies to predict how much their core business might change in a few years.
  • It is difficult to capture the value added from a company’s management style or decision-making capabilities. “During rapid transformation, change processes become more influential in determining financial performance than either structure or traditional processes.”[ii]
  • Companies are beginning to see the impact on cash flow from connecting with other groups, such as their communities, partners, and the environment. Quantifying this value continues to be challenging.

In summary, the method of calculating economic value added must be “modified to integrate perpetual transformation rather than one-time (or periodic) shareholder value initiatives in managing a business portfolio.”[iii]
The next actions are designed to assist companies in determining shareholder value in a complex and volatile environment.

  • Develop different cash flow scenarios. Organizations will be in a stronger position if they develop different cash flow scenarios for multiple futures based on the best estimates of what will change and how the market will behave in the next few years. The actual exercise of scenario building and the resulting discussion are more important than getting the estimates exactly right. The flow and exchange of ideas is valuable in generating the preparedness for the next phase.
  • Link shareholder value at every phase. When new business lines or other opportunities emerge through the adaptive process, it is essential to link shareholder value at every phase and ensure “sufficient coherence among strategy, finance, organization, and implementation.”[iv]
  • Focus on growth strategies. Such a focus is essential, even if it requires actions such as downsizing, restructuring, and reengineering, when an adaptive company is experiencing a major transformation.

Come back for the next 5 Principles on Leading a Dynamic Organization! Feel free to comment with questions, insights, or additions to this post. To receive alerts when the next blog is published, click on the RSS feed at the top left of the page to subscribe.

[i] Christopher Laszlo and Jean-François Laugel, Large-Scale Organizational Change (Boston: Butterworth Heinemann, 2000), 79.
[ii] Ibid., 80-81.
[iii] Ibid., 81.
[iv] Ibid., 84.