Many of today’s business leaders see innovation as the key to sustained business growth. Dr Graeme Ditchburn, research director at Towers Perrin ISR, examines how organisational culture sets innovative organisations apart, suggesting that they have cultures that enable them to generate new ideas, select the products and services that capture the imagination of their customers and launch them before the competition.
In high performing organisations, it is the alignment of strategic focus, leadership and organisation culture that ensures innovation success. These organisations tend to have a clearly defined strategy for beating the competition. Their leaders champion innovation, they enthuse teams and enable employees to operationalise the strategy. In turn, employees are able to unleash creativity in a productive way to deliver this business strategy. Innovation may ensure the continuing competitiveness of many UK organisations, but do they have the cultures to deliver? Drawing on extensive data from successful innovation organisations, Towers Perrin-ISR has examined this question and pinpointed areas for improvement.
The first imperative is fostering a culture that supports ideas incubation. Those who develop ideas must be confident that they can take risks with the support of leaders. Indeed, failure should be seen as a natural part of the learning curve. Creative teams should work in stimulating environments, with highly talented employees working collaboratively and innovation being celebrated through rewards systems and performance reviews. Managers responsible for incubation need to be both technically competent and accept that diverse ideas lead to success.
Our data shows that average UK organisations are good at creating climates that support incubation but are lagging behind very innovative companies. One immediate area for improvement is support for risk taking. The percentage of people in the UK who think their organisation supports risk-taking is 61%, compared to 70% in the UK’s strongest innovative organisations. However, UK businesses are in a better position than those in France and Germany to create new ideas. Notably British organisations are better placed than their French counterparts to anticipate the needs of customers. In the UK 65% of employees think that their organisation does an excellent job at anticipating the products and services that their customers will value, compared to 41% in France.
The second imperative is creating a climate that enables a business to select and quickly launch the right ideas. This requires organisations to anticipate customer needs, respond to changes in the market and minimise bureaucracy, ensuring employees are able to take action quickly with support from leaders who make decisions promptly and set priorities consistently. On average UK organisations are less adept at creating a climate which supports the selection and launch of the right ideas than very innovative ones in the UK and across the globe. The ability of UK organisations to respond to changes in the market is one issue. Only 40% of Britons think that their organisation is better at responding to market change than their competitors. In the UK’s innovative organisations 53% of employees think this is the case and in the world’s highly innovative organisations 55% report that their firm is better at responding to market change than competitors.
Effective leadership also requires greater a focus in the UK, we are lagging behind very innovative companies globally and average companies in France and Germany on a number of issues. UK leaders need to improve their focus on priority setting. Only 48% of people in the average UK organisation believe that the management of their division is doing a good job at establishing priorities. Whereas, 56% of employees in Germany and 52% in France think their managers are doing a good job at this. In very innovative companies this stands at 63% in the UK and 62% globally.
Leaders could also put their organisation in a better position to innovate by creating a climate that supports prompt decision making. Only 33% of employees in the UK think that their top managers do a good job at making decisions promptly, compared to 42% in France and 51% in Germany. The successful delivery of an innovation strategy requires a distinctive organisational culture. Many UK organisations are creating a climate that supports ideas incubation but falls down on the wider leadership and cultural issues that support taking ideas to market. In particular, they need to become more adept at making the right decisions promptly, anticipating changes in the market, establishing priorities, and enabling their employees to launch ideas faster than their competitors. Organisations that do this effectively will be the ones that truly succeed at innovation.