Defining a culture of innovation in 4 words...

This morning an acquaintance of mine that is a VP at one of the more distinguished UX consultancies in the field posted a provocative challenge: describe what "culture of innovation means in your own words."

Innovation is both a buzzword and a priority in business today. In a time when rampant lip service and box checking often substitute for meaningful action, it's important to understand the distinction between long-term cultural change and short-term tactics. To do the former, an organization must address four broad priorities: strategy, values, structure, and behavior. Let's take a quick look at each.

Strategy

One of the most-quoted maxims in business is "culture eats strategy for lunch," and this Catch 22 is a real challenge, particular for established companies looking to evolve. It's not enough to simply define "create a culture of innovation" as a strategy pillar. How then can this first key element best support the goal?

Noted business thinker Roger Martin describes strategy as a set of choices, with the key decisions of where to play and how to win the central guideposts. A company that does a poor job in defining its strategy choices, or that makes them overly vague or too broadly universal needs more focus if it is to create a sustainable culture of innovation. Apple has built the world's most valuable company not by trying to put an Apple device into the hands of everyone, but rather by serving a more specific segment. That Apple owns approximately 80% of the market value from 20% of the volume in smartphone sales is but one notable consequence of their strategic choices.

If your company is struggling to create an innovation culture, the first step should be a thoughtful examination of strategy, with an emphasis on clarity.

Values

If it's true that what a company values is what it rewards, then this is another key area to address. A company can't credibly state that innovation is a priority if it remains committed to outdated ideas.

While every company is unique, there are recurring themes that describe the values of innovative companies. A few of these are transparency, ethics, inclusion, and empowerment of individuals. If these values take a back seat to tired standards like "quality," or "stability," there may be a problem—regardless of whether you're in Houston or beyond.

Most importantly, an organization must kick the tendency to value predictability as a core tenet of its operations. It must embrace the creation of valid outcomes that offer transformative results, vs. predictable ones that offer incremental gains.

Structure

Old-school hierarchies don't tend to foster innovative results. While the obsession with Zappo's organizational model seems to have subsided, a willingness to depart from traditional org charts signals that there is a real commitment to innovate. It's useful to observe if a company applies the guidance for its external efforts to its internal operations—I describe this as a condition in which the same rules apply to everyone.

Leadership must embrace innovation as a priority. Ideally this comes from the CEO, although today there are commonly more executives charged specifically with driving innovation in the organization. This guidance should be encouraged in all aspects and divisions of the company, not just those tasked with creating external revenues.

Equally important is for the company to give its employees the freedom to experiment, work independently, and put forward new ideas and initiatives with the minimum number of approvals. 3M and Google are widely recognized for fostering this kind of grass-roots level creativity, and numerous new business lines for each came from individual or small-team initiatives.

Behaviors

The above three factors aren't truly effective unless or until we see them reflected in actual behavior. This applies to the entity and the individuals within it.

For the entity, evidence will come in the form of proactive measures. There will be a willingness to make big bets on focused choices driven by strategy and informed by core values. New initiatives will explore new markets and tackle new challenges while competitors focus on existing ones. This is well illustrated by Amazon, which built its highly successful Amazon Web Services division while most observers were busy studying its e-commerce models.

The tendency towards higher risk taking is also accompanied by a higher tolerance for failure and ability to pivot by applying the lessons of initial failures. This eliminates the culture of fear present at less-innovative companies. Microsoft has built the Surface device into a successful platform, when many companies might have abandoned the effort after its initial, tepid sales.

Individual behaviors also evidence the company commitment to innovation. Individuals and small teams enjoy more autonomy and display more agile performance (whether by deliberate capital A agile or otherwise). The work in environments that accept failure as a part of the journey, and often reward the initiative regardless. Critically, a culture of innovation prioritizes outcomes over process—and indeed rarely establishes singular, prescriptive processes in the first place.

The general priority for innovation in business today is the result of tighter competition, reduced barriers to entering markets, and the shorter half-lives of technological advantages. Addressing the four priorities of your company's strategy, values, structure and behaviors to align for innovation aren't a magical formula, but they are a great way to guide the effort. As a bonus, the company will not only maximize its internal talent, it will also become a magnet for talent seeking the unique opportunities that come from a culture of innovation.