Raise your hand if you don't want to continuously improve your organization.
Ask this question in any gathering of innovation managers, or C-suite level employees, and it's a fair bet you won't be seeing a sea of arms waving in the air. Who'd want the kind of organization where people went around with their heads down and their brains running in neutral? Who'd like to work in the sort of place where people were afraid to try things out or to experiment? Who'd stay with the kind of organization that wanted them only to do as they were told and not to challenge the status quo?
What is a continuous improvement culture?
First, it’s worth understanding what any kind of culture is.
A useful starting point is the work of former MIT Sloan School of Management professor Edgar Schein, a leading expert on organizational culture. According to Schein, culture is, at its simplest, a shared pattern of beliefs that shape our behavior – it's "the way we do things around here."
Schein's model suggests that our beliefs and values shape how we behave. And that's all we need if we’re solitary hermits. But since we interact with others, we come to a pattern of shared beliefs and values, leading to commonly agreed-on behavioral norms. These become practiced and refined to become "the way we do things around here." Behaving in this pattern means we create "artifacts" that reinforce and express our culture. For example, in the office, patterns of behavior are reinforced by policies, procedures, processes, physical layouts, and so on.
So, culture is a pattern of shared values and beliefs leading to shared behaviors.
And a continuous improvement culture is just that: the kind of beliefs and behaviors we'd expect to see in a place where people believe change, improvement, and innovation are crucial.
Continuous improvement culture is a type of culture concerned with incremental innovation, focused on doing what we already do, but better. This kind of culture, for instance, would characterize a production line or call center where there is scope for innovation but where a radical challenge isn’t required.
Smart organizations try to create different pipelines for the innovation journey, which work together to enable ideas, big and small, incremental and radical, to combine to create value.
Why does a continuous improvement culture matter?
Continuous improvement leads to innovation.
Companies like Pixar or 3M aren’t successful just because they’re lucky. Delivering a steady stream of award-winning films doesn’t happen by accident – it’s the result of deeply embedded patterns of behavior that capture and channel the creativity of their employees.
In the case of 3M, the ability to keep renewing its vast stable of products (3M has about 55,000 in its range!) depends on something the company has been doing for over 100 years: working in ways that deliver a regular flow of incremental improvements, liberally interspersed with breakthrough ideas that chart their progress – Scotch tape, masking tape, and Post-It notes, to name a few.
Toyota is another long-term success story where much of the edge comes from its strong process innovation culture, engaging every member of its workforce in continuous incremental improvement – or “Kaizen.” Toyota has been doing this for over 50 years. Typically, it receives over 1 million suggestions each year and implements most of them!
Another great continuous innovator, ConocoPhillips is Alaska’s largest crude oil producer, producing 179,000 barrels of oil each day. Through their Margin Improvement Site, powered by HYPE, they currently track over 2,000 ideas for continuous improvement initiatives. They run six to eight campaigns every year, reaching a community of over 1,500 employees and contractors in the office and out in the field. These initiatives achieve millions of dollars annually in cash-flow improvements.
So, having an innovation culture reaps significant rewards. And if we’re serious about building an innovation culture, we need to invest the time and resources to make it as effective as possible.
How to create a culture of continuous improvement
Creating a culture of continuous improvement is critical to ensuring the long-term success and sustainability of any organization.
In a perfect world, it would be great to be able to order a culture of continuous improvement online. Simply press a button and click, there we have it, a ready-made source of ideas and innovations!
Unfortunately, the reality is a little different!
Culture is all about "the way we do things around here" – the shared patterns of behavior that become the norms we live and work by. As Edgar Schein’s model points out, culture doesn't magically appear; it's built up over time by a process of rehearsal, negotiation, and practice. Eventually, it becomes part of the fabric of our organization and gets reinforced by artifacts like structures, policies, and procedures.
In a continuous improvement culture, we’d expect to see structures for creating ideas and developing them into something that creates value. There would be reward and recognition systems in place, measurement frameworks and resource allocation rules to enable innovation to happen. People working within this system would behave in particular ways, reflecting their shared beliefs about ideas and innovation.
Over time, these patterns of behavior should become embedded in the way we do things. If we’re successful, they become "hard-wired" into the organization, its processes and procedures, and its rules and structures.
The technical term for these behavior patterns is "routines." They’re a bit like the genetic code that provides the programs shaping how an organization behaves. And just like DNA, these routines are, to some extent, specific to an organization – its “personality.”
So how do we go about building our continuous improvement culture?
Cultures don't just happen – they are built up and reinforced. And there are four key steps at the heart of this challenge: articulate, enable, reinforce, review.
Let’s examine each!
Articulate your values
A good starting point is to clarify what we believe in – the values we want others who join us to share. What kind of organization do we want to be in terms of the way we approach innovation? Here’s what some great innovators have to say:
"Innovation is not just reserved for so-called creatives or leaders – it is for everyone." - Richard Branson, Founder of Virgin Group
"Failure isn’t a necessary evil. In fact, it isn’t evil at all. It is a necessary consequence of doing something new." - Ed Catmull, Co-Founder of Pixar and former President of Walt Disney Animation Studios
“Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other ideas.” - Steve Jobs, CEO and Founder of Apple
But we need to go beyond these high-level pronouncements. Otherwise, they run the risk of simply hanging in the corporate air like so many "motherhood" statements. We need to specify the kinds of behaviors that support those beliefs. What do we want to see people doing, and hear them saying as they go about their work? What stories do they tell about success – and failure – in innovation, and what behaviors underpin that?
For example, the global design and innovation company IDEO papers the walls of its project rooms with reminders of the behaviors that work for them. Phrases like "embrace ambiguity," "learn from failure," and "take ownership" can be found all over their offices in different parts of the world. But they are not simply slogans; each of them is illustrated by examples and reinforced by exhibits interpreting and adding to them, developed by team members. IDEO realized that its culture was so important to its business that it set up a team with the job of codifying the company's culture and putting it into a book to give to new employees, called the "Little Book of IDEO."
Similarly, Toyota has its core behaviors mapped out in a document issued to every new employee, which states "The Toyota Way," the company's underlying values and its core practices around innovation.
Enable people to learn and practice
The next stage is to put in place mechanisms to enable people to learn and practice these behaviors. This might involve training them in specific skills, such as problem finding and solving or using design thinking. It might include providing structures to support and guide the behaviors – the policies and procedures to follow. It may be creating an enabling platform – for example, if we want high-involvement innovation it makes sense to have a way to share and build on ideas, collecting and deploying them.
3M’s innovation culture includes a long-standing commitment to the "15% Culture," a policy that essentially gives people time and space to explore their own ideas (an approach borrowed successfully by Google, which attributes some of its major successes, like Gmail, to this model). As 3M Technical Director Kurt Beinlich comments, "it’s one of the things that sets 3M apart as an innovative company, by sticking to that culture of giving every one of our employees the ability to follow their instincts to take advantage of opportunities for the company."
For Pixar, the ability to challenge and confront is critical to the company's creative success. Pixar recognizes that people may feel uncomfortable speaking out, so it created the "Braintrust," – an approach that offers a "safe zone" meeting in which anyone, irrespective of job title or seniority, can challenge and give honest feedback.
Sometimes, the enabling can come from a physical environment. Hella, one of the world's largest companies selling automotive parts and accessories, was concerned to create a different culture to enable it to work in startup mode, challenging, experimenting, and playing around with often crazy ideas. Rather than try to do this within its traditional headquarters, Hella set up a different kind of innovation space – an incubator/lab within which different behaviors could flourish.
Back to Pixar, one of the major innovations Steve Jobs introduced during his time there was changing the architecture of the building to allow for creative collisions – people bumping into each other and having conversations. The goal was to use the physical environment to enable and support key innovation behaviors.
Reinforce the message
Being clear about the message is a good starting point. Creating an enabling environment helps as well, but another key device is setting a feedback pattern to help reinforce the desired behavior.
Reinforcing the message, through feedback, rewards, and incentives, really helps to make an organizational culture stick. For instance, celebrate innovation achievements, have a "Hall of Fame," recognize teams and individuals who make a contribution, and make sure that people who take risks or move outside the expected don't get punished or blamed if they fail!
Review, reflect, and analyze
In an uncertain, unpredictable world, simply doing the same thing may not always work. So, for a long-lasting culture, we also need the capacity to review and adapt. Occasionally, we might have to perform a major reset but continuous improvement is also essential, tweaking and adjusting as we go along.
We can see this in a startup where there’s a fast pattern of learning and culture development. But we can also see it in long-established organizations where "dynamic capability" – the capacity to reflect on and change routines – is critical to survival.
For example, for much of the early part of this century, 3M looked to be comfortably residing near the top of the world’s most innovative companies lists. But by 2007, 3M found its position slipping; closer examination suggested the company placed too much emphasis on behaviors associated with the discipline of Six Sigma. The company realized it was losing its capacity for risk-taking, reducing the flow of breakthrough products. A reset was called for, duly implemented, and, by 2010, things were back on track.
For Procter and Gamble, its reset occurred around 1999. After over 150 years of successfully working with a culture that emphasized internal strengths and capabilities, the company embarked on an ambitious transition to "connect and develop" – opening itself up to extensive collaboration with outside players. The move has taken time and involved a significant process of learning and embedding new behaviors – and letting go of some obsolete patterns.
Tips for excelling at continuous improvement
What’s most important when it comes to creating successful innovation behaviors? Analyzing what some of the greatest innovators say on the subject is a good place to start:
"To turn really interesting ideas and fledgling technologies into a company that can continue to innovate for years, it requires a lot of discipline." - Steve Jobs
"Nearly every man who develops an idea works it up to the point where it looks impossible, and then he gets discouraged. That's not the place to become discouraged."
- Thomas Edison
“Some of the best inventive moments are born out of 'wrong thinking.' Most people start with the right way so they all follow the same path. The wrong way will lead to mistakes from which you can learn and create new discoveries – the kind of original ideas that come to life when we dare to be different, keep an open mind, and have no fear of failure.”
- James Dyson
“Innovation happens when people are given the freedom to ask questions and the resources and power to find the answers.” - Richard Branson
But we should be careful not to take all of this wisdom at face value. For example, would we be happy following Nikola Tesla's beliefs and behavior patterns? He was undoubtedly a great innovator (about the only thing he didn't have a crack at was the vehicle which bears his name!). But he was also obsessed with the number three, washing his hands three times in a row, and walking around a building three times before entering!
Tesla is typical of many great individual innovators. As Melissa Schilling eloquently demonstrates in her book, "Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators Who Changed the World," they are often a bit eccentric.
To counteract this individual quirky effect, we could look at pairs and trios of innovators – and, again, we have plenty of examples: Procter and Gamble, Hewlett and Packard, Jobs and Wozniak, Gates and Allen, Brin and Page. What's interesting here is that it's often the differences in the way these individuals believe and behave that gives rise to the innovative culture in their organizations. The way they spark off each other helps create the values and behaviors that work.
We can see the importance of diversity even more when we look at high-performing innovation teams. There's been a lot of research in this space, and a key message emerges: Diversity matters.
Meredith Belbin's famous studies of group roles, which effectively capture behaviors contributed by different individuals, show that "Apollo teams," made up of many similar brilliant minds, are not, in fact, very successful. The best performance comes from a mix of varied people. We can see this particularly well if we look at organizations in the creative industries where innovation is a crucial survival factor. It's not just great people coming up with bright ideas; it's also a battlefield of arguments about shaping those ideas into something that works.
Conflict and argument aren't bad – the key is being able to work with them. Pixar, the studio that brought you "Toy Story," among other award-winning animated films, is famous for this. As Ed Catmull explains in his excellent book, "Creativity, Inc., Overcoming the Unseen Forces That Stand in the Way of True Inspiration," success isn't an accident; it comes down to finding a way of working, which is challenging and stretching.
Lead by example
This also brings in the idea of leadership – someone who helps reinforce and guide the culture but who also gives it a sense of overall direction. In the book, "The Illusion of Leadership," author Piers Ibbotson makes the point that a great theater or film director doesn't impose his or her ideas but, instead, works with the situation and the emerging ideas. Their role is to channel and shape them.
We can see this in famous examples of innovation teams that have accomplished extraordinary things, such as the original Skunk Works producing a jet fighter from zero in six months, or the fascinating exploits of the pioneers of the car component industry, the 'Barn Gang' under Boss Kettering. Prototyping and fast failure are not new ideas – they're deeply rooted in this kind of experience.
There is no one-size-fits-all solution
Recipes of this sort are powerful in the small, focused teams in a theater or film – or in a startup, where there are high levels of uncertainty, a need for creativity, and a strong sense of shared purpose. But what about growing and larger organizations? What about the public sector, where the core tasks are about reproducibility and consistency? What about maintaining levels of service and quality? How do we build an innovation culture here?
The answer is not to look for a one-size-fits-all solution. Trying to turn the whole organization into a startup is likely to bring it crashing down. Equally, running it as a business-as-usual supertanker runs the risk of crashing slowly but heavily into the rocks because of an inability to turn fast enough.
Instead, it's about looking to identify and build sub-cultures – coherent and complementary ways of working within the innovation challenge. A handful of the top-level beliefs about the importance of innovation can fit everyone. But there's scope for variations on the theme as the organization confronts different tasks. It's a little like tribes uniting behind a leader, pooling their distinct strengths to create a powerful country.
For example, an organization might have a mainstream R&D group, but it also recognizes the need to think outside the box and explore potentially disruptive innovations via an entrepreneur lab. It might have core innovation routes to market but also sees the need for a corporate venture unit to examine various ways of exploiting their knowledge base. At its heart, it might be running a collaboration platform, enabling high involvement across its workforce, aimed at delivering a steady stream of continuous improvements in its products, processes, and services. And it might be exploring new ways of working with users, deploying crowdsourcing and other tools as it seeks to open itself up to a changing innovation game.
All of these strategies require a commitment to innovation, but the kinds of behavior and underlying beliefs will vary considerably. It's not a case of one being better than the other but, rather, the need for diversity in approach to deal with a complex external challenge.
It’s all about trust – giving people space and time, providing them with direction and support but then letting them get on with it; and acting like entrepreneurs, experimenting, learning, and very likely making mistakes. One of the core values within Hella is the idea of "entrepreneurial responsibility," expressed in an interview with Dr. Jürgen Behrend, Managing Partner, as:
"…an essential prerequisite for the creating of technologically advanced products or for the designing of innovational processes is freedom […] the kind of freedom that our employees enjoy when they are trying out their ideas and breaking new ground. Against the backcloth of entrepreneurial responsibility for all employees, a vital feature in our corporate values, such freedom provides great scope for creativity within the development process."
To summarize, if you’re keen to develop a continuous innovation culture, here are the five essentials:
- Be clear about what you want. Articulate the culture in terms of behaviors and artifacts. What would you see, feel, and hear if people were doing this?
- Recognize that there are many different innovation cultures, involving various behaviors and underpinning values – ensure a good fit for your company.
- Remember that people can learn new behaviors. Train your team in innovation skills, move employees around, and stretch and develop them.
- Involve people in the project – cultures emerge as a result of shared values and beliefs; people buy into behaving in this way. Rather than dictate top down, indicate the direction you want to go in and then allow space for building the culture together.
- Manage your culture actively – reinforce, reward, recognize, and review regularly. And aim to build "dynamic capability" – the capacity to review and change cultural routines. Question "the way we do things around here," by asking:
- What cultural routines should we keep or build on?
- Which ones should we do less of, or even stop?
- Which new behaviors will we need in order to deal with the newly emerging challenges?