Tuesday, December 06, 2005

Innovation and the challenge of growth

Constant innovation is a characteristic of many successful growing companies. Staying ahead of the competition requires inventiveness at individual, group, and company levels. As companies grow, market demands and competition can force them to maintain a culture of continuous innovation. Growth, however, also creates a need for structure and control, which can make a culture of innovation difficult to sustain.

Erosion of flexibility
Sustainable growth requires increased operational scale, but companies cannot scale their operations effectively without implementing formal structures and processes. Growth can strain the entrepreneurial philosophy that has fuelled a company’s success. More importantly, it can erode corporate flexibility. As management layers increase, they create islands of data, knowledge, and intelligence that can complicate a company’s decision-making processes.

Reduced tolerance of risk
Developing new ideas is a risk-intensive process that requires significant resources. As companies grow, their risk profile must become more conservative as shareholders expect them to stabilise operations and manage their business according to financial criteria.

Collision of cultures
As companies grow, they require people who can guide them through each stage of their organisational development. However, companies also have to evolve to meet changing internal and external priorities. As a result, a company’s corporate culture is pulled between two ways: established employees who are used to a stable and familiar environment, and newer employees who have a different mindset, a higher tolerance for risk, and place less value on organisational structure. Left unchecked, this dichotomy can cause a company’s culture to be dictated by employee self-interest rather than corporate objectives.

Taking on the challenge
Sustaining an innovative culture requires companies to create environments where creative thinking is central to corporate values, actions, and assumptions. Innovative companies require employees who seek new opportunities, accept risk, collaborate well with others, and commit themselves to the organisation. Innovative companies also require leaders that will work to create those kinds of environments and will guide and promote innovative behaviour.

  1. Create the required foundation
    Companies need to assess the role of innovation within their organisations, make the necessary adjustments to their goals and their corporate culture, and redefine the responsibilities of their leaders.

  2. Enhance operations to foster innovation
    By creating an environment that empowers employees, companies will promote the collaboration required to generate and implement new ideas.

  3. Manage the ongoing change
    Companies must create teams to guide them through periods of change, manage their employees’ anxieties, and set small milestones to be used to gauge enthusiasm.

How do you know if you have the right foundation? A comprehensive assessment can be carried out using our Innovation Toolkit, however why not take this simple test to assess the state of your company?

Answer the following questions with a YES, NO or SORT OF.

Do you have the required foundation?
1. Does innovation continually contribute to revenue
generation and cost savings within your company?
2. Is innovation pervasive across the company, or is it isolated to specific groups?
3. Do your employees understand how innovation relates to the corporate vision and goals?
4. Have you created a set of core values, beliefs, and norms in order to guide the development of your corporate culture?
5. Have you redefined the roles of your company leaders to encourage and champion creative activities?

Do your operations foster innovation?
6. Does your workforce consist of people who have the ability to approach problems in an unconventional manner?
7. When hiring new employees, do you look for people who are willing to challenge the status quo and pursue new trends and directions?
8. Do you involve employees in the hiring process?
9. Do you have programs and activities that allow for meaningful interaction between new and existing employees?
10. Do you encourage your employees to be divergent thinkers and ensure that they have the right information and resources to follow through on their ideas?
11. Have you assessed your company’s organizational structure to identify and remove decision-making bottlenecks?
12. Is there a high degree of trust and open communication between various groups in your company?
13. Do you balance empowerment with accountability by creating a set of metrics for your employees to work toward?
14. Do your employees feel secure enough to believe that should their ideas fail to realize the desired result it will not affect their position within the company?
15. Does your company have a reward system that fosters behaviour that contributes to innovation?

How do you manage change?
16. Do you have a team of dedicated individuals, composed of representative employees, that lead and champion the changes required to sustain innovation?
17. Does this team monitor the activities of the company and ensure that there are no inconsistencies in the practices expected and performed?
18. Does this team use dialogue and consensus-building to garner support for the changes at the departmental level?
19. Do you manage the expectations and anxieties of your employees by communicating why change is important, involving employees in the implementation process, and providing the time and opportunity to disengage from the status quo?
20. Do you articulate clear short-term goals and objectives, measure progress, and communicate evidence of success to maintain the momentum and enthusiasm of your employees as changes are implemented?

If more than 75 percent of your answers (16 of 20) are “Yes,” then your company is likely to be adequately addressing the challenge of fostering an innovative culture.

If 50 to 75 percent of your answers (10 to 15) are “Yes” or “Sort Of,” there is more work to be done in order to foster an innovative culture.

If less than 50 percent of your answers are either “Yes” or “Sort Of,” your company seriously needs to re-evaluate its approach towards fostering an innovative culture.

To find out more about managing Innovation visit our website and sign up for our free Creativity and Innovation newsletter.


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