More, faster, bigger: how Europe can revolutionise corporate culture to drive innovation

While Europe is world class in research, European companies do not fully reflect this strength in their innovation results. But they urgently need to become more innovative to survive the approaching tsunami of companies from the emerging economies of China, India, Brazil and elsewhere, that are now poised to compete on the global scale.

These companies are becoming more and more competent at designing and manufacturing products that can compete with products from European firms on quality and performance. And they will win on price, because they will maintain a cost advantage over European companies.

It is certain these firms will roll back the inroads European companies like Volkswagen and BMW, have made in supplying high technology products in emerging economies such as China.

In order to stay ahead European companies need to innovate more, faster and bigger. But how? I have observed three approaches which work:

• Having an 'innovation dictator' at the helm, who calls all the important shots and demands total allegiance, like Steve Jobs at Apple, or Bill Gates at Microsoft. This of course begs the question of how to fill the gap when these titans move on.
• Re-inventing the company, as when Nokia was formed around a Finnish industrial conglomerate then manufacturing products ranging from rubber flooring to rifles. Or when IBM switched from being a computer manufacturer to being a business services provider. Of course this is a risky move, only likely to be contemplated in extremis. And one transformation may not be enough, as Nokia found when it failed to catch the smartphone wave.
• Changing the culture, to foster a climate of entrepreneurship and innovation. GE is attempting something of this sort, by opening up the company to external innovation impulses via crowd sourcing.

A culture of entrepreneurship and innovation - the defining competitive advantage

In a truely global economy, the ability to create a culture which fosters an entrepreneurial spirit and drives innovation will become the defining competitive advantage for big companies.

But there’s a stumbling block, in that even those companies that have built success around innovation find it difficult to become more innovative.  This is because of the two major hurdles to becoming more innovative, that operate at the individual, personal level and at the organisational, company level.

The first – personal - hurdle is anchored in neuroscience. We humans are programmed by evolution against acting innovatively. Our brains are wired to keep us alive by perpetuating what worked in the past – no experiments please! We want to maintain what we have already. The brain seeks preservation over surprise, even if it is a breakthrough promising great benefits.

At the company level, effectiveness and efficiency rules supreme. The modern corporation is designed for scale and sustainability, surviving and prospering by doing more of the same. Too much, or too-radical innovation, is perceived as a threat to the well-oiled machine: like a virus entering a healthy, well-functioning body, it gets killed.

How to promote more innovation?

Innovation is not an end in itself; it is a means to an end – to support the business. Given this, innovation needs to be anchored in the business strategy. To promote innovation, look at the business strategy and assess how the company can be more successful via more innovation.

More innovation comes with more risk. Top management needs to help the organisation to deal with this increased exposure to risk.

Lastly: to get more innovation, the organisation needs to change structure and (some) personnel. Otherwise, the output will be more of the same – or at best – incrementally improved.

How then to confront the neuronal hardwiring of managers and the organisation’s immune response against more innovation? You need to create a company culture that supports innovation – a culture that consistently and persistently fights the evolutionary and organisational pressure to perpetuate the status quo just because it worked well in the past.

Company culture – the elephant in the room

What is the culture of a company? My definition:  Culture is what drives decisions when the boss is not around. Only the boss can change culture. Like any lasting change in organisations it needs:

• Leadership commitment
• Consistency
• Persistence
• Communication, both internally and externally

Persistence and communication are the factors most executives underestimate and under-leverage. You have to repeat your message again and again, for a long time, to make a difference.

Spreading a religion can be considered as an exemplar for driving a culture change: you grow the faith in your community by talking about it in your community – like the stories of miracles experienced by believers. You convert non-believers to believers, by talking about your faith outside your community – with suppliers, customers, partners - as missionaries do when they go out to convert the world.

Top managers have to become missionaries of innovation - talking the talk and walking the walk, consistently and persistently, and for a long time.  That such change is possible is demonstrated by the successful introduction of process and quality improvement programmes such as Total Quality, Six Sigma and sustainability.

Remember: If you want to change attitudes, start with a change in behaviour, as William Glaser, American psychiatrist and developer of reality theory and choice therapy, so notably said.

Joachim von Heimburg is an independent Innovation Architect and Executive Adviser. He was formerly Innovation Director at the consumer goods company, Procter & Gamble and General Manager Innovation and Corporate Programs at the global chemical company, SABIC.