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To Innovate, Get the People Issues Right

By Jay Rao and Joe Weintraub

For a full length article, please see "How Innovative is Your Company’s Culture?," MIT Sloan Management Review, Spring 2013, Vol. 54, No. 3, p45.

An innovative c​ulture rests on a foundation of six building blocks: resources, processes, values, behavior, climate, and success. These building blocks are dynamically linked. For example, the values of the enterprise have an impact on people’s behaviors, on the climate of the workplace, and on how success is defined and measured. Our culture of innovation model builds upon dozens of studies by numerous authors.

When it comes to fostering innovation, enterprises have generally given substantial attention to resources, processes, and the measurement of success—the more easily measured, tools-oriented innovation building blocks. But, companies often have given much less attention to the harder-to-measure, people-oriented determinants of innovative culture—values, behaviors, and climate.

Not surprisingly, most companies also have done a better job of managing resources, processes, and the measurement of innovation success than they have the more people-oriented innovation building blocks. As many managers have discovered, anything that involves people’s values and behaviors and the climate of the workplace is more intangible and difficult to handle. As one CEO put it, “The soft stuff is the hard stuff.” Yet these difficult people issues have the greatest power to shape the culture of innovation, and create a sustained competitive advantage.

Below we take a quick look at four case examples:

IDEO: Values and Behaviors

Few companies better exemplify innovative values and behaviors than IDEO, the Palo Alto, California-based global design consultancy. IDEO puts a high value on productive creativity, which it links to playful behavior. And, it supports both in tangible ways. Its work routines model children’s playfulness: exploration that generates many ideas; learning through hands-on building; and role playing to build empathy for users. Placards placed around the company’s workspaces proclaim IDEO’s principles for diving deep into problems:

  • Encourage wild ideas
  • Defer judgment
  • Build on the ideas of others
  • Stay focused

This play is just the first stage of IDEO’s innovation process. Next, its employees begin to make decisions regarding a product’s design and implementation. This range of behavior styles—from playful to businesslike—has contributed to hundreds of products that combine the best of form and function, from the computer mouse to medical equipment.1

W.L. Gore: Safety

Climate Safety is an important factor in an innovative climate. A fearless workplace frees people to take the risks innovation requires. W.L. Gore, the Delaware chemical products company famous for Gore-Tex and other high-performance products, provides an instructive example of safety. Here, mistakes made in the pursuit of novel solutions are accepted as part of the creative process. When a project is killed, staff members celebrate its passing with beer and champagne. When a project fails, a post-mortem is conducted. Flawed concept or poor execution? Bad decisions? The goal of these post-mortems is not to punish, but to learn and improve.2

Rite-Solutions: Processes and Success

Recognizing that they have no monopoly on brainpower or good ideas, the founders of Rite-Solutions, a Rhode Island systems and software development company, developed a process for drawing on their employees’ collective creativity.

Dozens of project ideas are listed and described in detail on the company’s internal market. All new listings begin trading at $10 per share. Every employee is given $10,000 of play money with which to invest, and each uses his or her judgment in allocating that money among the available “stocks.” Employees also may volunteer to work on projects they favor. Management uses their collective wisdom to make decisions on which projects will be funded. Play money is redeemed for real cash if and when a project turns into a commercial product.3

Whirlpool: Resources

A cadre of innovation experts who know, teach, and implement innovative practices is one of the most important innovation resources a company can have. For decades, Whirlpool, the world’s largest appliance maker, was an engineering- and manufacturing-oriented company fixated on quality and cost. Its products were mostly commodities sold at large retailers, such as Sears and Best Buy. In 1999, the Michigan-based company embarked on a mission to be recognized as being an innovation leader as well. The company started by enlisting 75 employees from across the company to brainstorm about innovative products. The group came up with one hit product, but most ideas were viewed as too far-out or insignificant. Like many first-time innovators, people had a difficult time seeing how a more far-reaching idea could turn into an opportunity. That’s when Whirlpool decided to try a different tack.

First, every salaried employee was enrolled in a business innovation course. Second, the company trained certain employees, called I-mentors, who were similar to the Six Sigma Black Belts who worked on quality in the company. The I-mentors still kept their regular jobs but brought to those roles special training on how to facilitate innovation projects and help people with their ideas. An intranet portal offered employees a common forum for learning principles of innovation, keeping abreast of recent research and tracking the progress of ideas toward realization. Innovation teams comprised of employees from all levels of the company screened and vetted new ideas. Within just a few years, this resulted in hundreds of ideas in the pipeline, 60 in the prototype stage and 190 being scaled for the market. 

Whirlpool’s focus on resources demonstrates that a critical starting point for a deliberate, systematic, and comprehensive innovation initiative begins by building a community of innovation experts. Most innovations happen within a community, and the core of any community is a common language. All disciplines—management, medicine, law—have their own lingua franca.4 So does innovation. Creating a community of innovators requires a good understanding of the language of innovation and its concepts and tools.

References

  1. S. Thomke and A. Nimgade, “IDEO Product Development,” Harvard Business School case 9-600-143 (Boston: Harvard Business School Publishing, 2007).
  2. J. Rao, “W.L. Gore: Culture of Innovation,” Babson College case BAB698 (Babson Park, Massachusetts: Babson College, 2012).
  3. Jim Lavoie, Rite-Solutions’ founder and CEO, was awarded the 2012 Harvard Business Review/McKinsey M-Prize for Management Innovation. For more information on the company, see H. Rao and D. Hoyt, “Rite-Solutions: Mavericks Unleashing the Quiet Genius of Employees,” Stanford Graduate School of Business case HR-27 (Stanford, California; Stanford Graduate School of Business, 2006).
  4. J. Rao, “Speaking the Lingua Franca of Innovation,” IESE Insight no. 14 (third quarter 2012): 13-19.

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Jay Rao

Jay Rao teaches two MBA courses and Babson Executive Education programs. His research has appeared in The Sloan Management Review, Journal of Innovative Management, and the Academy of Management Executive. He is a member of the Innovation Board at Ocean Spray, has a family-business background and sits on the board of The HJKP Educational Trust (India).

Joe Weintraub

Joe Weintraub is an Organizational Psychologist who focuses in the areas of individual and organizational effectiveness, and is the Founder and Faculty Director of the Babson Coaching for Leadership and Teamwork Program. He is the co-author of several books and is president of Organizational Dimensions, a management consulting and assessment firm based in Wellesley.

This article was excerpted from the authors’ Spring 2013 MIT Sloan Management Review article, “How Innovative Is Your Company’s Culture?