Implementing Culture Change to Drive Innovation

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As discussed in a post last week, innovation is in part a cultural phenomenon – something that is in a lot of ways the antithesis of the culture that naturally appears in a successful firm over time. But its easy to change the culture to harness innovation, right?

You can’t be blamed for believing this, with the plethora of books and management consultants touting numerous ‘can’t fail’ ways to change the company culture from the CEO down as a way to boost innovation and create a renewed energy. Unfortunately, this is a lot easier said or written about than done. And what about those of us that work in a company that either thinks it is already innovative enough or has no interest in changing what works now for the larger corporation? How can an individual create real organizational change to increase and drive innovation without the power of the CEO to direct internal marketing campaigns and HR efforts?

As companies grow they require increased systems, processes, and hierarchy in order to manage the growth and control profitability. Eventually, this driving force becomes self-sustaining – with success comes bureaucracy (perhaps necessarily) and people that function well within a structured and organized environment. Eventually those innovative and driving employees that were the root of the success of the company either change to fit into the new dominant culture or are forced out. We justify this by saying that they aren’t a cultural fit anymore. At some point though in the progression of most firms it will become necessary to shift the culture to recapture that innovative spirit, at the very least within individual business units or groups that are looking for growth and new opportunities.

To understand how to impact the culture to improve innovation we must first understand two aspects of culture that can limit innovation:

Shared Beliefs: In most organizations, as a result of the filtering process that occurs during hiring and induction and that continues through teams shared experiences a strong set of shared beliefs will appear. These can be a strong tool to strengthen a corporation, leading to more delegation, decreased monitoring, higher satisfaction, higher motivation, faster coordination, and more communication, but importantly, also to less experimentation and less information collection.[1] Experimentation and information gathering are at the core of innovation, so while shared beliefs can be great for the corporation they can also severely limit innovation for a team.

Focus on Process Excellence and Cost Cutting: As stated above, a successful firm will have developed a strong bureaucracy by the time change for innovations sake is necessary. A focus on strong process excellence and cost cutting (along with out-sourcing and quality) are essential to deliver consistent returns to Wall Street. However, they are also an enemy of innovation as they look to eliminate complex projects that don’t fit the model and discourage high risk activities that require investments of time and money.

Knowing that these two things; Shared Beliefs and Focus on Process Excellence and Cost Cutting are major parts of the problem is only the start. How might the Osmotic Innovation change their team using this knowledge?

Disrupting Shared Beliefs: One cannot eliminate all sources of shared beliefs – so long as employees work together they will gradually build this characteristic. However, manager selection of employees plays a very strong role in sustaining shared beliefs. By selecting employees that are ‘culture fits’ or that think like the manager they sustain and strengthen this culture. Hiring people that are viewed as cultural risks while having the right skill set is one possible way to shift shared beliefs to encourage more experimentation and information gathering. Note that these should be people in important positions – having a few crazy technicians won’t disrupt the way that a group of managers or senior scientists think. It has been shown that culture and shared beliefs tend to flow from the important people within an organization so an even easier mechanism might be to put those who are willing to buck the status quo in your current organization into positions of responsibility and power or appoint them to take a lead on innovation initiatives.

Really Focus on Innovation: Because most employees see their compensation and reward systems being tied to the values of process excellence, cost cutting, and quality finding time or initiative to work on innovation or the willingness to support high programs is unlikely. Instead innovation needs to become part of everyone’s day-job, and should be tied to their annual performance / compensation reviews. This shows the commitment to innovation that can encourage creative employees to begin committing to new ideas and innovation. As was learned in the 1980’s at the joint Toyota-GM NUMMI venture, changing culture starts with changing what people do – the new way of thinking will come.[2] John Shook has described this in a model based on Edgar Schein’s original model of corporate culture; shown to the right. Apply this lesson by making employees responsible to deliver innovation as part of their job function. The new way of thinking (and culture) will follow. Merely advertising a new motto or idea to change peoples thinking isn’t enough to change values and attitudes and what people really do.

Short of wholesale changes driven by the CEO and Board, culture change to increase innovation can be managed and implemented within smaller parts of the organization by recognizing the key factors that drive and develop culture. Disrupting the entrenched belief systems to encourage experimentation and new knowledge gathering along with making innovation a measured part of a teams job function can be the levers used by the Osmotic Innovator to change a team or organizations culture from the ground up.

[1] Van den Steen, Eric. On the origin of shared beliefs (and corporate culture) RAND Journal of Economics. Vol 41, No.4, Winter 2010. 617-648.

[2] Shook, John. How to Change a Culture: Lessons from NUMMI. MIT Sloan Management Review. Winter 2010, Vol. 51, No. 2. 63 – 68.

Motivation and Rewards: The Application to Innovation

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We live in a corporate environment where time is scarce and employees are trying to balance their career and outside interests (e.g. family, personal hobbies, health, etc).  Because of this, most people simply go to their job and don’t really want to participate in any innovation sessions or activities that may require time above and beyond what is required.  They view innovation as yet another objective added to the already long list of whats expected of them in their daily work routine. One way companies address approaches to innovation, is by conducting innovation sessions.  Most likely innovation sessions have participants from the company who get together and through use of a facilitator, perform different activities to generate ideas.

In a perfect world, every employee within a company would be excited to attend such a session, and would be full of ideas.  However, the reality is companies tend to invite people regardless of their interest or abilities, and so as a result, we have to deal with people who are not engaged, not innovative, or have simply been invited because they funded the event.  How can we then motivate those who are not engaged in the innovation session and don’t particularly care to be there?

Typically innovation sessions have reward(s) planned at certain stages when either a team or individual completes some milestone or is perceived to be a large contributor of ideas.  Why? Well, many (if not all) of us at some time or another received an incentive to complete a task.  Therefore, it is only logical that everyone will be motivated to be innovative if there was a reward, right?

Although there is evidence to support that rewarding certain behavior each time it is observed will increase the frequency of that behavior, this is a very general conclusion and does not take into account peoples internal thoughts about themselves, their self-perspective, and motivation to behave in a certain way.  Generally, motivation can be either intrinsic or extrinsic.  Intrinsic motivations are those that arise from within – doing something because you want to – while extrinsic motivations mean people are seeking a reward, such as money, a good grade in class, or a trophy at a sporting event[1].  According to self-perception theory (SPT), replacing intrinsic motivation with extrinsic motivation may actually make people enjoy the activity less or loose interest altogether.  This is due to what has been termed the overjustification effect, which results when people begin to view their behavior as being caused by rewards instead of realizing the extent intrinsic motivation actually played.  Psychologist Daryl Bem, developer of SPT, conducted an experiment where subjects listened to a tape of a man enthusiastically describing a tedious peg-turning task.  Some of the subjects were informed the man was paid $20 for his testimonial while another group was told he was paid $1.  Those who were in the group informed that the man was only paid $1 felt as though he must have thoroughly enjoyed the task.  This is in contrast with the other group who felt the exact opposite.

Considering motivation from the Industrial-Organizational (I-O) Psychology approach, it becomes something a bit complex, but at the same time provides some valuable insight into how we can motivate and engage more employees in innovation – which is the ultimate goal for the Osmotic Innovator.  Maslows Hierarchy of Needs essentially states we have different levels of needs that must be sequentially fulfilled before we can reach self actualization (the desire of a person to develop their capacities to the fullest).  Although this has become the most popular way to think about motivation, there has been little research performed to test this theory, and the research that has been performed is not completely supportive.  There soon emerged a new approach to understand motivation and with this came Vrooms VIE Theory which was placed into a new category termed “Person-As-Godlike: The Scientist Model”.  Using Maslows Hierarchy of Needs as a base, VIE (Valence, Instrumentality, Expectancy) theory provides a definition for each component.  Valence identifies how psychological objects in an environment have an attracting and repelling force.  For example, most would find money attracting and uninteresting work as repelling.  Instrumentality deals with the relationship between performance and expected outcomes.  An example provided by Frank J. Landy and Jeffrey M. Conte is that of a promotion.  Usually a promotion means a higher salary and more prestige, but it may also include more responsibility and longer hours.  Once a person is aware of these instrumentalities (essentially Pros and Cons), they can better decide which outcome is better.  Lastly, expectancy is defined through this theory as the individuals belief that increased effort leads to successful performance.

Now that we have explored all the technical theories and provided a bit more information from Psychology, what does it mean for the Osmotic Innovator? Excluding the unexplored link between emotion and motivation, we can extrapolate the following:

  1. Inform employees what benefits may arise from their increased innovation.  Explain how things like increased company exposure and the ability to work on their own project all may stem from an increasingly innovative environment.
  2. Let employees know what an expected outcome would be from an action they begin to perform.  In other words, have them consider how increased thinking and participation in innovative programs may ultimately lead to things they want – directly or indirectly (e.g. bonuses, opportunities for promotion, etc)
  3. Provide small incremental incentives during innovation sessions to those who are perceived to be completely unmotivated.  It has been shown that providing incentives to those who completely lack the intrinsic motivation for something can not hurt – it can only potentially help for the duration of the event.
  4. Know your audience.  Begin to meet with those who seem to be lacking motivation and talk to them.  You will be amazed at what information you can gain and leverage to get them motivated.  Highlight how any contributions they make toward promoting a better innovative environment is valued.  Maybe even make them in charge of proposing (and possibly implementing) how a more innovative and positive work environment can be accomplished.

These are just a few suggestions that can be quickly and easily tried by any organization.  Remember, motivation is a complex topic and there is really no “one size fits all” approach.  Even today, there are debates within the Psychology community regarding the validity of some motivational theories.  Hopefully by implementing some of the suggestions above (and maybe even coming up with a few of your own), the innovative culture can begin to become infectious and slowly have a positive effect on everyone around.


Levy, Paul E.  Industrial Organizational Psychology.  3rd Ed. New York: Worth Publishers, 2009.

Landy, F. J. & Conte, M. Work in the 21st Century: An Introduction to Industrial and Organizational Psychology.  2nd Ed. Malden, Ma.: Blackwell Publishing, 2007.

Aronson, Elliot, Timothy D. Wilson, and Robin M. Akert.  Social Psychology.  7th Ed. NJ: Prentice Hall, 2010.

Myers, David G. Social Psychology.  10th Ed. McGraw Hill, 2009

Aronson, Elliot.  The Social Animal.  10th Ed. New York: Worth Publishers, 2008.