1

A c

orpo

rate

cul

ture

for

inno

vatio

n. W

hat i

s it

anyw

ay?

Man

agem

ent P

ract

ices

Whi

ch S

uppo

rt or

Det

ract

from

a C

orpo

rate

Cul

ture

for I

nnov

atio

n.

Oct

ober

, 200

9.

2

Inde

x

!In

trodu

ctio

n!

Inno

vatio

n -T

ypic

al P

roce

ss!

Get

ting

the

Cul

ture

Rig

ht fo

r Inn

ovat

ion

!W

hy b

othe

r?!

The

4 B

uild

ing

Blo

cs o

f Cor

pora

te C

ultu

re!

Sust

aini

ng In

nova

tion

�So

me

Thou

ghts

!R

efer

ence

Sou

rces

-Inn

ovat

ive

Com

pani

es in

Orig

inal

Sur

vey

-Inn

ovat

ive

Com

pani

es M

ost R

ecen

tly R

evie

wed

- The

Tw

enty

Fiv

e In

nova

tion

Fact

ors t

hat C

an b

e us

ed to

cal

ibra

tein

nova

tiven

ess.

Intr

oduct

ion

3

The

Sou

rces

of a

Cor

pora

te C

ultu

re!

Foun

der�

(s);

inst

ill, f

rom

the

very

beg

inni

ng, a

cul

ture

whi

ch h

as a

pr

ofou

nd a

nd lo

ng-la

stin

g af

fect

on

the

corp

orat

ion.

!

Lead

ers;

ove

r suc

cess

ive

gene

ratio

ns m

ay b

uild

on

and

mod

ify th

e cu

lture

by

thei

r act

ions

but

wha

t is c

hang

ed li

fts o

ff a

bas

e es

tabl

ishe

d by

the

foun

ders

.!

Peop

le; a

lead

er o

r an

outs

tand

ing

pers

on o

r a g

roup

can

hav

e a

prof

ound

effe

ct o

n th

e cu

lture

.!

Folk

lore

; sto

ries w

hich

are

usu

ally

supp

ortiv

e of

the

corp

orat

ion

can

grow

with

tim

e, th

us a

ddin

g ev

en m

ore

to th

e be

lief t

hat t

here

is

a c

ultu

re u

niqu

e to

the

corp

orat

ion.

!Su

cces

ses;

succ

esse

s and

failu

res h

ave

a w

ay o

f wre

nchi

ng th

e cu

lture

and

pro

vidi

ng e

ven

furth

er d

efin

ition

. **

****

****

****

****

****

****

****

****

****

****

****

****

**T

!Th

e �C

ultu

re� o

f a C

orpo

ratio

n R

esul

ts fr

om a

Var

iety

of S

ourc

es�

Thus

Mak

ing

Each

Cor

pora

tion�

s Cul

ture

Uni

que.

Intr

oduct

ion

4

Is th

ere

a cu

lture

�a

set o

f man

agem

ent p

ract

ices

and

be

liefs

whi

ch im

pact

cor

pora

te in

nova

tion?

You

bet

!

!So

me

corp

orat

ions

hav

e it,

som

e do

not

.!

With

out a

cul

ture

ther

e is

pro

babl

y no

inno

vatio

n.!

Som

etim

es it

is v

ery

diffi

cult

to d

escr

ibe

a cu

lture

.!

If y

ou h

ave

it, y

ou k

now

you

hav

e it.

If y

ou d

on�t

have

a c

ultu

re,

then

you

don

�t kn

ow w

hat�s

mis

sing

!!

In so

me

case

s a c

orpo

ratio

n�s c

ultu

re c

an b

e se

en to

be

diffe

rent

fr

om in

side

and

out

side

the

orga

niza

tion.

Eve

n di

ffer

ent g

roup

s w

ithin

a c

orpo

ratio

n ca

n ha

ve d

issi

mila

r vie

ws.

!K

now

ing

your

cor

pora

te c

ultu

re �

as b

est y

ou c

an �

is th

e ob

viou

s sta

rting

poi

nt.

****

****

****

****

****

****

****

****

****

****

****

***

!M

anag

emen

t pra

ctic

es im

pact

inno

vativ

enes

s!

Intr

oduct

ion

5

Wha

t do

we

mea

n by

inno

vatio

n?

!Th

e co

ncep

tion

of a

goo

d id

ea.

!In

nova

tion

mea

ns in

trodu

cing

som

ethi

ng n

ew, b

ut in

our

de

finiti

on, n

ot ju

st a

nyth

ing

new

.!

Inno

vatio

n m

eans

taki

ng a

risk

by

inve

stin

g tim

e, m

oney

and

ef

fort

in m

akin

g so

met

hing

hap

pen

that

is si

gnifi

cant

. !

Inno

vatio

n is

abo

ut b

oth

�bre

akth

roug

hs� a

nd a

lso

crea

ting

a di

ffere

nce

such

as;

-dev

elop

ing

a ne

w p

rodu

ct a

nd m

akin

g it

com

mer

cial

ly

succ

essf

ul-a

dopt

ing

a ne

w b

usin

ess m

odel

or s

trate

gic

thru

st-a

cqui

ring

or d

evel

opin

g a

new

pro

cess

tech

nolo

gy n

ot p

revi

ousl

ypa

tent

ed.

!So

met

hing

use

ful.

****

****

****

****

****

****

****

****

****

****

****

****

****

*!

The

corp

orat

ion�

s cul

ture

; it�s

bel

iefs

, it�s

val

ues,

it�s

way

of d

oing

bu

sine

ss, c

an fa

cilit

ate

and

enco

urag

e or

det

ract

from

inno

vatio

n .

Innov

atio

n P

roce

ss -

Typ

ical

6

Inno

vatio

n Pr

oces

s -T

ypic

al

Innov

atio

n P

roce

ss -

Typ

ical

7

Inno

vatio

n ha

s 3 d

istin

ct p

hase

s. D

iffer

ent

issu

es a

rise

at e

ach

phas

e

Inve

ntio

nIn

cuba

tion

Intr

oduc

tion

New

op

port

uniti

es

are

diffi

cult

to

unco

ver

Onc

e un

cove

red,

th

ey a

re ra

rely

sei

zed

Onc

e se

ized

, th

ey a

re n

ot

fully

im

plem

ente

d

Innov

atio

n P

roce

ss -

Typ

ical

8

Inve

ntio

nIn

cuba

tion

Intr

oduc

tion

Inno

vativ

e co

mpa

nies

man

age

each

pha

se so

as

to c

reat

e an

ent

erpr

isin

g cu

lture

. The

y;

stim

ulat

e th

e se

arch

fo

r ide

as

activ

ate

enab

ling

mec

hani

sms

sust

ain

and

rew

ard

inno

vato

rs

Innov

atio

n P

roce

ss -

Typ

ical

9

Inve

ntio

nIn

cuba

tion

Intr

oduc

tion

Prov

ide

visi

on

and

lead

ersh

ip

Enco

urag

e id

ea

gene

ratio

n

Man

age

the

sear

ch p

roce

ss

Empo

wer

key

pe

rson

nel

Com

mit

reso

urce

s

Nur

ture

pro

ject

s

Set u

p th

e or

gani

zatio

n

Laun

ch a

nd

mon

itor

Mot

ivat

e an

d re

war

d

Man

agem

ent p

ract

ices

aff

ect t

he

inno

vativ

e cu

lture

at e

ach

phas

e.

Get

ting t

he

culture

rig

ht

for

innov

atio

n10

Wha

t it t

akes

to g

et th

e co

rpor

ate

cultu

re r

ight

.

!C

ultu

re is

not

abo

ut th

e co

rpor

atio

n ge

tting

onl

y on

e th

ing

right

.

!C

ultu

re is

not

�clim

ate�

unl

ess y

ou w

ant t

he w

eath

er to

cha

nge

unpr

edic

tabl

y!

!C

ultu

re is

mul

ti-di

men

sion

al. A

num

ber o

f �th

ings

� hav

e to

be

wor

king

pro

perly

to h

ave

a cu

lture

whi

ch su

ppor

ts in

nova

tion.

!U

nder

stan

ding

the

cultu

re o

f a c

orpo

ratio

n is

com

plex

.

!So

me,

but

not

all,

asp

ects

of c

ultu

re c

an b

e ca

libra

ted.

Get

ting t

he

culture

rig

ht

for

innov

atio

n11

Stru

ctur

ing

the

corp

orat

ion

for

inno

vatio

n

!Th

ere

are

man

y op

tions

whe

n it

com

es to

tryi

ng to

bec

ome

mor

e in

nova

tive.

Whi

ch o

nes t

o ch

oose

or n

ot to

cho

ose

is tr

icky

.

!Th

e w

orst

cho

ice

is p

roba

bly

to d

o no

thin

g an

d to

let i

nnov

atio

nta

ke it

s ow

n co

urse

. Ado

ptin

g a

�lais

sey-

faire

� app

roac

h is

pro

babl

y a

dere

lictio

n of

dut

y an

d re

spon

sibi

lity.

!Si

nce

ther

e ar

e so

man

y ac

tions

to ta

ke a

nd d

irect

ions

to fo

llow

to

impr

ove

inno

vativ

enes

s, th

ere

is a

nee

d to

hav

e as

muc

h da

ta a

s one

ca

n on

such

a v

ague

topi

c .

!Th

e ap

proa

ch p

rese

nted

her

e is

a st

ruct

ured

app

roac

h to

impr

ovin

g th

e in

nova

tive

cultu

re in

an

orga

niza

tion.

Get

ting t

he

culture

rig

ht

for

innov

atio

n12

How

do

you

fix th

e cu

lture

�if

it is

in n

eed

of

fixin

g? E

xam

ples

onl

y �

whi

ch to

cho

ose

is c

ritic

al.

!St

ayin

g cl

ose

to y

our e

mpl

oyee

s!

Bui

ldin

g a

dive

rse

tale

nt b

ase

�m

ulti-

skill

ing

!Em

pow

erin

g ch

ampi

ons

!H

ire �m

aver

icks

�!

Rot

ate

empl

oyee

s!

Use

ded

icat

ed w

ork

grou

ps!

Rec

ogni

zing

the

time

elem

ent i

n in

nova

tion

!C

reat

ing

a co

nduc

ive

wor

k en

viro

nmen

t!

Ensu

ring

nece

ssar

y in

form

atio

n in

wid

ely

avai

labl

e**

****

****

****

****

****

****

****

****

****

****

***

By

mak

ing

use

of c

aref

ully

-sel

ecte

d en

ablin

g m

echa

nism

s.

Why

bot

her

?13

An

exam

inat

ion*

of m

any

corp

orat

ions

dee

med

to

be

inno

vativ

e re

veal

ed th

at;

!th

ere

is a

stro

ng c

orre

latio

n am

ong:

-inn

ovat

iven

ess,

-val

ue a

s a lo

ng-te

rm in

vest

men

t, -a

bilit

y to

attr

act a

nd k

eep

tale

nted

peo

ple,

-qua

lity

of m

anag

emen

t,

!an

d th

at in

nova

tive

com

pani

es d

o a

very

goo

d jo

b at

man

agin

g;

-peo

ple

and

inte

ract

ions

, -t

ime,

-s

pace

, -a

nd fl

ow o

f inf

orm

atio

n.

*Bas

ed o

n re

sear

ch c

ondu

cted

by

Arth

ur D

. Litt

le In

c. a

nd W

hite

& P

artn

ers

Ltd.

Why

bot

her

?14

Why

spen

d th

e tim

e to

lear

n ab

out y

our

corp

orat

e cu

lture

?

!In

nova

tion

take

s pla

ce in

a c

orpo

ratio

n fo

r man

y re

ason

s.

!Th

e 4

key

elem

ents

whi

ch le

ad to

a su

ppor

tive

cultu

re a

re;

-a p

eopl

e-or

ient

ed m

anag

emen

t sys

tem

,

-a fa

culty

to e

ncou

rage

and

man

age

idea

s

-the

fun

part

of c

orpo

rate

life

-the

�mus

t-hav

es� [

a se

t of p

re-r

equi

site

s] si

nce

with

out t

hese

at

tribu

tes l

ittle

of n

o in

nova

tion

is e

ver l

ikel

y to

take

pla

ce.M

ore

late

r!**

****

****

****

****

****

****

****

****

****

****

****

****

****

***

Inno

vativ

enes

s, in

nova

tion,

can

be

man

aged

�in

part�

by

putti

ng th

e rig

ht �b

locs

� in

plac

e an

d ch

oosin

g th

e ap

prop

riate

Fac

tors

for

taki

ng in

itiat

ives

.

The

4 B

uild

ing B

locs

of

Cor

por

ate

Culture

15

The

4 B

uild

ing

Blo

cs o

f Cor

pora

te C

ultu

re

!Th

e M

ust-H

aves

!A

Peo

ple-

Orie

nted

Man

agem

ent S

yste

m

!A

Fac

ulty

to E

ncou

rage

and

Man

age

Idea

s

!Th

e Fu

n Pa

rt of

Cor

pora

te L

ife

The

4 B

uild

ing B

locs

of

Cor

por

ate

Culture

16

The

Mus

t Hav

es. W

ithou

t the

se a

ttri

bute

s litt

le o

r no

inno

vatio

nw

ill e

ver

take

pl

ace.

�a le

ader

who

agg

ress

ivel

y se

eks i

nnov

atio

n; #

2

�man

agem

ent w

ho d

emon

stra

te a

tole

ranc

e fo

r fai

lure

; #5

�man

agem

ent a

nd a

supp

ortiv

e B

oard

of D

irect

ors w

ho lo

ok a

t lea

stat

the

�mid

-term

� hor

izon

, not

alw

ays s

hort-

term

, nor

cer

tain

ly n

ot lo

okin

g to

the

quar

ter f

or fi

nanc

ial r

esul

ts; #

1

�a c

orpo

rate

focu

s on

iden

tifyi

ng o

ppor

tuni

ties;

#4,

#19

�inve

stm

ent i

n R

&D

or f

or th

e ad

optio

n of

new

tech

nolo

gies

ear

ly in

thei

r de

velo

pmen

t; #2

3

The

4 B

uild

ing

Blo

cs o

f Cor

pora

te C

ultu

re.

Blo

c #1

.N

umbe

rs r

efer

to F

acto

rs u

sed

to d

escr

ibe

a co

rpor

ate

cultu

re.

The

4 B

uild

ing B

locs

of

Cor

por

ate

Culture

17

A P

eopl

e-O

rien

ted

Man

agem

ent S

yste

m #

6

�see

king

ope

nnes

s and

tran

spar

ency

; #13

�hav

ing

an a

ppro

pria

te le

vel o

f inf

orm

ality

; #13

�see

king

par

ticip

atio

n; #

12, #

20

�max

imiz

ing

dele

gatio

n w

ith a

ccou

ntab

ility

and

resp

onsi

bilit

y; #

18

�enc

oura

ging

info

rmal

com

mun

icat

ion;

#10

�use

of i

ndep

ende

nt w

ork

grou

ps; #

11

The

4 B

uild

ing

Blo

cs o

f Cor

pora

te C

ultu

re.

Blo

c #2

. N

umbe

rs r

efer

to F

acto

rs u

sed

to d

escr

ibe

a co

rpor

ate

cultu

re.

The

4 B

uild

ing B

locs

of

Cor

por

ate

Culture

18

A F

acul

ty to

Enc

oura

ge a

nd M

anag

e Id

eas

�ena

blin

g re

sour

ces f

or n

ew o

ppor

tuni

ties;

#19

�a to

lera

nce

for i

ndiv

idua

l ris

k ta

king

; #5

�hav

ing

an a

ccep

tabl

e ris

k pr

ofile

for n

ew in

vest

men

ts; #

9

�pla

nnin

g bu

t with

targ

ets e

stab

lishe

d fo

r inn

ovat

ion;

#15

The

4 B

uild

ing

Blo

cs o

f Cor

pora

te C

ultu

re.

Blo

c #3

. N

umbe

rs r

efer

to F

acto

rs u

sed

to d

escr

ibe

a co

rpor

ate

cultu

re.

The

4 B

uild

ing B

locs

of

Cor

por

ate

Culture

19

The

4 B

uild

ing

Blo

cs o

f Cor

pora

te C

ultu

re.

Blo

c #4

. N

umbe

rs r

efer

to F

acto

rs u

sed

to d

escr

ibe

a co

rpor

ate

cultu

re.

The

Fun

Par

t of C

orpo

rate

Life

�a to

lera

nce

for m

aver

icks

; #3

�an

attit

ude

whi

ch e

ncou

rage

s loy

alty

; #17

�enc

oura

ging

diff

eren

ces f

rom

the

corp

orat

e no

rm; #

8

�hav

ing

rew

ards

for i

nnov

ator

s; #

7, #

14

Sust

ainin

g I

nnov

atio

n20

Sust

aini

ng In

nova

tion

!Su

stai

ning

supe

rior p

erfo

rman

ce m

eans

hav

ing

a cu

lture

that

fo

ster

s and

rew

ards

inno

vatio

ns.

!A

facu

lty w

hich

man

ages

inno

vativ

enes

s.

!Fi

ndin

g a

star

ting

poin

t for

act

ion?

-Cal

ibra

ting

and

fixin

g th

e cu

lture

bas

ed o

n an

ass

essm

ent o

f the

cu

rren

t situ

atio

n.

-Fix

ing

the

idea

gen

erat

ing

syst

em?

Sust

ainin

g I

nnov

atio

n21

Sust

aini

ng In

nova

tion

�So

me

thou

ghts

!M

otiv

ate

and

rew

ard

inno

vato

rs!

Mea

surin

g re

sults

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trust

pow

er to

the

appr

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te p

eopl

e!

Prov

ide

exte

nsiv

e tra

inin

g!

Tole

rate

failu

re!

Shie

ld v

entu

res a

nd in

nova

tors

!B

ase

pay/

annu

al ra

ises

not

nec

essa

rily

ince

ntiv

es. L

ook

at v

ario

us ty

pes o

f com

pens

atio

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Prov

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adva

nce

com

pens

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mile

ston

es!

Emph

asiz

e pe

rson

al re

cogn

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!R

ewar

d w

ith a

dditi

onal

resp

onsi

bilit

y an

d pr

ojec

ts

22

Ref

eren

ce S

ourc

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23

Inno

vativ

e C

ompa

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�T

hose

initi

ally

su

rvey

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def

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Inno

vativ

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ctor

s

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pple

Com

pute

r!

Berg

en B

runw

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rug

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harle

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wab

(Ban

kAm

eric

a)!

Che

vron

(Orth

o D

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Oly

mpi

c O

rgan

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g C

omm

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CI

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3M!

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age

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and)

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ust

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Brom

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sch

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Sinc

lair

Res

earc

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Deb

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m�s

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nee

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f Aqu

itain

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Adv

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mic

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Mat

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ls!

Phili

ps/N

KF

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ciet

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anqu

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Cod

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sahi

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mic

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Epso

n!

Sum

itom

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ectri

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Tora

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24

Inno

vativ

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ompa

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Rev

iew

ed M

ost

Rec

ently

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octo

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Gam

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E

25

The

Tw

enty

-Fiv

e In

nova

tion

Fact

ors t

hat C

an

be u

sed

to c

alib

rate

inno

vativ

enes

s.1.

Emph

asis

on sh

ort-t

erm

vs

long

-term

pro

fits

2.Ex

tent

to w

hich

man

agem

ent e

xplic

itly

look

s fo

r inn

ovat

ion

3.To

lera

nce

of �m

aver

icks

�4.

Deg

ree

to w

hich

pla

nnin

g em

phas

izes

ratio

ning

reso

urce

s vs.

iden

tifyi

ng o

ppor

tuni

ties

5.To

lera

nce

for f

ailu

re6.

Emph

asis

on m

anag

emen

t of p

eopl

e an

d th

eir i

nter

actio

ns7.

Use

of c

aree

r lad

ders

and

reco

gniti

on o

f inn

ovat

ors

8.To

lera

nce

for v

aria

nces

from

the

corp

orat

e no

rm9.

Tole

ranc

e fo

r risk

(in

the

plan

ning

pro

cess

)10

.D

egre

e of

form

al c

omm

unic

atio

ns w

ithin

the

orga

niza

tion

11.

Use

of i

ndep

ende

nt w

ork

grou

ps fo

r spe

cial

pur

pose

s12

.D

egre

e to

whi

ch m

anag

emen

t dec

isio

ns w

ith in

put f

rom

rest

of o

rgan

izat

ion

13.

Form

ality

of d

ecis

ion

proc

ess

14.

Ava

ilabi

lity

of re

war

d m

echa

nism

s fo

r inn

ovat

ors

15.

Plan

ning

orie

ntat

ion

vsac

tion

orie

ntat

ion

16.

Atti

tude

s tow

ards

mer

ger,

acqu

isiti

on, j

oint

ven

ture

s, an

d di

vens

titur

e17

.M

anag

emen

t�s e

xpec

tatio

ns re

gard

ing

loya

lty to

the

com

pany

vsp

erso

nal d

evel

opm

ent

18.

Dec

entra

lizat

ion

vers

us c

entra

lized

hie

rarc

hy19

.A

vaila

bilit

y of

reso

urce

s (bu

dget

, per

sonn

el, t

ime,

etc

.) fo

r new

ven

ture

s20

.St

aff v

ersu

s lin

e in

volv

emen

t in

deci

sion

proc

ess

21.

Abi

lity

to re

tain

inno

vato

rs22

.Ex

tent

to w

hich

com

pany

has

an

inno

vativ

e tra

ditio

n23

.R

&D

bud

get l

evel

s ver

sus c

ompe

titio

n24

.Pe

rcep

tion

of in

nova

tion

as in

crea

sing

or d

ecre

asin

g25

.D

egre

e to

whi

ch e

mpl

oyee

org

aniz

atio

ns e

ncou

rage

inno

vatio

n