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Les McKeown's Predictable Success Blog

First published April 14, 2013

How to be a highly innovative organization 

A version of this article first appeared at Inc.com. How to Be a Highly Innovative OrganizationWatch most organizations operate and you’ll find that innovation, if it exists at all, typically emerges from one of three sources: First, from either the founder/owner (if it’s a small business), or (if it’s a larger enterprise) from small, informal groups of senior executives – usually just two or three people – who spark ideas off each other. Secondly, from similarly small and informal groups of engaged, front-line employees who grapple with and solve, ad-hoc, problems on the fly. Thirdly, from formal project teams which are specifically convened and mandated to work on a specific problem or issue. You’d expect, therefore, that truly outstanding organizations – those that innovate consistently and at a high level, like, say, Apple, Disney, Nike or Valve – got that way by increasing those three innovation sources over time (developing more groups of ‘sparking’ executives; encouraging more collaboration amongst front line employees; convening more formal teams). Interestingly, in most cases that’s not so. More often than not, the highly-innovative organization got that way not by iterating its innovative capabilities one step at a time, one employee at a time, one group or team at a time, but rather by instilling an all-pervasive, enterprise-wide culture of innovation – by making a presumption of innovation the norm throughout the organization, from top to bottom. Any organization can make this change. Moving away from anxiously identifying and encouraging those singular sparks of innovation that occur in isolated parts of your organization, to building an enterprise that lives, eats, sleeps and breathes innovation as a natural part of its day-to-day activities is something any committed leader can achieve. Here are three key areas to begin the process of transformation: 1. Default to cross-functional teams. In the occasionally innovative organization, most opportunities, issues, problems or challenges are addressed, by default, on an individual or silo-ed basis. In other words, the person who ‘owns’ the challenge or opportunity is expected to ‘solve’ it, and he or she typically does so either by themselves or by pulling in people from their own team to help. In consistently innovative organizations, the default approach to material opportunities, issues, problems or challenges is to hand them over to a cross-functional team – one that straddles silos and brings a much wider problem-solving perspective. (Note that highly innovative organizations also know how to prevent those cross-functional teams from bogging down the enterprise by staying short-lived, flexible and responsive, but that’s for another post.) 2. Use enterprise-wide post-mortems. Merely average organizations rarely analyze their past performance in any meaningful way, and if they do, it’s usually only after something has gone seriously wrong. Mimic the consistently innovative organization: when any substantive project or initiative is concluded, take time to learn lessons from how it was executed – whether or not the project was successful. As any good sports coach will tell you, there is as much to learn from how you succeeded as there is in uncovering why you failed. Again, use people from throughout the organization to conduct the post-mortem – including, most importantly, some folks who had nothing whatsoever to do with the project (they’ll provide the most objective feedback). 3. Combine 360s with rounded performance assessments. The single most striking thing I find when working with truly innovative organizations is how comfortable their people are with giving honest, unbiased, zero-agenda feedback to each other – and how good they are at it. And how often, and how naturally they do it. In the average organization, feedback is a rare bird and, when it is given, it’s usually done with hesitancy, a presumption of ulterior or ill motive, or (again) only after something has gone wrong. Building a strong, active feedback ‘muscle’ in your organization is as strong a competitive advantage as a low cost base or a technological breakthrough – but it does require work. Start using 360-degree assessments, administered by a skilled and sensitive provider. The first go-round will be awkward and may not yield that much by way of useable information, but subsequent uses will get better and easier as everyone relaxes and understands that the information they provide isn’t being used against them, but rather to improve how the organization operates. Build out your performance assessment process to encompass team- and group-based assessments, not just one-on-ones. Model the process by inviting all your direct reports to get involved in your own performance appraisal. And – one last time – make sure the performance assessment process encompasses success as well as under-achievement. Taking these three steps won’t make your company a Nike or a Valve overnight, but it will begin the most important transformation your organization will ever undergo.

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