Digital disruption: How to create a culture of innovation in your organisation
If digital disruption is the new normal, then all organisations must be open to ideas that can challenge them and maybe change their business models for the better. Such openness means executives need to find ways to support the green shoots of novel thinking across the business. So, what's the best way to create a culture of innovation? Four experts give their best-practice advice.
1. Create informal rules to help drive effective behaviour
Professor Feng Li, who is head of technology and innovation management at Cass Business School, recognises the sense of excitement around digital transformation. His research suggests businesses have access to more ideas than ever before. But that doesn't mean all executives are able to take advantage of these opportunities.
In fact, Feng says hype surrounding the need for transformation is often louder than the clamour for idea generation. "Digital is everywhere but fatigue is setting in and people are fed up with everyone talking about disruption and change," he says.
"If you look at your firm's ideas, most will be useless. People almost always underestimate the scale of the impact -- the reality is that once you notice something happening in your area, it's probably too late to do something about it. Be proactive, because incremental change can create a huge competitive advantage."
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The joined-up approach to innovation appeals to Feng, who says integrated thinking is the key to success. His school's research alongside technology firm VMware suggests there is often a gap between innovation and execution. Feng encourages business chiefs to avoiding thinking in isolation and to support successful strategies.
"Leaders have to want to embrace risk taking and innovation," he says. "Success there is about the personality of a business, and changing that is tough. Translating rules into behaviour requires a set of unwritten rules. You can have policies and strategies but these will turn into informal rules -- and unless you understand these informal rules, you won't be able to execute innovation."
2. Develop a collaborative mentoring network
Kevin O'Connor, managing director and head of private equity at finance specialist IHS Markit, also notes the significance of repeatable behaviour. He says while innovation is often presented as the end goal, it is better seen as a muscle or a skill: the more your practice, the better you become.
"Innovation should become a day-to-day element of who you are," he says. "Once you get into a can-do mind set, and innovation starts to feel good, you start to develop confidence. You then realise it's OK to try things and make mistakes, and the business starts to create a culture of innovation."
O'Connor says the firm has acquired many pioneering startups, where the entrepreneurs remain part of the wider company. That retained knowledge meant that when he had an idea, O'Connor could seek out mentors who had been on a similar journey beforehand.
This supporting organisational culture provided guidance, structure and control through an informal mentoring network. O'Connor says that "mini Silicon Valley effect", where you have a critical mass of people who care and collaborate, is when you start making stuff happen.
"An idea in isolation is a seed in concrete -- it can't take root. Idea generation is just part of the problem. You need the framework and culture to prove that thinking creatively can produce great results," he says.
3. Give praise where praise is due
Gideon Kay, CIO at advertising specialist Dentsu Aegis, believes in prominent reward and recognition programmes. People who come up with creative solutions should be praised openly to promote an ethos of innovation within an organisation.
"Good CEOs bring the person who came up with the idea on stage and showcase the individual -- they talk about the great culture of innovation they've created," he says, outlining how Dentsu Aegis runs award ceremonies for creative employees at its annual conference. The approach provides benefits for the worker and the chief executive.
"In a global organisation like ours, creating an internal culture of healthy competition around innovation brings forward ideas that can be useful," says Kay. "People should get to talk about what they've achieved because its helps drive a view that innovation is not only encouraged but is positive and you can receive rewards for it."
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Showcasing successful innovation breeds confidence around the rest of the organisation, says Kay. "Our industry is all about the showcasing of work -- getting on stage and presenting your ideas is a key part of the job. That works at a micro-scale, too," he says.
"For us, as an organisation that must innovate on behalf of our clients, peer-level recognition and the building of internal competition between markets within our global business is a virtuous circle. But remember that many ideas will only work for a client in a specific location. If you try and spread innovation globally, it can fail. Be mature enough to stand back and recognise where innovation won't scale."
4. Link creative solutions back to the heart of the business
As head of innovation at Royal Bank of Scotland (RBS), Kevin Hanley works across the various units of the group to find creative solutions to business challenges. He has two roles: the first is to create the climate for change and a sense of urgency within RBS; the second is to find answers to the questions he provokes around the business.
His work leads him to conclude that digital innovation is never the sole responsibility of the CIO. Of the 40 projects in the bank's current innovation portfolio, about 75 per cent started with a business conversation. "You have to take a technological idea and talk with the business about why this idea might be important," says Hanley.
"You need to embed change within the heart of the organisation to drive change. If you do that badly, that's a potential pain point, but done correctly, it's great. You must think about where innovation sits in relation to the core -- far enough away to innovate but close enough to avoid the tissue rejection moment."
Hanley is helping his business pursue creative solutions in a range of key areas, including blockchain and security. He says the pace of change creates significant challenges for traditional firms, like banks. As more advanced technology is placed in the hands of customers, so they become increasingly expectant in terms of the applications they use and their digital experiences. Executives must respond rapidly.
"Customers want deep personalisation and instant gratification, with services tailored to their requirements that can help transform their lives," says Hanley. "That all helps create change and disruption -- and traditional industrial boundaries will continue to blur."
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