If you want an innovation culture, you have to build a trust culture

by Geoff Knott, Director Ninety Consulting

A study into The Value of Corporate Culture[1] by economics researchers at Einaudi, North Western and Chicago Universities identified 9 core values that corporates in Insurance advertise about themselves. These are; Integrity, Teamwork, Innovation, Respect, Quality, Safety, Community, Communication and Hard work.

On average, firms in a US S&P 500 sample advertise 4 out of the 9 values. Innovation is the most advertised value in the sample, appearing in 80% of the firms’ material, this is followed by Integrity and Respect (70%). Quality is stressed by 60% of firms while half of them cite Teamwork as a value.

They found, however, very little evidence that advertised values are correlated with performance. One possibility is that many of these advertised values are simply cheap talk. Since the cost of claiming values on websites is close to zero, most firms will do it, regardless of the actual set of values present in the organization.

The researchers were then able to access survey data from Great Places to Work[2] to see the actual values being exhibited within a company. Analysis of that data showed that there is a positive and statistically significant correlation between the level of managerial integrity perceived by the employees and financial performance.

A further study by Great Places to Work[3] showed that integrity (trust) and innovation go hand-in-hand in top performing companies.

It makes sense doesn’t it?

The innovation process requires considerable amounts of trust. Creative ideas are inherently more risky than incremental improvement ideas. Employees take risks by participating in the innovation process. Communicating ideas to superiors who may have a career stake is challenging. Crazy ideas could be laughed at. Managers could champion only the least risky, least creative ideas as a safe option. Ideas could be taken elsewhere for implementation by someone else. Failure could be dangerous for a career.

Talking regularly to senior corporate executives who are trying to create innovation practices and instil a culture of innovation in the large organisations they work for, they all recognise the challenge of culture change and with it, the need for integrity and building trust.

They recognise the fact that trust has to start at the top, which can be difficult given that incentives of senior staff e.g. short-term top and bottom line foci, create temptations to take short-cuts and also reduce funding for longer-term innovation efforts.

They feel that creating trust and credibility regarding innovation are essential. Starting small with one team and then scaling to more. It doesn’t take a lot of money. Funding can be metered. Going for a series of small bets to demonstrate trust, learn and establish innovation capability that’s right for the organisation. Not going for the big bang project. Transformation involves small steps that allow for learning and iteration. Once credibility and trust has been built, they can speak into and act with more authority regarding innovation.

They acknowledge that there are stages before any work on new ideas – idea collection, challenges, education, etc. Any initiatives here must, they repeat must be taken seriously. If not, any further push will not be responded to – “why should I bother?”.The trust has gone.

Having a protected innovation fund sends a strong signal of trust. As one executive said, “The resources to do new innovation in a predominately business as usual environment will always face pressure to be redirected – it is an easy cut.”

They are also very serious about protecting the champions. As one told me, “We had a person who ran through quite a series of red lights to develop a proposition that is now a very successful part of our business.” These champions have energy, personal courage, persistence but they need someone senior watching their backs – they are top people.

And not surprisingly they celebrate failure as well as success. Any innovation initiative will involve failure. Hopefully this should happen fast. Failure must be seen as an opportunity to learn and try something else.

If you are an innovation leader in a major corporate, focus on building trust, not just innovation practices and culture. Otherwise your efforts to innovate will be stifled. As you will realise, this will involve working on addressing the values being demonstrated by management across the organisation. The benefits will not just confined to innovation.

[1]http://economics.mit.edu/files/9721

[2]http://www.greatplacetowork.co.uk

[3]https://s3.amazonaws.com/media.greatplacetowork.com/pdfs/Business+Case+for+a+High-Trust+Culture_081816.pdf

by Geoff Knott, Director Ninety Consulting

A study into The Value of Corporate Culture[1] by economics researchers at Einaudi, North Western and Chicago Universities identified 9 core values that corporates in Insurance advertise about themselves. These are; Integrity, Teamwork, Innovation, Respect, Quality, Safety, Community, Communication and Hard work.

On average, firms in a US S&P 500 sample advertise 4 out of the 9 values. Innovation is the most advertised value in the sample, appearing in 80% of the firms’ material, this is followed by Integrity and Respect (70%). Quality is stressed by 60% of firms while half of them cite Teamwork as a value.

They found, however, very little evidence that advertised values are correlated with performance. One possibility is that many of these advertised values are simply cheap talk. Since the cost of claiming values on websites is close to zero, most firms will do it, regardless of the actual set of values present in the organization.

The researchers were then able to access survey data from Great Places to Work[2] to see the actual values being exhibited within a company. Analysis of that data showed that there is a positive and statistically significant correlation between the level of managerial integrity perceived by the employees and financial performance.

A further study by Great Places to Work[3] showed that integrity (trust) and innovation go hand-in-hand in top performing companies.

It makes sense doesn’t it?

The innovation process requires considerable amounts of trust. Creative ideas are inherently more risky than incremental improvement ideas. Employees take risks by participating in the innovation process. Communicating ideas to superiors who may have a career stake is challenging. Crazy ideas could be laughed at. Managers could champion only the least risky, least creative ideas as a safe option. Ideas could be taken elsewhere for implementation by someone else. Failure could be dangerous for a career.

Talking regularly to senior corporate executives who are trying to create innovation practices and instil a culture of innovation in the large organisations they work for, they all recognise the challenge of culture change and with it, the need for integrity and building trust.

They recognise the fact that trust has to start at the top, which can be difficult given that incentives of senior staff e.g. short-term top and bottom line foci, create temptations to take short-cuts and also reduce funding for longer-term innovation efforts.

They feel that creating trust and credibility regarding innovation are essential. Starting small with one team and then scaling to more. It doesn’t take a lot of money. Funding can be metered. Going for a series of small bets to demonstrate trust, learn and establish innovation capability that’s right for the organisation. Not going for the big bang project. Transformation involves small steps that allow for learning and iteration. Once credibility and trust has been built, they can speak into and act with more authority regarding innovation.

They acknowledge that there are stages before any work on new ideas – idea collection, challenges, education, etc. Any initiatives here must, they repeat must be taken seriously. If not, any further push will not be responded to – “why should I bother?”.The trust has gone.

Having a protected innovation fund sends a strong signal of trust. As one executive said, “The resources to do new innovation in a predominately business as usual environment will always face pressure to be redirected – it is an easy cut.”

They are also very serious about protecting the champions. As one told me, “We had a person who ran through quite a series of red lights to develop a proposition that is now a very successful part of our business.” These champions have energy, personal courage, persistence but they need someone senior watching their backs – they are top people.

And not surprisingly they celebrate failure as well as success. Any innovation initiative will involve failure. Hopefully this should happen fast. Failure must be seen as an opportunity to learn and try something else.

If you are an innovation leader in a major corporate, focus on building trust, not just innovation practices and culture. Otherwise your efforts to innovate will be stifled. As you will realise, this will involve working on addressing the values being demonstrated by management across the organisation. The benefits will not just confined to innovation.

[1]http://economics.mit.edu/files/9721

[2]http://www.greatplacetowork.co.uk

[3]https://s3.amazonaws.com/media.greatplacetowork.com/pdfs/Business+Case+for+a+High-Trust+Culture_081816.pdf