Start-ups are potentially major disruptors, providing innovative products and services. Their success might grow them into larger, more bureaucratic companies. More likely to favor moderate, incremental innovation over riskier but potentially groundbreaking work. What to do to avoid the shift from truly innovative to incrementally so?
In an agile environment, the aim is to create circumstances to accelerate creativity and innovative behavior. Often, growing the organization’s innovation capability is perceived from a cultural point of view. Cultural change as key for driving innovation. But what about structural change?
I came across an interesting article in Harvard Business Review on this. The Innovation Equation by Safi Bahcall. According to him, the good news is that key elements of an organization can be managed to foster more-innovative teams even as companies increase in size. Bahcall lists several parameters to enhance innovation. When reflecting on the organizations I worked for, three structural focus areas stand out for me:
- Celebrate results, not rank;
- Invest in your employees;
- Review the governance structure.
Celebrate results, not rank
People need to be incentivized to move their projects forward. Not themselves. So, take a look at the way salary growth is built up in your organization. Like Bahcall states, if every promotion comes with a whopping 200% increase in salary, people will be busy with politics instead of their project. Low salary step-up rates encourage people to invest that particular hour on their project, not on politicking. Next to this, celebrating project results rather than ranks means changing compensation practices like the regular bonuses or luxury team trips.
Invest in your employees
A massive body of research has shown that different people are motivated by different things. To some, tangible financial rewards are important. To others personal growth or the desire to help others are essential. Organizations should identify and use all means at their disposal to increase employees’ stakes in the success of their projects.
Next to this investing in training employees is critical. Even more, applying newly learned skills is imperative to boost innovation. Training encourages employees to spend more time on projects, which reduces time spent on lobbying and networking, according to Bahcall.
Review the governance structure
A topic in itself in organisational literature: what is the best management span? According to Bahcall wider spans and looser controls are better for experimenting and developing loonshots and new technologies. If your organization’s focus is on growing operational excellence and low error rates, a narrow span is a better fit.
This listing of focus areas implicitly points out there is no one-size-fits-all approach. It is important to review your organization’s goals and context. From there, you can decide which capability to improve and which paramaters to intervene in. Like Bahcall states: Culture still matters, […] but it’s time to pay a little more attention to structure.
Read the entire article ‘The Innovation Equaton’ of Safi Bahcall on HBR.org.
Essence of Change 