Guest post by Kris Oestergaard:
Today, every business is looking to find ways to streamline its innovative abilities. Those successful in establishing a culture of innovation have addressed their organization’s “immune systems.” Just as the body’s immune system keeps it healthy, stable and tolerant of change, an organization’s immune system must be strong in order to handle the task of innovating.
But in a rapidly changing world, many of the defense mechanisms organizations utilize are no longer appropriate — and can even put organizations’ innovation at risk. Too often, when innovation processes fall short, top managers make the impulsive diagnosis that it’s because their people are simply unwilling to change. This assumption is pervasive: A recent study revealed that 76 percent of managers believed their organizations didn’t have the capabilities needed to move into the future.
But this conclusion is inexact. Every organization’s immune system is affected by an individual immune system, an organizational immune system and asocietal immune system. Organizational leaders need to address all three in order to transform into innovation champions.
1. Understanding individual’s resistance to change. Humans have different risk profiles. Some are thrill-seekers while others avoid exposure to risk at all costs. Knowing this, management needs to make a very compelling case if it wants to convince its staff to join in the organization’s innovation journey. Otherwise, the individual immune system kicks in and those with a low tolerance for risk, reluctant to change if the outcome is uncertain, won’t get on board.
2. Assessing your organizational immune system. Transformation processes demand risk taking, the development of new staff capabilities and a strong focus on innovation. But very often, organizations attempt to kickstart a large transformation process without adapting their policies for measuring and rewarding employee behavior to the new reality they have set out to create. Key performance indicators (KPIs) and rewards systems make up a large part of the organizational immune system. Unless these are aligned with the organization’s strategic long-term goals, they aren’t supporting the motivation and attitudes needed to drive innovation efforts.
Grundfos, the Danish water pump manufacturer, is among the legacy organizations that have intentionally restructured their rewards systems to boost innovation. Grundfos evaluates employees on new parameters, including a willingness to help others and motivation to undertake a new digitization journey. Another example is Microsoft, which now includes sharing and building on the knowledge of others among its KPIs. These performance indicators help employees become aware of and work in a way that builds the desired innovation culture of the organization.
3. Taking the temperature of the societal immune system.Organizational innovation efforts are subject to changes in the societal immune system as well. These can take the form of legislative inaction in regulating new industries. Consider Uber’s entry into the ride-hailing world, pushing the regulated taxi companies to the sidelines. Or, look at how the cryptocurrency Bitcoin has disrupted the regulated banking industry. Legislation can also serve to established industries by keeping new players out of the market and limiting innovation. But new business models can also seek out places where restrictions don’t apply.
Longtime suppliers and customers represent another subset of the societal immune system. Both need ongoing education and encouragement to keep them well informed of and up to date on any new directions and developments you create. For example, helping clients stay up to speed with technological upgrades of products is critical to maintaining the organization’s market share.
It’s essential to understand the influence that individual, organizational and societal immune systems have on increasing an organization’s innovation capacity. Business leaders need to analyze and address each of the three immune systems to create the best possible foundation for their innovation strategy.
Kris Oestergaard is a sought after speaker, facilitator, researcher and expert on innovation in legacy organizations, corporate cultures and exponential organizations. He is co-founder and Chief Learning and Innovation Officer at SingularityU Nordic, a collaborative venture with Singularity University in Silicon Valley. His new book is Transforming Legacy Organizations: Turn Your Established Business into an Innovation Champion to Win the Future (Wiley, June 10, 2019). Learn more at krisoestergaard.com.