I came to see, in my time at IBM, that culture isn’t just one aspect of the game—it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.

Vision, strategy, marketing, financial management—any management system, in fact—can set you on the right path and carry you for a while. But no enterprise—whether in business, government, education, health care, or any area of human endeavor—will succeed over the long haul if those elements aren’t part of its DNA.”

Lou Gerstner, about his tenure as CEO for IBM

Any leader of an organization serious about innovation knows that building the right culture is the toughest nut to crack. But it’s an essential part of the change journey, if not the only.

To answer the question what it takes to build a culture of innovation, and to explore the role of leadership to become a high-performing organization, Jan Kennedy invited Michael Pacanowsky, Gareth Bullen and Cris Beswick for a virtual fire-side chat.

Fueled by a true passion for the topic, and broad experiences in the trenches, the panel distilled some vital lessons for other innovation leaders. You’ll find a summary below – here’s the recording of the webinar:

What is a high-performing culture? What’s the link to leadership?

Michael: 
First is that the organization has to be successful. If the organization doesn’t thrive, then we don’t have a high performing culture. Second, is that the individuals within the organization, have to thrive, they have to be energized, they have to be engaged, they have to feel like, their working for something that is really exciting and important and they want to go forward with that. The third is, that the system has to be sustainable. So those are the three things that I think organizational success, individual thriving, and sustainability are for me, the characteristics of the high performing organizational culture.

I think that one of the things that’s very interesting about W. L. Gore and Associates, that those were baked in form the very beginning, 55 years ago when Bill Gore founded the company. He founded it around innovation and around task-force kinds of teams.

He used to call it “organizing for opportunity”. Let’s bring people together who what to try make something happen and give them free reign to do so.

With regards to the leadership style, Bill certainly was not commander in control, he was the opposite of that. One of the things that Bill talked about a lot was the importance of people making commitments, rather than taking an order. If you take an order, if you follow an order, it’s almost always half-hearted. There’s a certain amount of resistance, you’re doing it only because somebody told you to do it.

But when you make a commitment, then you put yourself in it and you’re making the commitment because this is something that you want to do. Once people have made a commitment, then the release of energy is huge.

Gareth:
At Northern Gas Networks they got to a certain place by command and control, but they knew they couldn’t get further with that style. They had to allow the people to run their business for them. If you can use strengths and talents you have in the business to achieve one single goal, actually it’s amazing what people will achieve for you.

That does take courage. 

Somebody said to me once, “the trouble is, you’re allowing the lunatics to take over the asylum.” Quite rightly our CEO at Northern Gas Mark Horsley said, “No, we haven’t the lunatics take over the asylum, we’ve given it back to the people who know how to run this business.” I think there’s a lot of truth in that actually.

Chris:
I think one of the real strengths of some of the leaders that I’ve been fortunate enough to work with is an absolute genuine belief that they can achieve something that a lot of other people just don’t think is possible.

That is almost a really entrepreneurial trait. It’s a belief that something is possible. When you then build that with the right culture of people feeling comfortable that they can contribute, everyone will willingly create. That’s the backbone of innovation, that’s how you build a culture of innovation. That’s takes exceptional leadership.

Jan:
It seems to be about giving away power, decentralizing decision making. But you’re only going to do that if you believe in the people that you have around you.

 

So, at what level in the organization does this have to happen? Where do you start?

Gareth:
I think for it to really work first, the senior team have to be committed to this. Otherwise, actually you’re wasting your time.

Certainly, I saw that in Northern Gas Networks. You had to have commitment there, then you have hope, then you can take others with you.

The other thing we did in Northern Gas Networks, was we built a community of the willing.

They could anywhere in the business. Once we secured that senior management team, then the willing came in, with the attitude and behaviors and the will and excitement.

Michael: 
There is this notion in many places where the CEO can go all gung-ho about it, but if it the energy doesn’t get through the middle managers, then it can be blocked. I’ve also seen situations where maybe the people at the top aren’t in favor of such a transformation, but there’s someone, three levels down who thinks this is a good idea and he can provide enough cover for some of his direct reports to try some experiments, to do something.

And you can get at least pockets of innovation taking place within the organization.

So, this is where I think that the combination of leadership and culture is so important. If you could build that culture that everybody gets behind, then I think you’ve got a much greater chance than if you’ve got an excited CEO or an excited middle manager, or an excited product development team. When everybody comes together, that’s where you’ll really get the leverage and I think that’s really important.

 

How to deal with the tension between becoming more innovative, while improving existing operation performance at the same time?

Chris: 
The question really is: how do we avoid disrupting the performance engine, whilst still innovating.

It can be done, you’ve just got to be really careful that your innovation function doesn’t become a skunkworks or a lab or something that’s too stand alone. It’s a fine line between it being completely external or utopia.

Gareth:
Ine thing that relieved that tension a little, was to really simplify the preposition of what we’re trying to achieve. So, people could tie themselves around that, you know, they could genuine think, what could we do, you can rely me to improve customer service or safety. So, I think that helped relieve that tension, because we simplified the business to be honest with you.

Michael:
I do think that it takes a little bit of a mind-set of we want to be in this for the long term. 

Not, can I create an organization that sucks every penny out of our operations, so that we can keep it as profit and does so in a way that, you know, destroys the organization, you don’t want do that. I think that’s it really, really, important – this is the place where I think leaderships really earns its money, when they can do that.

 

How did W.L. Gore develop their culture of innovation?

Michael:
Bill Gore was an engineer at the DuPont Company and this was in the ’50s, quite some time ago. Every once in a while, at DuPont, when a problem would come up or an opportunity where they weren’t able to work fast enough or even come up with a solution, a way forward – through the traditional channels of functional specialization, they would create these task forces.

From working on these task forces, Bill learned that first, the task force had a limited timeframe. So they would say, you got six weeks, you got six months, whatever it was, but it’s not in perpetuity that you’re going to be this way. Second, they would pull together relatively small groups of people and they would be very clear, here’s the problem, here’s the opportunity, do something with it.

So, what Bill found, was that the energy level on the task force, was enormous. He also found that people talked to one another by first name. They addressed each other by first name, compared to the Mr. so and so; doctor so and so, which was part of the corporate environment.

Third was that everybody listened really well to the ideas that might come from anywhere. Then the task force would get work done or whatever and people would go back into the corporate mode and people who last week were talking to each other as Bill, Charley, Sue, were now talking to each other again as Dr. Rosenbloom, Mr. Smith, so on as so forth.

It was just very frustrating for Bill. So when he started W.L. Gore and Associates, he said I want this to be driven by this kind of task force mentality. We’re going to organize around opportunity, rather than organize by function or organize by anything else of that notion.

And so, Gareth, when you were talking earlier about that single goal, well this is the single goal for a team, right. What is our opportunity here… and let’s go for it.

What is it going to take for us to achieve that opportunity, make it real, any of those kind of thing? So that’s what I think, was the DNA that got baked into W.L. Gore and Associates, right from the get-go.

 

How can a culture of innovation be integrated in the core business, not just in a separate unit?

Gareth:
I mentioned earlier that what we decided to do, was to work with the willing. Work with those who wanted to move the business forward.

As I’ve seen in so many organizations, if you were in trouble, you got more attention from your manager, you know, if you stole something, if you broke something, you know, they’re probably going to have a word. Managers were telling me all the time, they hadn’t to talk got time to talk to their colleagues, they were too busy, but they always had time to discipline them.

We tried turning that on its head; we called the Directors in and just said: “who do you know who’s got the attitude, got the behaviors, got the will to make this organization the very best”. They came up with 36 names. We tried a very simple thing actually, myself and Mark would just have ten of those at a time. Mark, who’s a wonderful leader, would talk about his hopes and his feelings of opportunity and the values he had.

I would talk a bit about viral change, actually, if the folks out there, want to read up on viral change. That whole idea that individuals can have a great effect on others around them you know through their own attitude and behavior. We’d ask them about where they saw the opportunity and we wouldn’t ask anybody to do anything.

We’d just say; look, if you feel you can be part of this and go out there, get out there and make a difference. It was that simple.

And at the end of the session, we’d say, “who do you know, who’s got those attitudes and behaviors.” And they would write those down and I would invite them. I broke through the hierarchy, because I would just ring the people who were on the list, it didn’t matter where you are. It was just, would you fancy coming for a curry, you know, two hours and people would talk about the opportunities. They would go back and they would infect others around them.

So, we never made anybody do anything, we went to the community of the willing, that was all. And 36 people became 200; 200 became 800; 800 became 2000 folks.

We would say there’s only two rules to ask yourself if you want to do something: is it safe and is it legal? Now if it’s yes to both of those things, probably have a go, you know, we’ll take it from there.

Cris:
We’ve got to be really careful when we talk about innovation activity and then what we can do in terms of whether it’s hackathons or workshops or whatever, to build a culture of innovation.

You can’t just go out into an organization and do bits of pockets of activity like that and hope to build a culture of innovation.

 

If innovation is fully dependent on leadership, what are examples of failed leadership? Why would a leader not want innovation to happen?

Gareth:
I think for me, the flops have been far more common that the successes. Often you find leaders at the top who really aren’t committed to this. You know, they’ll say the right words but they don’t really want it to happen.

Actually, there’s comfort to command and control. At least, it may not be great, but at least you know what’s going on, don’t you, you can control everything. I think sometimes, it’s not just the leaders – actually their multinational owner’s well all they want is to report everything each day. To understand exactly what the business is doing each day, to have all the data.

For most of us, we lead in the way we’ve been led. If you’ve been led by command and control, you’re sort of got up the greasy pole doing it and it’s hard to change that habit.

Chris:
One of the big issues with leadership is that it takes different behavior. Leadership training and development has never really featured innovation. So, we see in a lot of the corporates that all the senior team have had years and years of management development training, but at no time has that ever featured or included any of the really important stuff and the new, different stuff around, what it takes to lead for innovation.

These senior people are now faced with the situation where their leadership skills and abilities are somewhat outdated. The way that innovation needs to be driven and the cultures in organizations that we’re asking people to build, take fundamentally different leadership skills and behaviors.

In fairness to them, its scary stuff, you know, some of these people spent 20, 30, 40 years in the industry being taught how to lead and manage in a certain way. People like me go in and say, right, you’ve got to lead and manage – you’ve got to have different behavior. It’s a big change; it is difficult and hard work.

Michael:
These folks will say, I work 80 hours, 100 hours a week, I’m as busy as I can possibly be. I’m now 55, 60 years old, I can see another runway of 5-7 years, this is what I know how to do. I know how to move these numbers around on a spreadsheet; and now you’re telling me that I have to pay attention to enabling people, I have to engage people. It’s like, you ask me to do the impossible, I’m not built to do this right.

It’s the unusual person who’s got the capacity to say, you know what: what I’ve been doing has been successful all the way up to this point, but it isn’t going to get me to where I need to go.

That takes huge courage, and willingness to be vulnerable.

Gareth:
It takes people at that level to align themselves to the world that we now live in. It takes that shift for them to say, here’s how we’ve operated for 10, 20, 30 years- I know that the world has shifted, I know that the pace of change is completely changed.

I know that innovation and adoptability and all these things, we have to do that and because I know that, I am either prepared to do that or I’m not. And the ones that say, I’m up for it, I still believe we can achieve something, we just now need to shift the business in to operating with innovation at our heart – those are the very few and far between, those are the real innovation leaders that we see.

 

The steps necessary to make a U-turn towards innovation

Cris:
The first thing we do is defining the “why”: understanding where the organization is and where it wants to go.What’s its ambition, what’s its vision, what does it believe it wants to do and it’s capable of.

Phase 2 is all around getting the people that are passionate about helping the senior team drive innovation and do this. Phase 3 is around agreeing what the future of the organization looks like. What does it need that it hasn’t got now? What does it need to behave like, how does it need to act. Then Stage 4 is then around starting to communicate innovation to the whole organization.

Stage 5 is around building the aptitude for innovation – it really highlights the importance of HR. So HR, organization development, learning, and development teams. Then stage 6 is all focused around how do we make it sustainable. That’s a really quick overview, but that’s the process we use in corporates for helping build a culture of innovation.

There’s lots of talk about why innovation is important and the need for innovation, but there’s never really been a book or a framework that says, okay, if we get that, then what do we do and how do we do it? That’s why we’ve written a book that will be out in three months – feel free to reach out to me if you want more details.