Business Culture: Don't Underestimate Its Importance

Business culture: know about it, and just as important, don’t underestimate its importance.

I read an interesting article in Harvard Business Review (Pisano; June 2015) about the need for better strategies in executing innovation in organizations. While the article has some great recommendations, it ignores one critical element of innovation: the importance of a business culture that nurtures the creative environment.

Here’s one way I could explain “business culture.” And, forgive me; I do like to use the “shipping” metaphor. So, let’s pretend that Ship A and Ship B have been given the assignment to go find a new route to some new place that will bring in lots of money. Ship A is run by a captain that seeks perfection, that likes to follow the path that other ships have taken before, and will not think about the point when his crew has reached the “fork in the sea,” and has to tell the guy who steers the ship which way to turn. Throughout this voyage, he has taken the safe route, has not considered the idea that taking a new route entirely may be the best way to go. He may either doubt his ability to lead in some way, or does not have the ability to think outside the box. I’m not feeling too good about Ship A’s chances.

Now, Ship B is run by a captain who is excited at this assignment. Has reviewed the routes that have been taken before, understands that maybe, just maybe, a whole new route may be the key to success. She understands the risks, has had a meeting with her crew, and has inspired them to join her, full speed ahead. And, in the long run, she not only finds a sailable route to fortune, but has also discovered new islands along the way, and new countries to trade with. I like this Captain.

So, the business that fosters an environment to take risks will see more innovation. It may also see some ideas that sink in the water, but without the inclination to seek something new and which benefits its customers, businesses grow stale, and eventually obsolete. Innovations arise from the freedom to explore rather than excessive planning and irritations.

Pisano’s article on innovation ignores some critical cultural components.

Quite simply a great strategy without a supportive culture will fail. For example, it is clear that many innovations are developed by staff who exhibit deviant behavior. Managing them must be a priority.

Similarly many innovations will fail at first and organizations like Google which focus on learning from mistakes are more equipped to manage the mistakes. (Like the Captain on Ship A, his tendency to take the well-worn route has prevented him from learning from mistakes, and thus, becoming a better Captain.)

Not only should a business owner commit to a culture of innovation and, for that matter, excellent customer service, he should create a culture that encourages it and supports it. For example:

Do companies really care about their customers and get excited when a customer has a great experience?

Many companies treat employees like expendable pieces of the machine, which leads to chaos in the job market.

Is there trust between management and staff? This requires hiring and training good people, giving them the authority they need to do their jobs well, and understanding that they will make mistakes at times — mistakes that need correction and not just a reprimand.