Digital Transformation

The cultural commandments for innovative companies

Waracle
1st September 2020
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https://waracle.com/blog/digital-transformation/the-cultural-commandments-for-innovative-companies/
A blackboard with thinking outside the box written on it

In Eric Beinhocker’s ‘the origin of wealth’, Beinhocker details the ‘cultural commandments for high-performing, adaptive companies’. The purpose of this section in his book is to outline a range of behavioral norms that he believes the staff of innovative companies need to adhere to, to facilitate exploration, innovation and build competitive advantage.

Let’s take a look at each of the four behavioral norms in turn and see if you agree or disagree with them.

Be non-hierarchical

What matters is the quality of the idea, not the job title of the person that came up with it.

In McKinsey’s purpose, mission and values, there is a section which suggests that every new hire has ‘an obligation to dissent’. The idea is that innovative and competitive firms need brave young people with bold ideas to survive. If those same bold, young individuals believe that all they need to do is agree with their boss to get ahead, then you have a problem. Strategies will optimise to previous environments, investment in innovation will slow and competitive advantage will be eroded.

Be open

It is essential to be flexible across your frames of reference, your mental models and your problem-solving. The last thing any company needs is replicators (i.e. I did this before, so let’s do it again).

Being open means having the humility to understand you don’t have all the answers and lets you test and learn to find the optimal business plans, innovations or ways of working.

Openness is not a trait that tends to be engendered in hierarchical structures, as employees begin to play politics and align themselves with certain individuals to try and benefit from organisational information asymmetries.

Be fact-based

Everyone has an opinion, but what does the data say, what is objectively true… what cannot be argued with.

Starting from a place of fact allows a business to orientate itself around some fundamental cornerstones, which will ultimately allow them to generate better hypotheses for new products, services, acquisitions and ways of doing things that are tethered by the truth.

Too many businesses don’t face up the reality of their economic environment and make decisions based on subjective opinion rather than facts.

Challenge

Business isn’t a race with a finish line, so lines need to be drawn to ensure that there is some competitive urgency.

Returning to McKinsey, the values of the business institute a broad understanding that to be successful in their structure it is ‘up or out’ (you either get promoted or you leave the business). Now whilst this can be seen as a negative, it sets the agenda for high performance. It can’t be argued that they haven’t been clear from the outset.

Individual performance has an hugely important role to play in the success of any organisation, If individual performance is poor, hierarchy has to intervene and institute processes, which will inevitably restrict innovation and damage a business’ opportunity to adapt, innovate and outperform its rivals.

Alongside norms for innovative behaviours, Beinhocker also outlines performance norms and cooperating norms, which we won’t go into here… but are equally well founded and precise.

We really value our company culture and find it fascinating when academics outline theories relating to structure, culture and behaviours. At Waracle, we support organisations at all stages of their digital transformation. Our experts support your talented teams to prioritise your innovation to ensure the highest return on investment, if you want to find out more, get in touch today.