Bridging the Gap: Successful Innovation in Project Management
In the last two decades, the tenure of companies in Fortune 500 has radically shrunk. Mark Perry, a scholar at AEI and a professor of economics and finance at the University of Michigan, brilliantly named this trend “creative destruction.” Moreover, today’s list is missing nine out of ten of the Fortune 500 companies, which were on the list in 1955. These companies are replaced by firms that only recently were considered start-ups. Start-ups are very effective in competing with large corporations thanks to their unique culture and structure that supports innovation as part of their DNA. What's clear is that innovation is a critical element of not only business growth, but simply business survival. With that, the question is: “Are large corporations capable of successful innovation?”
In general, corporations are good with project management; however, it seems there is a gap in their understanding of what is required to manage innovation. Joyce Wycoff, a co-founder of the “Innovation Network,” emphasizes several factors that make it hard to manage innovation projects. For example, such projects often start with loosely defined objectives, deal with higher risks, do not follow linear guidelines, require a lot of decision making, and more than any other projects depend on the ability to collaborate and work effectively as a team. To address these factors, we have seen that multiple corporations implement guidelines to adapt their corporate culture. Among these guidelines are tolerance to failure, willingness to experiment, promotion of psychological safety and a highly collaborative environment, and even elimination of middle-management layers to become less hierarchical. However, as research shows, implementation of these guidelines did not bring expected results. In his article “The hard truth about innovative cultures,” Gary Pisano, a professor of Business Administration at Harvard Business School, points out key aspects that companies are often missing when they aim to modernize corporate culture. Below we will look into these “truths” in an attempt to understand what it takes to make large corporations more innovative.
“Tolerance for Failure but No Tolerance for Incompetence.” Innovative projects are impossible without failure since a company is operating in unexplored territory and pushing the boundaries. However, tolerance for failure can only produce results in a highly-skilled workforce environment; otherwise, it can quickly develop into tolerance for incompetency. To understand whether the failure was a consequence of lack of skills, sloppiness, or to better understand the path forward, a Lessons Learned Analysis is required. That is why, despite all technological advancements, the innovation environment is still highly dependent on workforce skills. To be successful, innovative companies must compete for the best talent.
“Psychologically Safe but Brutally Candid.” Operating in an exploratory environment requires a thorough analysis of ideas by experts from different fields and often, it may sound like criticism. Some organizations, such as Google, are known for their high tolerance to criticism and do not take this personally. Many other organizations fall into the trap of politeness when the need arises to kill non-viable ideas. Despite perceived tensions, professional confrontations are incredibly productive as they allow nurturing of the best ideas. To develop this type of culture, organizational leaders have to set an example by providing constructive criticism respectfully and encouraging everyone to criticize their own ideas openly.
“Collaboration but with Individual Accountability.” As we know, speed to market is vital for innovation projects. It is known that individuals will make decisions faster than teams. Moreover, a team consensus can be used as a shield to avoid the consequences of a wrong decision. That is why holding individuals accountable, and not teams, is the best way forward for an innovative organization. In fact, it is a propensity for an individual to collaborate. I’ll explain: when someone feels accountable, they will make sure to collect opinions from the right people and will be interested in making the best decision possible. It can be tricky promoting a culture of personal accountability while avoiding risk-averse behaviour. Senior leaders are encouraged to publicly hold themselves accountable and cascade this principle throughout their organizations. To support this set of beliefs among his employees, Paul Stoffels, head of R&D at Johnson & Johnson's pharmaceutical division, was spreading and actively exercising the following saying: “You take the risk; I will take the blame.”
“Flat but Strong Leadership.” It is no secret that organizations with a flat structure have several benefits; for example, they have faster and more accurate communications between the management and front-line employees. Furthermore, organizations which are flat culturally are more robust towards a fast-changing environment as individuals are empowered to take actions, make decisions, and openly share their opinion. All these benefits, however, can lead to chaos if leadership does not set clear priorities, directions, and provide ongoing clarifications. Without strong leadership, a flat organization will fail due to a lost sense of priorities and over-delegation.
As we can see, developing the right innovative culture means striking a delicate balance. It is not as easy as pulling too hard in one direction will likely create a dysfunctional environment. The pressure is on organizational leaders, who should be ready to navigate this complex landscape by maintaining a healthy culture and a productive environment.
Do you have experience working in an innovative environment? Do you think your organization has got certain aspects right or, you see where it got it wrong? Please share your examples, experiences, and lessons learned in the comment section below.
—Olga Minikh
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