Doug Saunders

Hard Truths About Innovative Cultures: A Summary

Company cultures that tout innovation, personal creativity, and high levels of independence are often perceived as an ideal place to work for most people who are aware of work environments like these.

Business behaviors that are generally associated with successful innovative companies are tolerant of failure, have a willingness to experiment, are psychologically safe, highly collaborative, and have nonhierarchical business structures.

What we tend to forget is that while all of these can create the image of a fun and rewarding place to work, there are trade off's that must be considered to create this type of environment, and many companies do not succeed.

Tolerance for Failure Without Tolerance for Incompetence-

To be an innovative company means that employees and company leaders must explore previously unknown ideas and concepts. Because of this, tolerance for failure is required. Not every brand new idea out of a batch of brand new ideas will succeed, and everyone is keenly aware of this if the business is lead well.

However, to be successful, this tolerance for failure has to be tempered with the less desired cultural characteristics like less tolerance for incompetence. If a company and its leaders are willing to give their employees creative freedoms, they have to be really good at what they do whenever they are doing it.

If you cant keep up with that performance standards, you're likely going to be replaced or moved to another department that better matches your skillset.

This means that standards for performance must be clear and communicated often. Sometimes raising hiring standards might be necessary at the expense of growth. Another calculated risk an innovative company might have to take.

However, if employees are trusted, highly-skilled, and there are clear guidelines for what constitutes a successful versus a disastrous failure, a company like Google doesn't mind taking well-calculated risks.

This way, if a project fails for some unforeseen technical reason out of anyone's control, something can be gained from experience. Rather than poor management and sloppy thinking, resulting in a massive late production loss to the company.

The trick in balancing this dynamic is finding appropriate corrective action when mistakes are made and maintaining high levels of proficiency while still treating employees with decency.

Willingness to experiment but highly disciplined-

Experimentation is a pivotal aspect of every innovative company. While this sounds exciting, which, it certainly can be if executed correctly, doesn't mean that anything goes, or that projects can be thrown together haphazardly.

For example, Flagship Pioneering, a Massachusetts based company, thrives on a business model of refined experimentation. Instead of waiting for new scientific venture pitches to come to them, they use their own internal scientists to search for new opportunities with untapped potential.

This way of trying new ideas is very different from how most companies experiment further potential gains; however, their process is well organized and efficient, so they don't take on any more unnecessary risk than they need to.

I. Initial experimentation:

Flagship Pioneering begins its process by assigning small teams of dedicated scientists to begin research on a major social or economic topic.

All ideas are encouraged. Even the ones that do not have any scientific data or analysis to support them. Instead, asking themselves how the ideas lacking research could work; and if it could, would it be valuable?

Experiments are not designed to validate a concept, but rather to poke as many holes as possible to see if the idea will really hold up and can be carried out practically.

II. Funding the research:

Most companies, when working on a new R&D project, will dump tons of resources into the project in the hopes that throwing money at the project will make it successful.

Flagship Pioneering takes an entirely different approach to how much time and resources should be spent on developing a concept.

Instead of pouring their resources into the project, the company typically tries to keep costs of experimenting below $1 million per project, and the time frame for viability less than six months.

This system allows for a focus on the most critical issues in development. What will and won't work is discovered early, this allows for quick adjustments and faster feedback. It also keeps employees from developing an attachment to projects that might not work out.

III. Listening to data:

Flagship finds that ignoring any kind of experimental information is unacceptable.

The success or failure of a project lies in that research data. If things are not going as expected, teams can make significant adjustments to correct course, or kill a project before it becomes a resource vacuum.

If data were hidden or ignored, it could result in the potential loss of millions of dollars and months or years wasted.

IV. Discipline:

What we know from most companies is that the success or failure of a project lies in keeping the project alive. One wrong move and someone's career could be on the chopping block.

Once again, Flagship takes an opposite approach to this. With more projects vetted more quickly and more efficiently. Sticking with a failing concept doesn't make much sense, from a personal or business perspective.

To run a business model like this effectively requires staff to maintain this high level of discipline on every project.

If your staff is going to keep up with this, they need to also see that the leaders of the organization are also willing to kill their own passion projects or change their approach when new data is brought to light.

Psychologically Safe but Brutally Candid-

Psychological safety in the workspace allows for staff to voice their critiques and opinions without fear of retaliation from a supervisor or peers.

This kind of open communication is essential for creativity and support to flourish in an innovative culture. Productivity can easily be crushed if a subordinate employee doesn't feel that that can tell their supervisor they have a better way to accomplish something.

The downside to this, however, is that many people who are new to places like this might not be prepared for the honest and brutal critiques of their own work.

A balance has to be found between productive critique and open combativeness. One way that that many successful innovators use is for leadership positions to request feedback from subordinate staff. That way, when criticism is given, it's clear that the dynamic is a two-way street.

Collaboration with Individual Accountability-

In a company that is designed for innovation, working together with your team is incredibly important. Different people bring different skills, ideas, and proficiencies that all provide some benefit to a project in a way that a more focused approach may not be able to achieve.

However, if collaboration isn't directed, and no one person wants to be responsible for the ideas presented, cooperation devolves to consensus.

Once people feel like they need to all agree before they can make a decision, efficiency is slowed, and the culture becomes more hierarchical in nature.

Company leaders can keep the balance between these forces by emulating these desired behaviors. Such as using the insights and experience of others to accomplish a goal, while holding themselves responsible for a project at risk of losing face to a failure.

Flat but Strong Leadership-

A flat organizational structure allows employees and leaders to make effective decisions in a way that traditional hierarchically structured business can't.

By decentralizing the decision process, those who are closest to changing circumstances can act accordingly without bureaucratic hold-ups.

And because differences in the company are generally based on competence rather than position, solutions are more diverse and supply more relevant information to a problem.

Balance here lies in management articulating the big vision while maintaining technical involvement in a project. For employees, this means developing leadership skills of their own and a willingness for accountability.