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10.3 Innovative Cultures and Capacity for Change

Some executives believe that the key to being innovative is all about investing heavily in a Research and Development unit; others argue that all innovation stems from hiring the right leaders; still others assert that innovation is largely a matter of luck and serendipity. However, the research consensus is that organizational culture is the primary source of comprehensive and sustained innovation.Garvin (2004). The primary reason for this is that innovation is a teachable discipline that involves many different people in collaboration.Drucker (1993).

There is a wide variety of cultural typologies in the organizational sciences, but one of the most popular is the “Competing Values” framework advanced by Kim Cameron and Robert Quinn. According to these authors, there are four classical types of organizational cultures: (a) hierarchy, (b) market, (c) clan, and (d) adhocracyA type of organizational culture that is most conducive to innovation because it emphasizes flexibility and discretion over stability and control, and external differentiation over internal integration.. These four organizational cultures vary in their relative emphasis on flexibility and discretion bestowed upon individuals and their external focus on variation and differentiation. The “adhocracy” culture is reported to be the one cultural type that is most conducive to innovation since it emphasizes flexibility and discretion over stability and control and external differentiation over internal integration.Cameron and Quinn (1999).

As Cameron and Quinn point out, some cultures are more open to innovation and change than others, but the reason for this is that there are competing values tugging the culture in multiple directions. The “hierarchyA type of organizational culture that places an emphasis on control, accountability, and stability, and that limits the overall capacity for change.” culture, with its inward integration coupled with a stability and control focus, is the exact opposite of the adhocracy culture. Indeed, hierarchical cultures are useful for addressing matters of accountability, as discussed in the previous chapter. However, too much emphasis on control and an overly inward focus will limit the overall capacity for change of the organization. In sum, there must be a balance struck between innovation and accountability for those organizations that seek to expand their capacity for change.

Innovation is fostered by information gathered from new connections, from insights gained by journeys into other disciplines or places; from active, collegial networks and fluid open boundaries. Innovation arises from ongoing circles of exchange, where information is not just accumulated or stored, but created.Wheatley (2006), p. 113.

Clearly, the more open the culture is to new ideas and connections, the more likely that it will be innovative and capable of change.

In 2004, Fast Company magazine nominated W. L. Gore and Associates as “pound for pound, the most innovative company in America.” They argued that their impressive string of innovations were a direct result of their culture, which was designed specifically to be innovative. What is striking is how nonhierarchical Gore’s culture is. For example, they emphasize the power of small, interdisciplinary teams over formal organizational structure. There are no ranks, no titles, and no bosses to report to. The firm takes the long view as much as possible; and it emphasizes the importance of face-to-face communication. Associates are encouraged to spend up to 10% of their time pursuing speculative new ideas. And the culture celebrates failure in order to encourage risk taking.Deutschman (2004).