Canadian HR Reporter

STRATEGIC CAPABILITY NETWORK'S PANEL of thought leaders brings decades of experience from the senior ranks of Canada's business community. eir commentary puts HR management issues into context and looks at the practical implications of proposals and policies. CANADIAN HR REPORTER October 16, 2017 EXECUTIVE SERIES 11 www.scnetwork.ca Join our professional community of Canadian HR & Organizational Leaders: • Connecting @ monthly events • Collaborating with peers • Challenging conventional thinking The Power of Human Capital CULTIVATING LEADERSHIP FOR 35 YEARS Great Leaders GROW www.scnetwork.ca Leadership behaviour key to innovation Five SCNetwork members discuss Atul Dighe's presentation on innovation culture Silvia Lulka: Innovation seems like a given — we all talk about it, we all say we need it, and we all say it is important — and yet what it is and how we do it remains somewhat amorphous. In his presentation "Creating an Innovation Culture," Atul Dighe of Gartner (formerly Corporate Ex- ecutive Board or CEB) made an interesting and important distinc- tion between culture — the deeply held beliefs that evolve slowly and are diffi cult to change — and cli- mate — the shared perception of how we work, the way we inter- act with each other and with our customers. Climate is easier to control, eas- ier to change and can eventually lead to cultural change. I like that distinction because it defi nes and helps us focus on what we can do. Not surprisingly, his research shows that the most overwhelm- ing factor in creating a climate of innovation is what senior leaders do and say. He gave us a great ex- ample by asking us to do an activ- ity. Unbeknown to us, the instruc- tions were diff erent. e groups with instructions that said, "Don't evaluate... have fun" had far more ideas than the group with instruc- tions that said, "You may be asked to present your best idea." It's a good reminder that what we say sets the tone for those around us to create and innovate. Every time we say, or hear some- one say, "We tried that before," " ey won't go for that" or " at's out of our scope," we are reinforc- ing a climate that does not foster innovation. It's something worth keeping in mind. Tracey White: I agree. When Atul asked us to identify factors that supported or discouraged an innovation mindset, I picked "fail- ure intolerance." I was surprised to see that CEB's research identifi es "leader behaviour" as the number one factor. But, I shouldn't have been. We've known since work on change management debuted in the 1990s that tone from the top matters. Leaders are key to setting the climate for change acceptance, risk-taking and failure tolerance — all of which drive new product development and enable business to respond quickly to changing customer expectations. CEB's research found two- thirds of business leaders agree that transforming their core business model is a top priority. And yet Atul observed that risk aversion is part of our corporate DNA. I would argue our business operating systems militate against innovation. Take HR systems like stacked ranking, for example, which was blamed for under- mining the innovation culture at Microsoft. Indeed, there is a growing body of evidence to show public com- panies are less able to invest in innovation and build long-term value. McKinsey found that 55 per cent of executives would delay or forego investment in research and development (R&D) if it threatens quarterly earnings. is strikes to the heart of Atul's point. People are watching execu- tive behaviour all the time for sig- nals about what matters. They won't take risks to innovate if they perceive a "say-do" gap at the top. Edmond Mellina: e McKin- sey stats are telling. If the C-suite doesn't walk the innovation talk, it's game over. Having said that, I initially felt ambivalent when Atul started hammering the utmost impor- tance of senior leadership behav- iour. Indeed, change is a game of proximity. Distant leaders cannot play the game eff ectively, whether you measure distance in terms of geography or hierarchical levels. Local leaders represent the true keystone of change because they have signifi cantly more infl uence on their people than any C-suite executives. So, as I was listening to Atul, I kept thinking, "Yes, but what about the local leaders?" Until he put up a slide explaining that se- nior leaders come in three forms: C-suite executives, R&D/innova- tion leaders and senior-level inno- vation team leaders. at was an important point because the last two categories encompass the lo- cal innovation leaders. In other words, the stage is set for innovation when both C-suite executives and local innovation leaders walk the innovation talk. But, let me go back to Silvia's first comment about climate versus culture. I've always had a leitmotiv when starting to drive diffi cult change: "Focus fi rst on getting (tiny) motion in the right direction." That is why I really liked Atul's distinction between climate and culture. Changing the culture is akin to boiling the ocean. It's too overwhelming, too big a challenge. But, start- ing to create a diff erent climate is achievable. Not only that, but it gets us the all-important mo- tion in the right direction — that is, towards culture change. If we keep working on the climate, the culture will eventually follow. It's a very pragmatic approach. I like it a lot. Paul Pittman: I was interest- ed in the source of the research, namely those with designated re- sponsibilities for innovation and R&D in the organizations that CEB studied. at being the case, I don't think we should be sur- prised that "rewards" also scored highly as an important driver of innovation. Most employees asked about their functional re- sponsibility would tag this as an important factor in their behav- iour — as Atul said, none of us work for nothing. As Silvia points out, leader- ship behaviour is another factor as a strong driver of innovation. But isn't this what drives most of the behaviours of subordi- nates — both good and bad? Of course, innovation will fl ow and be a key feature of the culture if leadership encourages a climate of experimentation. I thought Atul's example of the lowly umbrella was, as Al- fred Hitchcock would have said, a "McGuffi n" — a red herring. Quite clearly, innovation in um- brellas, by his own admission, has not occurred for 200 years and would likely have been commer- cial suicide for James the umbrel- la seller. (By the way, did anyone check that the folks who came up with 13 examples of umbrella innovation were at a table with the open-ended question?) I was unclear about what this example and the exercise were meant to demonstrate — it certainly wasn't innovation. Innovation as peddled by con- sultants is a poison chalice. For example, industry today is rushing to "app" their products — to have them join "the internet of things." Since these are highly dependent on constant Wi-Fi connectivity, many will fail to live up to the per- formance of their analogue prede- cessors — note the digital doorbell. e rush to innovation, rather than studied progress to sus- tainability, has destroyed many commercial reputations and sig- nifi cant shareholder value. e nature of the market is that con- sumers will buy what they are pre- sented with, but if dissatisfi ed, will just as quickly stop buying. My thinking is: Figure out what it is that you do and continue to refi ne it so that you are constantly doing it — as defi ned by your cus- tomers — extremely well. And, like the umbrella seller, ensure that you will be around for anoth- er 200 years. Your shareholders will thank you. Jan van der Hoop: Culture, climate, the poison chalice and the permission to fail. As always, there's no shortage of strong views and perspectives around this table. For me, I think the recurrent truth that emerged in this pre- sentation (as it did in all others we've enjoyed recently) is that the success or failure — of a plan, business unit, change initiative or innovation strategy — lies in the hands of your leaders at all levels in the organization. If they do not own the heads and the hearts of the people under their responsibility, and if they are not leading by personal example, au- thentically and transparently mod- elling the desired behavior, nothing will move in the desired direction. at manager is the key who will either unlock success or doom an initiative to the trash heap of good but unrealistic ideas that are poorly executed. PANELLISTS: • Jan G. van der Hoop, president of Fit First Technologies in Toronto • Silvia Lulka, director of coaching at Rogers Communications in Toronto • Paul Pittman, founder and president of the Human Well in Toronto • Tracey White, owner and managing director at Strategy in Action in Toronto • Edmond Mellina, co-founding president of Orchango Jan van der Hoop Tracey White Silvia Lulka Paul Pittman Edmond Mellina Changing the culture is akin to boiling the ocean. It's too overwhelming. Starting with climate is achievable.

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