Could your culture be stifling innovation?

Could your culture be stifling innovation?

Each firm has its own unique culture. Often times, this culture evolves from the original founders of the company and continues to thrive even long after those founders have left the organization. At other times, firms receive a kick in the pants from new leadership and culture is changed in step-form. HP is an example of the former, while GE under Jack Welch is an example of the latter.

Without getting into an academic debate, culture is the set of norms that govern positive and acceptable behavior in an organization. It is more than simply determining what is right and wrong; it is what determines what is “all right”. For example, supporting one’s superior no matter the outcome might be part of the culture at one organization, whereas open and honest debate, regardless of role in the hierarchy might be part of the culture at a different organization.

Ultimately, the culture of most firms can be categorized into those that are rules-based and those that are normative.


Rules-based organizations

Firms in this category tend to be very hierarchical, with written rules governing daily activity. For most of their history, auto manufacturers were prime examples of rules-based organizations. One major American auto manufacturer used to have very tightly written rules about what sort of furniture and fixture was appropriate for each level of executive leadership. This same firm is said to have gone so far as to pay for the expense of removing carpeting and wood paneling if an office was reallocated to an executive of a lower standing. That’s a pretty severe set of written rules.

Normative organizations

Firms in this category are often very flat meritocracies. Written edicts are few and far between; rules still exist, but they are embodied in the collective mind of the organization, rather than on a written piece of paper. One firm we had the pleasure of working with illustrates this beautifully. The company had one written rule as regards to vacation: There is no limit on vacation time available, and all vacation time is paid. The founder of the firm felt that vacation time was an opportunity to recharge one’s batteries and clear one’s mind. The policy turned out to be a powerful tool to attract and retain colleagues, and on average, individuals at this firm take no more than a few weeks of vacation time per year. The comfort (and support) that more is available “just in case” is what drives value.

So what does this all mean?

Well, to a firm interested in growth and innovation, it means quite a bit. There will always be a place for rules in any organization. We’re not suggesting they should be thrown out all together. But no individual (and no set of individuals) can envision every future possibility. Rules that govern every possible outcome are a thing of the past. Instead, modern firms that want to thrive should set guidelines that describe model behavior and then allow culture to reward that behavior.

This approach might be novel for a company with unlimited paid vacation time, but it is essential for a firm that is looking to foster and support innovation.

Interested in learning more about how to foster innovation within your organization? Drop us a line. We’d love to hear from you.

About the Kabardian Group: We help clients achieve profitable growth. Short, simple and to the point. Our clients include companies large and small and at every stage of their development, including start-ups.

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