Posts Tagged ‘Strategy + Business’

One of the advantages of having worked at several companies is that you really get to understand how different cultures can be. In the newest strategy + business study — The Global Innovation 1000: Why Culture is Key, the researchers make the point that the most important ingredients in building an innovative environment is strategic alignment and a culture that supports innovation. They found after studying the world’s biggest spenders on R&D over seven years that “there is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.” That’s a very revealing statistic. It is natural to assume that high R&D spenders would have the best bottom lines and most success. It just is not true.

Now that innovation spending is back on track after a poor economy, the authors conclude the following below. This is such a critical point for those wishing to understand innovation and what really is important in building a reputation for being a best place to work:

“Culture matters, enormously. Studies have shown again and again that there may be no more critical source of business success or failure than a company’s culture — it trumps strategy and leadership. This isn’t to say that strategy doesn’t matter, but rather that the particular strategy a company employs will succed only if it is supported by the appropriate cultural attributes.”

It always gets back to the people and the culture. The research is alot deeper than this but the quote above about culture trumping strategy and leadership just jumped out at me. I’d have to argue that the leadership provides the foundation for a culture that supports innovation and that leadership might matter even more than strategy but culture shapes success, and ultimately reputation.

Some people have unequaled reputations. The late CK Prahalad had one. He was one of the most influential management thought leaders of this generation. One of his books, The Fortune at the Bottom of the Pyramid, was groundbreaking and foresaw the rise of emerging markets.  He was definitely always a step ahead. Strategy + Business, the management journal of Booz Allen, has a wonderful interview with him from 2009 and one of his comments struck a chord. It reminded me of the courage I need whenever I embark on a new thought leadership initiative that raises eyebrows with some people.

Every one of my research projects started the same way: recognizing that the established theory did not explain a certain phenomenon. We had to stay constantly focused on weak signals. Each weak signal was a contradictory phenomenon that was not happening across the board. You could very easily say, “Dismiss it, this is an outlier, so we don’t have to worry about it.” But the outliers and weak signals were the places to find a different way to think about the problem.

To make a difference, you always have to start with the outlier or the unexpected. Recently I had an inkling to follow a particular trend and mentioned it to someone  in the field. They said that they had thought about it and decided it was not going to go anywhere.  It wouldn’t happen. At first, I readily accepted his point of view. Then I thought about the weak signal this trend was giving out and that perhaps I was indeed right.  I could be wrong but it is probably worth following just in case. Anyhow, I am going to pursue this little idea and see where it takes me.  After I read Prahalad’s statement, I made up my mind to mine my own ideas.