The “Six C’s” Model for Building A Culture of Innovation
A study examined the practices and behaviors of BCG’s top 100 innovative firms around the world.
April 7 2011 by Sharon Daniels
Continual innovation may be the most powerful of any competitive advantage for a business. It creates game-changing breakthroughs. Along parallel lines, bit by bit, it also tweaks improvements in existing products, chips away at costs and debugs processes — in every corner of the company, all non-stop. In a turbulent business environment like today’s, it’s essential for helping a business move from playing defense to playing an aggressive, and winning, offense. But innovation can thrive only where there’s a culture of innovation.
Research by AchieveGlobal has identified the particular tactics that businesses are using to build this culture. These tactics are replicable and scalable. We’ve organized them under six headings, each beginning with the letter C. This memory aid can be used to help educate the workforce about the ways the innovation culture is being created — and serve as a guide for managers on innovating in their unit.
Our study examined the practices of companies on Boston Consulting Group’s Top 100 Most Innovative Companies list to learn how they innovate better than their competitors do, the competencies they develop and the behaviors they put in place. The study respondents included managers at all levels in businesses in a wide range of industries in North America, Europe and the Pacific.
The great innovators of years past didn’t rely on teamwork. Think Edison, Einstein, Ford. But what worked then doesn’t work any more. With rare exceptions (think Michael Dell, Jeff Bezos), innovation now needs the collaboration of a large and diverse group of people â€” the larger and more diverse the better.
This is confirmed by a Northwestern University study of 19.9 million scientific papers and 2.1 million patents that showed that the more participants involved in innovation efforts the better the results. What it calls “home run” research papers, or those getting at least 1,000 citations, were six times more likely to come from a team than a sole author. The size of research teams has grown by about 20 percent per decade over the last 50 years.
Technology has become so complex that one lonely scientist can’t master all the knowledge needed to make a breakthrough. It’s been noted in Malcolm Gladwell’s Outliers and elsewhere that its takes many years of effort to become an expert at anything. People’s peak age of creativity continues to increase. The “ideal” age for most scientists is close to 40.
This doesn’t mean responsibility for innovation should be given to a team of 40-year-olds, however. What’s needed is a rich broth that that includes inexperienced people who can bring in a new perspective, together with a socioeconomic mix of people at all levels up and down your supply chain, from different departments, functions, divisions, brands and plants â€” and especially people who don’t ordinarily work with each other.
What’s also needed for the mix are personalities that include the analytic as well as the imaginative. Dr. Stanley Crooke, CEO of Isis Pharmaceuticals, deliberately includes people with eccentricities in the company’s drug development efforts. “Whenever I feel the weirdness start to go down around here I go out and recruit for weird,” he says.
Think about broadening the range of perspectives in your innovation program by including academics, consultants and people from accrediting agencies. Create an innovation ecosystem.
2. Customer Centered
A culture of innovation requires a deep commitment to understanding customers’ expectations and providing them with value. Our study revealed that a company’s customers can actually take the lead in helping it make significant innovation breakthroughs.
Look into how your customers might be practicing what’s being called “user innovation” â€” using your products for unintended purposes or refining them to meet their particular needs, without your company’s involvement and maybe even without its knowledge. Check out the possibilities for partnering with these customers to further develop the products.
IBM, which has been awarded more patents than any other company for each of the last 18 years, actively partners with its customers to create innovations. The company has opened Innovation Centers in 32 countries over the last few years.
The T-shirt manufacturing company Threadless generates its designs through its online customer community. Members vote on which designs should be produced and the designers get part of the sales proceeds. “Wisdom of crowds” initiatives have helped a wide range of businesses design what people want and predict their marketability. You also can use an open innovation network to encourage customers to propose technology development partnerships with you.
Look up, down and around your customer base for help with innovation. The next big idea might come from a totally unexpected source.
3. Context Rich
Information is essential for innovation. Our study showed that businesses that use innovation as a competitive advantage put lots of effort into developing formal and informal systems for collecting information and free-flowing it throughout the workforce. Their knowledge management systems include advanced forms of application sharing, document sharing, collaborative workplace design and wiki group editing.
Social networking has become the hot issue in knowledge management. It’s helping businesses know what they know — and let everyone else know it, too. This lets them get a bigger payoff from research spending because they no longer have to constantly reinvent the wheel. Medtronic uses a range of social media to help its 5,000 engineers and scientists in R&D identify people at the company who already are dealing with a particular challenge and ask those people questions.
MIT’s Michael Schrage proposes that businesses can improve knowledge management by using the software that helps academics spot plagiarized content in their students’ papers. The purpose here isn’t to discourage the lifting of co-workers’ ideas, though. Rather, the technology would identify the idea-copiers so they can be rewarded — and the employees whose ideas get copied most also would earn kudos.
Innovative leaders encourage their employees to question authority, to question their assumptions, to ask why, why not and what if? These leaders also question their own assumptions to be sure they’re open to others’ opinions. They make it clear to everyone that the company values experimentation. One way in which they demonstrate this is giving employees opportunities to pursue their ideas on company time and with company resources.
Google allows employees to devote 10 percent of their time to projects of their choice, a policy that has produced Gmail, Google News, Google Translate, Google Sky and other advancements. 3M Companies has been encouraging “experimental doodling” for years and has been rewarded with innovations like Post-It notes. Jeff Bezos of Amazon says, “I encourage our employees to go down blind alleys and experiment.”
Innovative companies also create physical environments that encourage generating ideas and sharing them. Pixar Animation Studio Inc. includes cafes and social areas in its buildings so a wide range of employees can wander in and create informal networks. Edward Ho, the technology lead for Google Buzz, seats employees “unnaturally close together” to foster idea-sharing.
5. Confidence Building
Our research shows that businesses that excel at innovation actively increase their employees’ capabilities and self-esteem. They continually improve employees’ skills with training that combines live instruction and on-line learning, with employer-paid college courses, job rotation, mentoring programs and stretch assignments.
Their learning initiatives cover both technology and the management skills needed for selecting promising job candidates, onboarding them, assessing their performance, motivating them to be more productive and dealing constructively with performance shortcomings.
These companies are cautious about wasting resources on ideas that won’t pan out but also are careful not to inhibit creative thinking by asking premature questions about feasibility and cost. They make it clear that failure is a necessary part of making progress and that a failed project won’t result in a scolding.
Most business leaders focus on making their companies function efficiently. Innovative leaders focus on meeting challenges. A six-year study by faculty at Harvard Business School and Brigham Young University concluded that a key characteristic of these leaders is their willingness to challenge the status quo.
Our research confirmed this. Leaders of innovative companies constantly challenge the entire workforce to reach for new heights. They set ambitious (though achievable) goals, both short- and long-term, within a particular unit and company-wide. Employees who meet their goals are commended publicly, sometimes by senior executives. Even small wins are celebrated.
These leaders recognize that they have to make innovation a personal priority and their managers must do the same because otherwise the employees won’t support it. They also understand that a focus on innovation demands that there be internal changes â€” new structures and systems throughout the business, new functions, new roles and new success metrics.
They know there will be resistance to this effort, both overt and below the radar. They deal with it constructively by letting everyone understand that innovation will help the company prosper and this in turn will deliver payoffs to everyone. A leader has to express personal passion for the changes innovation requires or it won’t take hold.
How’s Your Innovation?
Ongoing innovation happens only when there’s a living, breathing innovation culture. Leaders who create and nurture this culture will be rewarded with both game-changing breakthroughs and ongoing smaller-scale improvements that cumulatively bring big gains. This culture can be built with the help of the Six C’s model.