Bringing innovation to the business is one of the hardest things a business leader has to do.

Babatope Ipinyomi, of The Change Lead, invited me to be a guest on his ‘Change Lead’ podcast. Our wide-ranging conversation focused on encouraging innovation in business.

We looked at:

  • Why 94% of business leaders are disappointed with their organisation’s capacity to innovate.
  • Barriers to innovation.
  • How innovation can be brought to bear on a business challenge.
  • Innovation for SMEs in the face of global challenges.
  • Innovation in a world of compliance.
  • Bottom-up innovation.
  • How innovation can break down silos of both function and personality type.
  • Recognising that the right business culture is key to productive innovation.
  • How the boss can be a hindrance to innovation.
  • Innovation needs to work with the reality of a sound business structure.
  • Innovation relates to practical issues and is not an ‘end in itself’.
  • Innovation as a discipline can be taught and a wonderful array of practical tools are available to help us.

The podcast can be found at:
Apple Podcasts.
Google Podcasts:
Spotify Podcasts.

These are some of the highlights of the conversation with additional material as well.

1.   Why are we disappointed by our efforts to innovate?

Business leaders agree that innovation is important to their success. However, when asked 94% of business leaders still express disappointment in the ability of their organisation to innovate. How can we explain this trend?

Time and again, the key to success is finding the right question. All too often effort is mis-spent by addressing the wrong question. Time spent working out the right question to ask is always a sound investment.

But first, when we think of innovation, we need to be aware of the difference between Creativity and Innovation. The main difference between creativity and innovation is the focus. Creativity is about unleashing the potential of the mind to conceive new ideas. Creativity is subjective, making it harder to measure.

Innovation, on the other hand, is measurable. Innovation is about introducing change into relatively stable systems. It’s also concerned with the work required to make an idea viable. By identifying a previously unrecognised and unmet need, an organisation can use innovation to apply its creative resources to design an appropriate solution and reap a return on its investment. All too innovation is not seen in a context.

So to move into the question, businesses have to identity challenges. But just naming a challenge can be an implied criticism of the organisation and in particular its leadership, so people often keep quiet.

This brings us to culture. It starts at the top. Leadership is key which we will see as we continue our conversation. To understand innovation, we need to see the many possible barriers to overcome. So, when asking the question “How can I bring innovation to my business?”, it is often good to reverse this to “What’s stopping me from bringing innovation to my business?”

Barriers to innovation
  • The single biggest reason why most organisations and individuals do not achieve their full potential is fear – fear of failure and fear of the boss. Innovation is about rocking the boat and many bosses don’t want their boat rocked! One person in the not-for-profit sector said to me recently that he was afraid of his boss.
  • Control freaks run a good number of businesses – this is a killer to innovation.
  • Poor leadership.
  • Short term thinking.
  • Lack of resource/capacity.
  • Lack of collaboration.
  • Lack of time.
  • Lack of focus. …  Not asking the right questions.
  • Lots of ideas but no delivery of actual improvements or creation of new products.

Insecurity, arrogance, closed mind, a lack of curiosity in the leadership are all barriers to innovation. Where the boss is omniscient – that is all-knowing, then we are set-up for failure.

Good ideas come from the shop floor. A former head of Marks & Spencer visited a store with his wife and daughter every Saturday afternoon – and on Monday morning at the Senior Management Team Meeting, the boss had feedback from customers and staff – often much to the surprise of the management team!

The Army can be a great example of good leadership – where at meetings, the commanding officer often sits at the side and someone else with the right role and experience chairs the meeting and drives into the appropriate detail.

I can never understand why traditionally the Prime Minister usually chairs every meeting s/he attends – that seems daft to me. The boss should be appointing experts in their field to run areas of the business, let them get on with it and then hold them to account. Remember that chairing meetings is a skill in itself. So, if a boss is disappointed about his or her organisation’s poor innovation – look in the mirror.

According to Charles Handy, a major problem encountered by people responsible for innovation can be that of conflicting priorities. In general, the centres of power of an organisation are in favour of the status quo – this can give a high degree of role ambiguity to the manager of an innovative function. Is that person supposed to innovate or not? There can be considerable conflict between the administrative side of a job and the creative side – two types of work with different psychological demands, which can be hard to combine in one individual. Recognising this is key and I think we will unpack this more later.

2.   Aren’t global challenges too big for us?

In our interconnected world, with businesses dealing with interconnected, intractable challenges, is it possible to encourage innovation when dealing with the largest global challenges we face?

Some of us will be familiar with the Serenity Prayer (by the American theologian Reinhold Niebuhr 1892–1971):

God, grant me the serenity to accept the things I cannot change,
courage to change the things I can,
and wisdom to know the difference.

What can I actually do? Let’s do that. As we have already seen, business leaders can definitely work on their culture. So we do what we can do. Then for the things we cannot change directly, we can still influence change. Such as:

  • In the supply chain – we can make it a requirement that our suppliers behave in a certain way such as paying their own suppliers on time.
  • Industry – raise awareness of issues, and raise standards.
  • Thought leadership – we project our vision
  • Influence policy makers, regulators, law makers. We can create positive self-fulfilling prophecies.

Teamwork/partnerships are very powerful – they create joined up thinking. Networks such as the All Party Parliamentary Groups (APPGs) which are informal cross-party groups that have no official status within Parliament but do great work in bringing people together including from outside Parliament to look at issues.

We can list the challenges – literally write them down – and brainstorm around them (and we will look at some innovation tools later on). Many of these challenges are on our mind right now:

  • Covid-19 pandemic
  • Skills shortage
  • Materials shortage
  • Energy crisis
  • Migrant crisis
  • Rise of China as a geopolitical force
  • Climate change

What we don’t do is say is “It’s all too difficult!” We won’t be defeatist – realistic, yes but not defeatist.

3.   Compliance seems to work against us

How can we get the duality of innovation and compliance to thrive in a business? Particularly for businesses that operate in regulated markets, how can we get compliance to work with innovation?

This is an excellent question. It is close to my heart given that some of my time is spent working with HMRC! Compliance should be our friend not an enemy. But regulators sometimes have the wrong sort of power and are insufficiently held to account themselves.

Years ago, HMRC were amazed to discover that CIS (the Construction Industry Scheme) rules applied to themselves, yet HMRC wrote the rules! Personally, I would allow taxpayers to fine HMRC for their late replies. It recently took HMRC seven months to reply to a letter to me in which they contradicted their previous letter! To be fair to HMRC – they are trying and do have an innovation department.

A former Speaker of the House of Commons who was keen on lauding it over others was amazed to discover that he was held accountable by the asbestos regulations for all asbestos within the House of Commons. It was the only time I am aware of when this particular person was speechless!

We desperately need innovation in compliance. So often we have unintended consequences by ill-thought through decisions by a government. The £1 note was abolished to save printing costs as the low value note didn’t last long in circulation but owing to heavy transport costs in lugging the coins around the country, the change to coins actually cost money.

The Government introduced ‘Fees for intervention’ (FFI) from the Health & Safety Executive (HSE) a few years ago whereby the HSE can (and now do) issue fines when they visit sites. The result is that construction firms no longer invite the HSE to site to ask for advice (HSE advisers are excellent and very experienced). So, the change to FFI may well have cost lives as HSE input is no longer asked for by construction firms for fear of a bill and indeed a black mark that may preclude the company from future work. Understandably FFIs have received widespread criticism.

The Grenfell tragedy has shown the appalling holes in building regulations (in their widest sense) – which have simply not worked with the disaster causing 72 innocent people to perish. Four years on from the disaster (in 2017) and the underlying flaws in the system have not been sorted out. On the face of it, compliance has sadly failed here on a monumental scale (criminal charges are yet to brought against anyone – it will be interesting to see if any politicians who oversaw the building industry are charged with criminal negligence).

The Great Post Office scandal (about which I have written) is another example of compliance going severely wrong. There was a complete lack of curiosity from the Post Office to the Post Office trade union to the judges who imprisoned innocent Post Office staff. This is one of the greatest (perhaps the greatest) miscarriages of justice in British history. No one took a step back and looked at the snowballing problem and asked some basic questions that any student of innovation might have asked. Too many vested interests were at work – and so lies and cover-ups prevailed. In a murder trial, one usually needs a body to secure a conviction. With the Post Office scandal, a lot of money went missing but it all vanished into thin air. Nobody wondered how so much money could be stolen by so many people and none of it turn up anywhere else – and that was because it was never stolen in the first place. Where, oh where, was the curiosity of the innovative mind?

One doesn’t normally keep the Queen waiting, but it took four years for Her Majesty finally to receive an answer to the question she first asked in 2008 “Why did nobody notice the awful financial crisis earlier?” As she toured the Bank of England’s gold vault, Sujit Kapadia, an economist and one of the Bank’s top financial policy experts, stopped the Queen during a visit in 2012 to say he would like to answer the question she first posed to academics at the London School of Economics at the height of the financial crisis in 2008. “Oh,” she said, slightly taken aback, as Kapadia went on to explain that as the global economy boomed in the pre-crisis years, the City had got “complacent” and many thought regulation wasn’t necessary.

Kapadia told Her Majesty that financial crises were a bit like earthquakes and ‘flu pandemics in being rare and difficult to predict and reassured her that the staff at the Bank were there to help prevent another one. Groupthink contributed to the financial crisis of 2008, and yet we have not learnt the lesson. According to the recent (12 Oct 2021) report by The House of Commons – Health and Social Care, and Science and Technology Committees ‘Coronavirus: lessons learned to date’ report:

“The fact that the UK’s approach reflected a consensus between official scientific advisers and the Government indicates a degree of groupthink that was present at the time which meant we were not as open to approaches being taken elsewhere as we should have been” (Item 2 of the Executive Summary). Some early failings, the report suggested, resulted from apparent “groupthink” among scientists and ministers. With hindsight to Kapadia’s answer to the Queen, we might well wonder why we were so unprepared for the Covid-19 pandemic when a pandemic had long been predicted.

Compliance so often lags innovation which is why innovators need to be placed at the centre of compliance. Yet, we realise that many bureaucratic institutions will place the parachuted innovators in the basement office with no windows!

One of the key messages I want to give in this conversation is the vital need for those in charge of regulation and compliance to have innovation at its heart. Otherwise, our regulation will only be second best.

4.   How can the boss encourage innovation?

What do you see as the role of the people at the top of organisations to encourage innovation?

Cranfield School of Management identifies four styles of leadership:

  • Artisan – mucking in
  • Hero – No one except the hero can do anything
  • Meddler – micro-manager
  • Strategist – allows for autonomy so staff can get on with their job

Leaders should think strategically and beyond. Self-awareness by leaders is key.

Understanding organisations and how they work is vitally important too.

I have a super nephew who wants to make a fortune on the stock market and asks Uncle David for his share tips. When I suggest instead that he reads books on investing and gets to grip with how the stock market works, what asset allocation is and how to measure volatility etc, he slightly loses interest!

So it is with innovation. It sounds sexy and dynamic but innovation must sit in the context of an organisation. Unless we understand how organisations as a whole work, we won’t help innovation within that organisation to flourish.

In an organisation there are four principal activity types:

  • Steady state – all the routine things which can be programmed in some way. The infrastructure, accounts, secretarial, admin, production, sales (but not marketing). 80% of personnel.
  • Innovation – everything directed to changing the way that the organisation does things. R&D, parts of marketing, development side of production, corporate planning, some parts of finance.
  • Crisis – all organisations have to deal with the unexpected. No one has a monopoly of crises but often crises occur at the face of the organisation’s external interaction with the world outside.
  • Policy – the overall guidance and direction of the organisation, the priorities, direction an allocation of resources are in this activity – with overlap of course.

It can follow that if an appropriate culture prevails for each activity, then that part of the organisation will be more effective.

But organisations can themselves be dominant in one of these states/activity types rather than having the four states in balance. So, an organisation can primarily have a culture of being steady state or innovative or being in crisis or policy driven. No one state/activity type should be allowed to swamp the organisation.

I argue that we need to get the balance right, so the organisation can operate well. Then we can encourage innovation. Put another way, the crisis run organisation needs to get structure and order brought into it. That might not be a very innovative comment, but it needs to happen! Innovation is not about upsetting the apple cart for the sake of it. Ironically, I have worked with several organisations who have asked for my help to be more innovative, and they have come to see that their primary need was some structure. That structure might include capturing feedback from staff and customers. Innovation itself can benefit from structure.

A well-run organisation can then make the most of innovation by recognising that innovation inevitably involves working with conflict. All too often the innovator finds him/herself saying “Don’t shoot me – I’m only the messenger!”

McKinsey have some useful thoughts of leadership and innovation here.

5.   What about bottom-up innovation?

How can we encourage bottom-up innovation where everyone in the organisation can pull together to achieve real transformative change?

Bottom-up innovation is helped by sharing information and sharing challenges, by trusting staff and rewarding innovation. It needs to be OK to make mistakes.

The guy who swept the floor at NASA was once asked what his job was. He answered, ‘My job is to get a man on the moon.’ What a fantastic answer!

Another man on a TV quiz show was asked his job. He was elusive but said he worked at the heart of Government and that some days he can really feel the heat. It turned out that he was in charge of the heating system and keeping the boilers going at the Palace of Westminster!

Everyone needs to feel valued and respected.

We can’t discuss innovation without coming back to silos. Silos within a business can stifle innovation. How then can businesses break down silos and unleash innovative thinking?

We need to take a step back and think of the silos that we often are as individuals. Personality traits such as we see in Insights Discovery, Myers Briggs or Belbin all help us see the type of person we are. In Insights discovery for example, personalities are divided into four colours:

  • Red – Fiery red director
  • Blue – Cool blue analytical
  • Green – Calm, kind, people centred
  • Yellow – Energetic extrovert

Each colour has specific characteristics, and this is shown really clearly in groups of people where each person in the group is of the same colour, (ie only reds work as a group, only blues work as a group etc). Each group is then given the same task. In the podcast we have a wonderful example of the disasters that happen when people of the same colour work together in organising a village fete!

For us to swap, even temporarily, our natural colour type (eg for a blue person to become a yellow person) is not easy but with courage and trust it can be done. It could mean the blue accountant thinking like the yellow extrovert salesperson. To do so can be so worthwhile and liberating – try it in some team building exercises and see what happens!

To overcome silo thinking we therefore start by working at the individual level and encourage individuals to think and behave outside their own natural personality silo.

We then build on this by challenging the traditional silo functionality of an organisation to operate across silos. The combination of people operating outside their personality silo and also their functional silo can be really dramatic. Cross-silo work groups can be very innovative and come up with fantastic ideas.

Jaap Linssen wrote this interesting article about bottom-up innovation.

6.   What are some useful tools for innovation?

Can you share any examples of how you have worked with your clients to encourage innovation and are there any specific techniques you use to encourage innovation?

On the podcast, I give what is, I think, a wonderful and inspiring story of how an observation by Simon Berry that Coca Cola gets into the most remote places in the world was used to bring medicine (especially oral rehydration salts and zinc) to stop children dying of chronic diarrhoea in remote areas of Africa. Condoms were also brought to remote areas especially those ravaged by HIV/AIDS. For me, the interesting thing is that I worked for a Coca Cola franchise in the Middle East. I saw that Coca Cola gets to all parts of the desert but I never made the connection to use the Coca Cola network for a different but incredibly useful purpose. Someone else, Simon Berry, did make that connection and saved countless lives by their idea – that is innovation at its best!

It should be added though that Simon had to work hard to bring his vision to reality but undaunted he overcame the obstacles he found in his path. All credit also to the BBC who gave much needed publicity to his brainwave through the BBC Radio 4 PM programme at 5.00pm. The PM team persuaded Coca Cola to take Simon’s idea seriously. The story can be heard here (listen from 7 mins 55 secs).

Some great innovation techniques include:

Some useful techniques to encourage workplace innovation can be found here.

Benjamin Franklin once said: “Tell me and I forget, teach me and I may remember, involve me and I learn.”

I acknowledge with gratitude the wisdom of my colleagues Patrick Foster, Paul Robins MCIOB and Yevi Ilangakoon who have taught me much about innovation. Patrick patiently taught me the invaluable lesson that innovation must be seen in a context and staff can and should be trusted, Paul taught me to think outside the box and to challenge the status quo and Yevi gave me self-belief, taught me that innovation can be learnt and gave me some wonderful tools to implement it. I am deeply grateful to each of them.

I am grateful also to Babatope Ipinyomi for the opportunity to talk about innovation and for the deep insights he brought to our conversation about this fascinating and vitally important subject for businesses.

Errors or flaws in this article are of course my own.

Anyone wanting a follow-up conversation on innovation in their business is welcome to contact me.

David Eaton
07841 215182

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