10.3: What Makes an Organizational Culture Innovative?

In this chapter, I argue that the key to making an organization innovative is to cultivate an innovative culture, our eighth and final dimension of organizational capacity for change. There are many reasons why creative ideas and innovative projects are killed within organizations. Notably, almost all of them have to do with an overweighting of the risks to existing operations, and an underassessment of the returns associated with new ideas based on the overarching organizational culture. Clearly, not all ideas should be pursued and the pursuit of new ideas needs to be selective. However, very few organizations know how to fully explore new ideas and develop the best ideas into innovative new ventures. Perhaps that is why the stock market values Apple so highly, due to its rare ability to keep coming up with a steady stream of innovative new products and services year after year.

“The creative process is social, not just individual, and thus forms of organization are necessary. But elements of organization can and frequently do stifle creativity and innovation.”Florida (2002), p. 22. Organizational cultures become creative and innovative when they encourage “combinatorial play.”Shames (2009). In other words, employees need to imaginatively combine ideas in new ways and then play with them to see how the new combination works in reality. In most organizations, however, imagination and play are not valued, getting work done on time and under budget is; pursuing ideas with unproven merit is frowned upon; and extrinsic rewards are emphasized over intrinsic rewards. All of these traditional cultural norms and values thwart the development of innovation since creative employees usually value imagination and play and pursuing new ideas into unknown realms, and are highly motivated by intrinsic rewards.

A second aspect of organizational culture that is fundamental to creativity is the cultivation of diversity of thought. Although many organizations pay lip service to the need to diversify their workforce, diversity of observable demographic traits is typically the emphasis, not diversity of thought. When the workforce is highly diverse, then misunderstandings are likely, conflict often ensues, and productivity can decline. Clearly, none of these outcomes is a pleasant experience and they do not automatically lead to innovations. However, if diversity of thought is welcomed in an organizational culture, creativity and innovation are more likely.Basset-Jones (2005).

A third aspect of organizational culture that can facilitate innovation is the ubiquity of weak ties. Strong ties are relationships we have with family members, close friends, and longtime neighbors or coworkers. They tend to be ties of long duration, marked by trust and reciprocity in multiple areas of life. In contrast, weak ties are those relationships that are more on the surface—people we are acquainted with but not deeply connected to. Research has shown that creative individuals have many “weak ties” inside and outside their work organizations.Granovetter (1973). Consequently, organizational cultures that encourage flexible working conditions and external networking make innovation more likely. Hence, there is a spontaneous and serendipitous aspect to innovative cultures.

A fourth aspect of organizational culture that nurtures creativity and innovation is an organization-wide ability to look long term. Today’s organizations are very lean and short-term focused. They are so busy exploiting existing markets, they don’t have the time or resources or capacity to explore new markets. However, organizational cultures that enable the organization to both exploit and explore markets make it possible for its leaders to “fly the plan while rewiring it.”Judge and Blocker (2008).

A fifth aspect of organizational culture that makes creativity and innovation possible is the tolerance of ambiguity and failure. As Woody Allen states, “If you are not failing every now and again, it’s a sign you’re not doing anything very innovative.” Clearly, not all new ideas will work out as hoped, so ideas that lead to dead-ends are an inevitable part of the innovation process. Unfortunately, most organizational cultures seek to blame individuals who fail, rather than accepting occasional failures and attempting to learn from the experience.

A sixth aspect of organizational culture stems from the reality that most innovations come from collaboration within and across teams, not the genius or perseverance of a single individual. For example, in a scientific study of R&D units in the biotechnology industry, Judge and associates found that the most innovative units operated more like goal-directed communities than as a collection of big-name scientists.Judge, Fryxzell, & Dooley (1997). Nonetheless, many organizations seek to hire employees who are extremely intelligent, come from prestigious universities, or both, and these are often the individuals who have the most problems collaborating with others.