March 22, 2019
In any conversation with a client about making a technology change, particularly if their project involves updating or upgrading their processes using cloud-based business software, we remind them that change management is an important part of the implementation. Embracing new technology tools—and not just adopting them—is a mindset: the change makes sense to employees, who have grappled with challenges and look forward to experiencing the benefits of innovation.
This level of “readiness” isn’t something any business can take for granted, unless they’re already highly digitally evolved. But since most companies are still somewhere in the middle of the digital evolution scale, there’s usually some work to be done in the culture department. Here, we’re going to look at workforce culture—and creating one that’s ready to innovate—from a slightly different perspective. Instead of sharing what’s become conventional wisdom (e.g. “start at the top,” and “help employees understand the ‘whys’ behind your goals”), we’ll share what qualities tend to characterizea digitally innovative culture.
McKinsey’s 8 Essentials of Innovation
McKinsey has defined the 8 essentials of innovation. These are “attributes that are present, either in part or in full, at every big company that’s a high performer in product, process, or business-model innovation.” Consider your own responses to these questions, separately and together, to get a feel for “what it takes” to achieve an innovative culture:
- Aspire – Do you regard innovation-led growth as critical, and do you have cascaded targets that reflect this?
- Choose – Do you invest in a coherent, time- and risk-balanced portfolio of initiatives with sufficient resources to win?
- Discover – Do you have differentiated business, market, and technology insights that translate into winning value propositions?
- Evolve – Do you create new business models that provide defensible and scalable profit sources?
- Accelerate – Do you beat the competition by developing and launching innovations quickly and effectively?
- Scale – Do you launch innovations at the right scale in the relevant markets and segments?
- Extend – Do you win by creating and capitalizing on external networks?
- Mobilize – Are your people motivated, rewarded, and organized to innovate repeatedly?
Reading Between the Lines
These attributes make it clear that digital innovation is so much more than implementing a new piece of software—or even moving some data or processes into the cloud. Digital innovation is a strategy and, as we said before, a cultural mindset. It requires a set of business practices, core competencies, and cultural “markers” that, together, enable an organization to progress along the continuum of digital innovation.
To be fair, some organizations are simply implementing a new piece of software. Perhaps they haven’t had significant conversations about digital strategy—or maybe these conversations are just getting started, and their first foray into “digital innovation” is adopting a cloud-based business system. If this is your stat of affairs, you have a remarkable opportunity to learn from the more experienced digital innovators—to really dig into McKinsey’s list of attributes, for example—and start devising a digital strategy that will guide you forward.
This is also the ideal time, of course, to lay the cultural groundwork in your workforce. Once you make the decision to pursue a digital strategy, even if it’s still being established, your employees should be invited on board. Here are some tips to help ensure your organization’s culture is developing along innovative lines, heading in the right direction (progress!):
- Break Down Silos. We’re talking about more than data silos We’re referring to departmental silos, communication silos, and any other walls or obstacles that are standing between employee collaboration. This might start with your IT director opening lines of communication with each department head, regularly checking in on business and technology needs; it might involve creating more transparency between IT and the rest of the company. Getting people talking, sharing, and seeking solutions is a great way to enable more holistic thinking.
- Encourage Outside-of-the-Box Thinking. Isn’t this what innovation is all about? If your company has been doing things in the same way for a long time (e.g. you’ve been using the same legacy business systems for over a decade), there may be some stale thinking in your ranks. New technology introduces new ways to work, opens up new possibilities, paves the way for even more new technology. Start getting your workforce thinking in terms of “what can technology do for us and our customers,” with the knowledge that the organization is open to making investments that turn potential into reality.
- Learn from Failures. One characteristic of the most digitally mature companies is they’re relatively more comfortable making mistakes. In the spirit of progress, they’re willing to take some missteps (however measured). Indeed, your organization may be incredibly risk-adverse—and we’re not suggesting you start loosening the reigns to see what happens. The idea here is to begin to think iteratively, with respect to process improvements, especially when new technology is involved. At the end of the day (or month, year, or decade), you may have trial-and-errored your way into exceptionally well-optimized workflows.
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