Many pages have been written, and many words penned, about that elusive piece of the business enterprise we call “culture”. Culture is to a business what the persona and soul are to an individual. It defines who it is, how it thinks, what it does, and what are and are not the right ways for it to move into the future. When strategies sputter and fail, it is often the culture that either carries the business forward or does not. It is the culture that ends up holding the power of life and death in its hands. Peter Drucker summed it up well when he said “culture eats strategy for breakfast.”
And so if there is one thing that most management thinkers agree on, it is this… the impact that a business’ culture has on its long-term success is immense. In the end, it will ultimately make or break the business. For this reason, a great culture is something to be highly prized and appreciated.
But then the very next question becomes one of exactly what constitutes a “great culture”. What type of culture does your organization need in order to thrive over the long haul? What defines the difference between a great culture, an also-ran culture, and a toxic culture? And how must culture evolve as the world changes? Indeed, it is telling to examine what people write about business culture …about what it should be, and what it should not be …about how it should make you feel — or not feel …about what it should inspire you to do — and persuade you to not do. These are all very real questions that business leaders must wrestle with each day.
In something of an attempt to answer this question, it has become vogue over the past ten years to assert that companies need “a culture of innovation”… that having a culture of innovation is what will ensure their survival and success. The thinking goes that constantly changing what we offer and how we offer it will, in and of itself, somehow magically guarantee our survival.
I’m here to tell you that this is not the case, not because it is inherently wrong (it isn’t), but because it simply isn’t the full story. Unfortunately we have sold ourselves short by believing this story. A “culture of innovation” is the sort of misnomer that sounds great in a company speech, but in the end does not deliver the goods, at least not on its own.
Don’t believe me? Eastman Kodak had a highly innovative culture, inventing digital photography way back in 1975, and then proceeded to go bankrupt. Dell Computer, too, had a highly innovative culture, figuring out how to run circles around its competitors with a new business model based on build-to-order …until mobile devices and inexpensive Asian competitors stole its thunder. Even Sony Corporation, once the bastion of consumer electronics innovation with such intelligent products as the Walkman, had a highly innovative culture, yet is now only a faded shadow of its former self.
So what happened? Why didn’t these companies’ innovative cultures continue to carry the day?
To answer that question, we first have to set the record straight on something. It is that — contrary to what many people believe — innovation is not an end in itself, and innovation per se, while great, is not the ultimate goal. Thinking otherwise is a very tactical and (with all due respect) organizationally immature point of view. To understand this better, one must appreciate the real point and purpose behind business innovation. That point is to constantly reconnect businesses and their markets at entirely new levels — creating a bridge through which new value flows again and again, as expressed in the offerings provided, the way they are provided, the messaging that goes with them, the consumer experience they generate, and the brand community that arises as a result. So while a culture of innovation is a great starting place (certainly much better than a non-innovative culture), it is not the place at which we can afford to end. We have to move our culture further on beyond this. That is the mistake those companies made. They stopped at simply being innovative, and went no further.
The key concept to move our thinking in this direction is the concept of “constantly reconnecting” businesses and markets. You see, it is not enough to innovate once — or even for a season — and think that this is going to be adequate. And it is certainly not enough to be innovative for the sake of innovation. No… there has to be a bigger purpose and an end game in mind beyond the innovation itself. There has to be a bigger reason for being innovative.
There is. It’s called relevance.
What we need therefore is not a “culture of innovation”, but rather a culture of relevance.
In a culture of relevance, the business eagerly embraces the constant change that is happening all around it, together with the chaos that comes with it, and is humble enough to realize that it must constantly renew — and when needed, reinvent — itself, so that at any given time it is relevant to the world. By doing this, the business justifies its continued existence and the market will reward it accordingly. Innovation, therefore, is simply a tool to that end.
Going back again to the previous examples, while those companies continued to innovate — and, indeed, maintain quite innovative cultures — they continued to innovate, in each case, around a dying set of external realities. Gradually over time, those external realities changed, and the world around them moved on to a new set of realities, while they failed to do so. They remained fixated on the former set of realities and continued — with great cultures — to innovate around those and their prevailing business models. They failed to see, comprehend, and most importantly, embrace this change that was happening in their external reality, and so, gradually, they became increasingly irrelevant, not unlike the frog in the pot of water that becomes gradually warmer and warmer, unnoticed by the frog, until it has been boiled. Invariably, it is understandable that when a company builds its entire ecosystem, infrastructure, and way of operating around a particular reality, there comes to be such great momentum inside of that that it is often nearly impossible to change course… there is simply too much capital and know-how invested in that model. Any change is overly painful — or even lethal — or they simply cannot see what new thing to change to in time. In either case, their innovative cultures fail to carry the day, because they simply are not enough. Only a culture committed to enduring relevance will be enough to carry the day.
My own experience, in fact, has been that many companies who claim to have a “culture of innovation”, in reality do not. Much of the time their claims amount to grandstanding, and their attempts to seem innovative simply come across as plastic and fake. Contrast this with companies who have committed themselves to relevance and what one sees is a much different animal indeed. Those companies are constantly reinventing themselves and experimenting with many new forms of value. These are companies like Alphabet, Amazon, Apple, Virgin, Tesla, and many others in their class. Their cultures reflect who they are.
You see, a company’s culture does not exist in isolation from who the company fundamentally is. If the company is not fundamentally committed to the challenge of ongoing relevance, then its culture will never reflect anything to the contrary. If it is willing to sit idly by and ignore the fact that the world around it is in constant and rapid flux, and that it too must be constantly and rapidly changing, then it cannot expect to have a culture that is going to carry the day, no matter how “innovative” it may feel otherwise. You must fundamentally change who the business is. This is often what separates the winners from the losers. The losers want to stay with that they know, incrementing it ad nauseum. The winners, however, know better. While they’ll take everything they can get from today’s sources of value, they know that each successive generation of value has a limited lifespan, and only by relentlessly searching for the next source of value — the one that will be relevant to the markets of tomorrow — will they continue prospering and thriving.
I will leave us with one last thought. It is the answer to the question “what must we do to create a culture of relevance?” There are two things you must do in order for this to happen. The first is you must accept and wholeheartedly embrace the fact that the world around you — the one to whom you are trying to connect and offer value — is in a constant state of change. The second is you must commit yourself to constantly reinventing and renewing the business so that it can constantly deliver relevant value to the market, thereby justifying its continued existence (and this is where great innovation comes in). Just these two things. That’s all. But let’s be honest with one another… they are a whole lot harder than they seem on the surface. They require an incredibly humble perspective that most companies simply have not been accustomed to. Companies traditionally expected that, on the basis of their past success, there was an entitlement to the future. That is a very misleading (and somewhat arrogant) view of the world — one which usually ends in business failure somewhere down the road. So buckle up for the ride, humble yourself, and start reinventing. If you do it right, you just might still be here a hundred years from now, relevant as ever.
Anthony Mills is the Founder & CEO of Legacy Innovation Group, a growth strategy and strategic innovation consulting firm.
Learn more at www.legacyinnova.com.