The Cultural Challenges Associated with Innovation
During a recent informal internal event, Rune Bjerke, the CEO of the biggest bank in Norway (DNB), emphasized that the most important barrier to become more innovative, is organizational culture.
He claimed that fear of failure rooted in the culture is a fundamental problem, and that DNB therefore tries to create a culture that tolerates failure, and that stimulates continuous learning from mistakes. Research conducted by Berkeley professor Jennifer Chatman and Stanford professor Charles O`Reilly on innovative cultures supports both his view and concerns.
It is interesting to explore some of the cultural challenges associated with innovation, and the psychological explanations behind. Developing innovative cultures requires acceptance of risk. It also implies less predictability, and that the organisation prioritises long-term over short-term goals. In his influential work, Chris Argyris, has addressed the importance of tolerating such conditions, and actually stimulating and nurturing them within organisations. It is key to embrace the discomforting nature of conflicts.
O`Reilly argues that organizations that want to develop innovative cultures and adaptability should seek risk-taking, willingness to experiment and personal initiative. They should not foster cultural attributes such as being careful, predictable and “making your numbers”. Even though organisations, especially after periods of success and growth, are inclined to develop these non-favourable innovative cultural attributes, both intentionally and unintentionally. Argyris labels this phenomenon ‘skilled incompetence’.
This causes organisations to be predisposed to systematically undermine the pluralistic conditions and constructive confrontations required to foster innovation, in favour of conformity, collective comfort and the maintenance of harmony. The organisational mechanism is called ‘organisational defensive routines’. Agryris defines them as any action or policy designed to avoid surprise, embarrassment or threat. However, they also prevent deeper learning which is crucial in order to be innovative, and such conditions might undermine ambition of developing a culture that tolerates failure.
Chatman emphasizes the individual trade-offs and risks associated with being innovative and creative. She points out how pioneering experiments in social psychology have demonstrated that people in general are so influenced by others’ expectations, that they are willing and likely to alter their behaviour in their presence; that is, to do something differently than they would do if they were alone. The reason that employees are inclined to assimilate is that the consequences of violating strong norms, she claims; “at best, embarrassment, and, at worst, exclusion or alienation from the social group”.
Questioning conventional truths in organisations may threatens employees` ability to survive and excel socially. This has severe implications for how inclined organisational members are to take risk, experiment and challenge basic assumptions, and this may limit innovative behaviour.
The costs associated with being the person who challenges status quo within an organisation, and the recognition that this might be a risky business, adds to the possible problems organisations face as a result of their desire to become more innovative. According to Chatman the lesson for organisations is clear: employees may refrain from generating creative ideas because the cost of expressing them is too high. Managers can count on their employees having creative ideas in their heads, about how to do their jobs better, improve a system or develop a new product or service.
The crucial question is whether they are willing to express their ideas out loud, and share them. In a recent article, David Dabscheck at Colombia University, claims that the real culprit is inside our heads. People become risk-averse when problems are framed as gains they will receive, and are more prone to risk-taking when problems are framed as losses that they will incur.