Managing Innovation Or Culture Change?

Innovating Perspectives Volume 21, Number 5 © September 2013 Managing Innovation or Culture Change? By Lanny Vincent ncreasingly I find myself engaged in damental purposes of organizational trans- the thinking of executive leaders. conversations wherein clients present formation. After more than a decade along “innovation” as their stated interest, but this journey, the purposes of organizational A favorite book of mine is Differences Ias I listen more closely, their underlying culture change may have been realized. That Make a Difference by Russell Ackoff, goal turns out to be changing their organi- However, many express disappointment at which is filled with insights for leaders and zation's culture, often called “change man- the unrealized goals of their innovating. managers. Ackoff took 50 sets of common agement.” terms, which are frequently used inter- A company may require both innovation changeably by mistake, and clarified their Many established companies are engaged management and change management, and more appropriate and accurate use. in both change management and innova- the efforts of one may reinforce the goals of tion management. While each may deal the other. However, the two should not be For example, many use “react” and “re- with change, innovation management and thought of, managed or led as if they were spond” as if they are synonyms. Ackoff sug- change management are different. Their one. Doing so produces much unnecessary gests they are not. To make the difference goals, focus and purpose are distinct from frustration. Yet this may be happening more explicit, he brings in a third term: “reflex.” each other. frequently than we realize, particularly Reflex is what happens automatically, in since lean principles and the faddish “both/ human physiology, it's autonomic. With a Change management attempts to reform or and” (vs. either/or) seem to have saturated Continued on the next page transform the performance of the organization and its employees. The focus is on the core capabilities of the organization in serving existing customers and markets. Its purpose is to improve the organization's performance in the form of efficiencies, improvements or lower costs. Change management is inherently egocentric, focused inwardly on the organization itself. Its primary concern is improving productivity of operating throughputs. Innovation management attempts to renew the organization's relevance to those it serves. The focus is on external condi- tions, factors and dynamics in discovering prospects and needs and converting them into customers and solutions, respective- ly. Its purpose is to develop and introduce new value propositions in the form of new products, processes or services. Innovation is inherently allocentric, focused outward- ly on serving others. Its primary concern is nurturing efforts of developing new value. A global consumer durables company I worked with for a number of years made a very explicit record of its innovation “The bottom line here, gentlemen, is that, no matter what we do, journey, stating that innovation would in- we’re going to wind up getting wet.” tentionally serve the broader and more fun- Collection / cartoonbank.com Yorker New ©The Vincent & Associates, Ltd. Innovation Management Services innovations that work® (415) 387-1270 Managing Innovation or Culture Change? Continued from the previous page modern management theory, was one of cause all sorts of waste and confusion, reflex we have no choice. In contrast, when the first to take this point of view. Druck- which does not have to be repeated. we “react,” according to Ackoff, we have er wrote Innovation and Entrepreneurship a choice but we don't exercise it. Howev- in 1985 in which he describes innovation The difference between innovation man- er, when we “respond,” we not only have a as the systematic and diagnostic discipline agement and change management is of- choice, but we consciously make it. or tool entrepreneurs use to create, develop ten ignored or poorly understood by well and introduce new value for prospective or intentioned leaders who say that both are Were Ackoff alive today, I bet he would current customers. needed. The problem is in managing and add another pair of concepts that are fre- leading both as if they are the same thing. quently confused with each other: innova- A third use of the same word “innova- Consider what Drucker wrote in 1973 in tion management and change management. tion” comes from organizational leaders. his book Management: “Because its pur- That these two concepts are often used syn- Their use of “innovation” describes orga- pose is to create a customer, the business onymously has led to a great deal of wasted nizational changes required to dramatically enterprise has two—and only these two— effort, disillusioned innovators and cynical improve performance. As leaders who are basic functions: marketing and innovation. leaders. All this could be avoided with a bit tasked with the process and outcomes of Marketing and innovation produce results; more attention to the differences between organizational change, these so-called “in- all the rest are costs.” innovation management and change man- novations” can be classified as either ref- agement. ormations or transformations. According to That innovation is often regarded as an ex- Ackoff, “reformations” seek performance ception and interruption to “real work” is Detached analysts like economists and so- improvements through organizational be- a testament to this pervasive confusion—a ciologists use the word “innovation” to de- havior change without changing structure failure to recognize a difference that makes scribe how new ideas, values, know-how or or function; while “transformations” re- a difference. Innovations renew an organi- products diffuse into a population and cul- quire changes in structure or function. zation's relevance to those it serves. Culture ture. As a result, these analysts tend to view change aims to improve the performance innovation retrospectively. Everett Rogers When “innovation” is used to describe of those doing the serving. An organization in 1962 offered a diffusion theory for inno- change management, the primary focus is should always seek to improve what it's vation that has become synonymous with on the organization and its performance. currently doing. Sooner or later, however, innovation itself. Popular updates to Rog- However, when “innovation” is used in the every organization needs to renew its rele- ers' original theory include Malcolm Glad- contexts of economists and innovators, the vancy to those it serves. r well's Tipping Point and Geoffrey Moore's primary focus is on a new value proposi- Crossing the Chasm. Diffusion is a type tion the organization is developing or intro- of change that describes how something ducing to those it serves. The Myths and new (product, process, technology, idea or Realities of Corporate knowledge) becomes adopted by a market Both change management and innovation or society. management involve diagnosis, making Innovating changes and dealing with resistance, which Myth: Entrepreneurs and innovators use “innova- is often underestimated. Yet the count- Innovating is about being different. tion” to describe both the process (innovat- er-measures each employs to address this ing) and the result (an innovation) of their resistance are distinct. When organizational Reality: efforts. As active participants, innovators change efforts and innovation management Innovating requires getting to the typically view innovation prospective- are attempted simultaneously, the change truth and believing it enough to do ly, often with a more detailed and close- efforts will often unintentionally produce something about it. up perspective. Peter Drucker, a father of new strains of resistance to the innovation and innovators. This is one of 20 myths and realities Vincent & Associates, Ltd. about innovation revealed in our sur- If change management and innovation Innovation Management Services vey report entitled, Corporate Innova- management are attempted simultaneous- tion Management: Reconciling “Trellis” We believe corporate innovating requires ly then some insulation mechanism will and “Vine.” What Veterans of Corporate sensitive and demanding conversations. be required (see “Innovation Midwives: facilitates Innovating Are Saying. Vincent & Associates, Ltd. Sustaining Innovation Streams in Estab- these dialogues. Sequenced conversation lished Companies,” Research-Technology between diverse experts enables input If you would like to receive a copy of Management, 2005). Ignoring the need to and feedback essential to progress. We’ve our survey results, please contact Jane insulate innovation and innovators, or even been doing this for 33 years. Gannon at jane@innovationsthatwork. worse, integrating the change management innovationsthatwork.com com or (415) 387-1270. effort with innovation management, will .

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