Gmail, Adsense, Post-It notes are just some of the products that came from employees during their time off. While those inventions were novel and helped generate a sizable portion of revenue for the respective companies, there’s an underlying secret that led to the creation of those products in the first place.
Several organizations focus on addressing problems first. This allows them to generate the solutions either internally or through the use of external consultants. The most successful organizations focus on an entirely different metric altogether. It is the cultivation and grooming of the culture of innovation. As you’ll discover in this article, a company with over 230,000 employees have a simple method of innovating and how a 100-year-old publishing company that was declining, was able to grow by focusing on its culture.
“I have an idea, let’s all just do this” said by a classic CEO working in a legacy organization, from the top down. The leadership team will just have an idea for a new product and give it out to the rest of the team to launch it. Legacy organizations are organizations that I refer to in my new business innovation book as organizations that are often outdated and stuck in the old ways. In computing, where legacy systems often paved the way for standards that would follow, it is also a previously outdated computer system that’s in need for replacement as it’s not as effective for today’s world. Similarly, while legacy organizations were effective in the past, with the new pace of change, the new technology, and the rising millennial workforce, legacy organizations need to adapt.
Even though sporadic inventions can come through from legacy organizations, to maintain a consistent flow of new ideas and innovations, it can only come from organizations with a culture of innovation baked in. This allows suggestions, ideas, and information to flow smoothly within an innovative organization.
“You get a 40% boost in employee engagement, 40% bump in customer engagement and 35%+ of resulting profits” mentions S. Chris Edmonds, author of the Culture Engine. Edmonds shared a story about working with a catalog printing plant where over 30 primary languages were spoken on the main floor. By understanding how to help the customer first, the organization was able to shift their marketing solutions and within 4 months, cut waste in half. Edmonds suggests that “as a leader, you’d have to formalize a behavior” and that “managing the quality of workplace culture is the other half of the manager's job”
Equally, when you have over 230,000 employees worldwide, creating and sustaining change is an even higher priority. Jeff Wong is the Global Chief Innovation Officer at EY, where he heads the global innovation efforts. If someone has an idea at EY, from an intern to an executive, there’s an easy line of communication for his team to receive the idea. Wong mentions that “everyone at EY can send an email to me directly or there are processes in place for someone like an intern in London to reach out on a team level. Similarly for the services line and then up to the UK team”
It’s this easy flow of communication that’s needed for ideas to come to fruition. “We have a portfolio of internally funded startups and at the same time we also look at disruption coming from technology,” says Wong. They’re able to get insights, methodologies, and processes from people outside the company and bring it in-house.
Todd Rovak, CEO at Fahrenheit 212 and Capgemini Consulting (North America), suggests “innovation culture – like any other company culture – is defined by what is rewarded and what is deemed important or strategic to a company.” The key he suggests is that the executives must place the importance of developing and socializing an innovation strategy. “How can we get different perspectives in a healthy environment? How does a designer safely argue with an engineer?” Millennials join expecting that level of communication and this positive type of friction helps spark new ideas.
Rovak mentions that story about working with a telecom looking to buy a new business. Instead of simply looking at the end product, his team would ask “What’s the type of play we’re going for? Which one are we well positioned to enter into?” This allows leaders to narrow the target.
Whether it’s creating a new organization of building and maintaining an existing brand, it’s being aware of the situation that will be present in the future, not what it is currently, nor the past.
Founded in 1922, Trusted Media Brands, Inc., formerly Reader's Digest Association, is nearly a 100-year-old publishing company known for its iconic brand Reader's Digest. However, by the time Bonnie Kintzer returned in 2014 as the CEO, the company had been in and out of bankruptcy under several different leaders and was in dire need of a transformation. Despite having millions of customers and an established brand name, the company's customer count and revenues were declining.
“What would delight customers? What would satisfy advertisers? Our mission is to grow.” mentions Kintzer. Realizing that there are many customers that love the brand after reading letters from customers, she wanted to empower employees to grow. “First I met with 50% of the employees,” says Kintzer. She did this by talking to the leadership team and then making sure she covered every area of the org chart.
From there, she generated ideas with the team and set 90-day goals. “Everyone’s goals are shared with the entire team,” says Kintzer. “Behaviour changes slowly and takes around 12-14 months but having metrics is helpful to course correct along the way.”
This transition allowed TMBI to increase their audience 55% to 53.8 million consumers, increase mobile unique visitors by 103%, and reach 21 million adult millennials since 2014.
Legacy organizations can build a culture of innovation but not by doing the same thing, the same way. “I find it surprising how companies continue to do the same thing and expect different results,” says Rovak. They key is to embrace the new technology and processes.
Wong says that at EY “we play with the technology ourselves and use it on our own problems. We avoid the invented here culture, let’s just get to the right answer.” The invented here culture is about getting the right solution for the users whether the technology was built internally or externally by a competitor. It’s about following embracing the change.
Whether there are legacy organization or simply smaller organizations with 50 employees, by simply embracing the change that’s happening all around the world, the culture of innovation can be baked in to sustain more and more innovations to generate massive revenue growth not only in the short term future, but also in the years to come.
Najeeb Khan is an author, entrepreneur and an innovation strategist. He’s giving The Huffington Post readers a free copy of his new business innovation book. You can follow him on twitter and see his weekly innovation reports.