Why culture and leadership matter for disruptive innovation

Allowing people room to conceive and try things. Bringing in “troublemakers and tinkerers.” Encouraging ideas from everyone, then allowing “people to collide and generate ideas.”

These traits are part of the process that allows companies to adapt to change, to disrupt themselves and fend off competitors, and improve without losing sight of what they are. But it wasn’t just speaker Dirk Beveridge of 4th Generation Systems saying this -- it was a CEO of a $50 million company and a corporate sales manager of a $1.6 billion operation. They model these traits as part of their vision, instill them in the culture, and ultimately inspire companies that iterate, think and adapt with guidance, but not micromanagement, from their leaders.

All this matters because, as Scott McKain said later on Thursday at the NAW 2015 Executive Summit, “Great isn’t good enough to grow a business in today’s economy.” If you are doing great work but can’t say what makes you different than your competitors, than your marketplace, then you aren’t differentiated or truly focused on customers. You lack “clarity.”

And 2015 is the time to innovate, to disrupt, to encourage the generation and trialing of ideas, Beveridge said. Times are good, and with a future promising more and new competition, rapid change, complexity, volatility and more difficult paths to growth, the “same old” won’t cut it.

That’s easier said than done. But only people will create change, disrupt industries or lead innovation, Beveridge said. People, not companies.

“The CEO is responsible for the vision and culture of the business”

When Paul Raiche, president of Ceratec, talks about listening to customers and employees, about giving people the freedom to think, devise and act, about stepping back from the day to day, he isn’t speaking from a position of weakness. In fact, the CEO retains a prominent role in this construction -- without his or her taking the lead, there won’t be a coherent vision or culture.

Raiche had a serious accident in 2011 that put him out of work for more than two months. It was during his recovery, he said, that he began reading and thinking more about culture, about what would happen to his company if he weren’t there for the long term. He was shocked to realize that, though “the CEO holds the vision,” he didn’t have one.

His mantra is “Inspiring inspired people.” A great company must have the right people to develop the right culture to then fight for inspired, new, disruptive ideas. And a CEO must be learning and listening and thinking and inspiring that process without micromanaging it. And part of that, as Raiche emphasized repeatedly, is not simply keeping all that knowledge to himself. After all, if the CEO doesn’t share information, it doesn’t do any good.

How did Raiche apply this to his company? He visited similar distributors to see what they did, whether the business model made sense. He had his company spend time with suppliers on the plant floor, with truckers to see how they used their phone (i.e. technology) -- all the while with the idea of taking the best of what’s out there and applying it internally as fit. And, as part of this, he backed off. With great employees, Raiche could "give them latitude to do what they want within the context of the business."

Ideas deserve to have debate

Ideas rarely bubble up out of nowhere, and rarely are they accepted without hesitation. Rare, too, do they come from the usual suspects. To come up with disruptive, unusual, innovative and risky ideas requires an environment that also is different from the status quo.

What do Raiche and Keith Holland of Border States Electric Supply recommend? People who like to agitate and play with ideas. As Raiche said:

“You need to find your troublemakers, your tinkerers, those that are driven by curiosity,and [then] provide a platform -- a culture to facilitate their experiments.”

In fact, Raiche went so far as to hire a consultant who is “only there to cause trouble.” Trouble doesn’t have to be big or destructive; it can mean small shifts to the status quo, such as this consultant video-conferencing into a meeting instead of coming to the office. Employees waited to see if Raiche would have a negative reaction; instead, Raiche often works from home and travels to the office mostly for meetings and other personal interactions.

Holland deals with idea generation in specific, concrete ways in his role as corporate sales manager for maintenance, repair and operations at Border States Electric Supply, an employee-owned distributor.

Ideas need time and space to be developed, he said. They are neither the province of just a few people nor those of a certain title or viewpoint:

“See ideas through a different lens and allow people to collide and generate ideas. Talented individuals, in the right environment for development, achieve goals and the benefits are incredible."

Timing and accountability

Even experiments must come with some foundation, and must eventually pan out. McKain in his later presentation said how he was surprised to find that a customer-focused experience, even in creative fields, starts not with creativity but clarity.

For Holland, ideas don't necessarily need to originate as fleshed-out concepts, but they eventually must scale up, or they’ll be “parked.”  And ideas need to fit the idea of a “customer culture” -- one that combines “teamwork, documented tangible results, trust and creativity.”

Not every idea is right, and not every idea is right at the time. However, just because an idea isn’t right for the moment doesn’t mean it isn’t ever going to be right. Holland related how he learned this the hard way with an idea that didn’t work in the 1990s. When it was raised again many years later, Holland was dismissive, but he did decide to allow for an experiment. This time, the idea worked. If Holland didn’t live up to the culture of idea generation and collision, this improvement may have never been realized.

And when an idea is right? Well, Holland says, companies have to be smart enough to realize that and act.

James daSilva is a senior editor at SmartBrief and manages SmartBlog on Leadership. He edits SmartBrief’s newsletters on leadership and entrepreneurship, among others. Before joining SmartBrief, he was copy desk chief at a daily newspaper in New York. You can find him on Twitter discussing leadership and management issues @SBLeaders

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