Corporate culture is key to innovation


Some companies out-innovate their peers year after year after year. Why? Forbes recently published a list of the world’s most innovative companies. But why do some companies have a high innovation premium while others do not?

The elements that make up a truly innovative company are many:

  • A focused innovation strategy
  • A winning overall business strategy
  • Deep customer insight
  • Great talent
  • The right set of capabilities to achieve successful execution

More important than any of the individual elements, however, is the role played by corporate culture – the organization’s self-sustaining patterns of behaving, feeling, thinking, and believing – in tying them all together.

Yet according to the results of this year’s Global Innovation 1000 study, only about half of all companies say their corporate culture robustly supports their innovation strategy. Moreover, about the same proportion say their innovation strategy is inadequately aligned with their overall corporate strategy.

Issues of culture have long been of great concern to corporate executives and management theorists alike, whether they apply to companies as a whole or to selected areas such as innovation. The reason is obvious: Culture matters, enormously. Studies have shown again and again that there may be no more critical source of business success or failure than a company’s culture —
it trumps strategy and leadership. That isn’t to say that strategy doesn’t matter, but rather that the particular strategy a company employs will succeed only if it is supported by the appropriate cultural attributes.

This disconnect, as the saying goes, is both a problem and an opportunity. The study data shows that companies with unsupportive cultures and poor strategic alignment significantly underperform their competitors:

Overall, 36 percent of all respondents to our survey admitted that their innovation strategy is not well aligned to their company’s overall strategy, and 47 percent said their company’s culture does not support their innovation strategy. Not surprisingly, companies saddled with both poor alignment and poor cultural support perform at a much lower level than well-aligned companies. In fact, companies with both highly aligned cultures and highly aligned innovation strategies have 30 percent higher enterprise value growth and 17 percent higher profit growth than companies with low degrees of alignment.

If more companies could gain traction in closing both the strategic alignment and culture gaps to better realize these goals and attributes than their financial performance could improve.

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Posted by Torben Rick

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