HOW DOES CULTURE INFLUENCE INNOVATION? Pt 1 of 3 -

HOW DOES CULTURE INFLUENCE INNOVATION? Pt 1 of 3

While academic studies have focused on establishing the positive relationship between culture and innovation, they don’t always show how that may look like. Culture is like the fingerprint of an organisation, and how your company operates and why it operates the way it does is unique. It is what identifies you and the company.  

Over the next few weeks, I will explore how culture affects innovation in a business and what we can learn from it.  

According to these studies on culture and innovation, there are six different dimensions or types of culture: clan culture, market culture, adaptable culture, hierarchical culture, learning culture, and innovation-oriented culture. As business owners, we’re interested in applying these concepts and dimensions in real life. We want to know how these dimensions look like in real life. 

With this in mind, to put each of these culture types in a better perspective, so that we, as business owners, can better understand and apply them, I will proceed to answer the following questions: 

  1. What is culture and what are the different types of culture? 
  2. How does each of the six types of culture look like in real life? 
  3. How does each culture type contribute to innovation?
  4. Most importantly, how can small businesses nurture culture to support innovation and drive business success?

In this three-part video series, I will be discussing two culture types in each video, identifying the unique focus of each type, providing a real-life examples, and what small businesses can do to cultivate and nurture each culture type to support innovation and drive business success.  

In the first of a three-part series, I will share with you what culture is and what clan culture and market culture are. In the succeeding videos, I will expound more on the other culture types. 

What is culture in an organisation?                                       

Culture, put simply, is a way of doing things. It defines what’s acceptable and what’s not based on core or dominant values and beliefs. Because values and beliefs differ, culture will remain unique to an organisation or a community.  

In a literature review published in the journal Management Decision, authors focused on understanding and determining how culture influences innovation. In the review, the authors identified six dimensions or types of culture based on the studies that have they have gathered and analysed.   

The value in understanding these cultural types is to better appreciate how they drive innovation and success in the organisation. Each cultural type focuses on specific elements of an organisation. This focus is what determines the path towards innovation and success. Knowing your cultural type will allow you to evaluate whether you focus on the right thing and whether policies and systems support this focus.  

What is a clan culture? 

A clan culture looks a lot like a friendly place to work where people can be easy to share ideas among themselves easily. Team camaraderie is built on a foundation of trust. 

How does clan culture look like? 

Canva’s culture is an example of clan culture. In the words of Canva co-founder and CEO Melanie Perkins: 

Canva’s culture is about creating a place where everyone loves coming to work, and where everyone is striving to do the best work of their lives and create the most outstanding product and company we can. This means we don’t have any rules for the sake of having rules, we have high standards, and we care about each other and enjoy hanging out together.” 

The key phrases are “a place where everyone loves coming to work” and “don’t have any rules for the sake of having rules.” Canva has an internal focus—on creating a work environment built on trust, and it values flexibility, in making sure that rules don’t get in the way of team members producing “the best work of their lives.” 

How does it contribute to innovation?  

Trust enhances creativity and encourages experimentation, which are crucial in innovation. The more people trust each other, the more willing individual team members become creative and experimental, making the team more innovative. This reminds us of Google’s study on psychological safety and how psychological safety builds trust and drives teams to its top performance.  

How does Canva’s culture contribute to its success? 

They built a people system because their goal is to build the most effective and engaged company in the world. They are building a feedback culture that will allow team members to work harmoniously, develop self-awareness, and feel empowered within the organisation. In return, members of Canva’s growing team are producing “the best work of their lives.”  

As of April 2021, Canva’s active users jumped to 55 million, from 30 million in June 2020. In the same period, Canva was said to be valued at $15 billion. 

What makes them successful at what they do? Because Melanie Perkins, co-founder of Canva, built Canva with the desire to help people solve their design problems—she cared about their customers. But to drive that, she needed to care about her team who developed and continue to develop solutions for Canva’s customers. 

How can small businesses nurture a clan culture? 

Remember these two key phrases from Canva: “a place where everyone loves coming to work” and “don’t have any rules for the sake of having rules.” The focus of clan culture is the team, specifically building trust amongst team members. It supports the team by providing them with project or task discretion and work flexibility. 

To nurture a clan culture, business leaders should focus on building trust. This means fostering clear communication that encourages the team to be honest and candid but respectful. This also means encouraging team members to experiment. With experimentation, however, comes the risk of failure. But in many companies that are supportive of their team, failure is a welcome occurrence—people learn more from failure than they do from success. More importantly, success is a product of many attempts and failures.  

Nurturing a clan culture also means providing team members with autonomy and work flexibility. This means allowing your team members to determine how, where, and when they work, provided a good set of boundaries, such as holding them accountable for the quality and effectiveness of their work. 

As a business leader, focus on encouragement and motivating your team. Your role is to find out what kind of work and tasks your team members love to do and give them more of that so that so that, like the Canvanauts (or what they call everyone who works in Canva), they can produce “the best work of their lives.”  

What is a market culture? 

A market culture is the opposite of a clan culture. The market culture looks outward to the organisation, which makes it customer-centric and highly competitive. And unlike clan culture, it values stability and control over flexibility and discretion.   

How does a market culture look like? 

Dan Murphy’s retail concept was simple but straightforward. That is to offer the most extensive range of wines at the lowest prices possible to customers, then add passionate and enthusiastic sales personnel into the mix for a pleasant and memorable customer experience.  

As part of the Woolworths Group, Dan Murphy’s focus is on providing an exceptional customer experience. It is imperative to have extremely well-versed people in the whole range of liquor categories with a special emphasis on regional knowledge, food and wine matching, and cellaring. That’s why Dan Murphy’s has very knowledgeable team in every store, many with professional winemaking experience, selected for their passion and expertise, to support their customer-centric approach. 

How does it contribute to innovation and success? 

Dan Murphy’s customer-orientation focuses on further improving upon processes and ensuring systems are robust so that they may continue to serve their customers and remain competitive.   

Their focus is on customer experience: To transform customer experience in a way that drives revenue and drives a better outcome for customers. This means, among other things, personalising touchpoints with customers in their e-commerce site to help them choose from their very wide selection of wines and spirits and making sure that they receive their orders within a short timeframe through the innovative use of technology. 

How can small businesses nurture a market culture? 

The Woolworths Group’s core purpose is: We create better experiences together for a better tomorrow. Their purpose is clear—provide a great experience for a better tomorrow for their customers. They are also clear with who and how they will fulfil this: by each team member working together. Everything that they do is for their customers.  

Cultivating and nurturing a market culture is straightforward: focus your attention on addressing your customers’ needs. Your hiring decisions should be based on what would make the most sense for your customers, which, in Dan Murphy’s case, is providing better customer experience. This means hiring people whose skills and attitude towards your customers will contribute to our overall goals.   

Your operations and business decisions, too, should be based on providing the best value for your customers. One of your focus should be on establishing workflows and processes to ensure that your frontline staff is able to provide the experience you want your customers to have.   

To summarise: 

  • Culture, put simply, is a way of doing things. It defines what’s acceptable and what’s not things based on core or dominant values and beliefs. 
  • Culture is unique to the organisation. 
  • Based on studies, culture contributes to an organisation’s innovativeness and, as a result, to its success. 
  • According to studies, there are 6 types of culture: clan culture, market culture, adaptable culture, hierarchical culture, learning culture, and innovation-oriented culture. 
  • A clan culture looks like a friendly place to work where people can easily share ideas among themselves. Canva is an example of a team with a clan culture.
  • A market culture is the opposite of a clan culture. The market culture looks outward to the organisation, which makes it customer-centric and highly competitive. And unlike clan culture, it values stability and control over flexibility and discretion. Dan Murphy’s is an example of a team with a market culture. 

In the next video, I will be discussing adaptable culture and hierarchical culture: how they look like, how they contribute to innovation and business success, and how small businesses can cultivate and nurture them. 

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