How Does Culture Influence Innovation? Pt. 2 -

How Does Culture Influence Innovation? Pt. 2

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. 

In the second of a three-part series, I will be discussing adaptable culture and hierarchical culture: what they are, bring to you organisations that practice such culture type, how these culture types have aided innovation in their markets, and how they can apply to you  

WHAT IS ADAPTABLE CULTURE? 

An adaptable culture works toward bringing critical resources together to engage in innovative and creative ventures. Teams with an adaptable culture looks outside of their organisation, which means that they are customer-centric and are very competitive. They empower teams, encourage creativity within teams, and afford them flexibility and discretion to address customer needs and to compete with their rivals.  

Like agile companies, they focus on moving quickly to adapt to changing conditions. Agile is a mindset of continuous learning and adjustment with a goal of delivering the best value to the customer.  

How does an adaptable culture look like? 

Spotify, is a Swedish audio streaming and media services provider, founded in 2006k. Spotify is incorporated in Luxembourg as Spotify Technology S.A, and is headquartered in Stockholm, Sweden, with offices in 17 different countries around the world. Daniel Ek, founder of Spotify, describes their culture this way:  

We’re dedicated to relentless innovation, ensuring our technology stays relevant, easy to use, and easy to scale … Working fast means acting with consent, not consensus. Even if the majority can’t come to an agreement, it’s important to keep moving, take a chance, and execute.”  

The key phrases are “staying relevant, easy to use, and easy to scale,” “acting with consent, not consensus,” and “keep moving, take a chance, and execute.” These phrases demonstrate Spotify’s focus: customer-centricity and team empowerment through autonomy. They make it clear on how to accomplish their goals. Spotify focuses on providing services that will delight customers through their ease of use and relevance to their lifestyles. The company empowers its team members by encouraging everyone to experiment without needing consensus. Still, it provides clear boundaries in that these experimental customer solutions need to be “easy to scale” and that they need “consent” before they execute. 

How does it contribute to innovation?  

The core assumption is that the business faces many threats: from an ever-changing market environment, evolving consumer lifestyles, and competitor innovation. This assumption is what forms their mindset: fail fast, learn fast, and improve fast. It’s this assumption and mindset that drives innovation within the company.  

Teams with an adaptable culture are future-oriented and focus on building better products and services to address changing customer needs, which means the organisation exert effort in making sure that they can adapt to changing market landscapes and disruptions.  

How does Spotify’s culture contribute to its success? 

Spotify can be described as decentralised—it moves in squads, or teams with no more than 8 people. Each squad works autonomously—they decide what to work on, how to accomplish it, and how to work together as a team—but within a set of boundaries that relate to their goals or mission. They are not burdened by bureaucracy, and they don’t waste time waiting for approvals or consensus. This means they can easily abandon experiments that don’t work, learn from their mistakes, and use what they’ve learned to develop the next successful experiment.   

How can small businesses nurture an adaptable culture? 

To nurture an adaptable culture in your business, you’ll need to focus on empowering your team to allow them to respond quickly to customer needs and wants. First, your team will need to know and understand clearly their boundaries, specifically, what they are accountable for and what their short-term and long-term goals are. Second, you’ll need to give room for experimentation—failure has more to teach than success. The only way to keep succeeding is to keep experimenting and to keep learning.   

WHAT IS HIERARCHICAL CULTURE? 

The hierarchical culture is the opposite of the adaptable culture. The hierarchical culture is characterised by a formalised and structured place to work, emphasising stability, predictability, and efficiency. It also looks inward and focuses on nurturing its team. 

How does a hierarchical culture look like? 

CB Insights, a New York-based market intelligence platform, is an example of an organisation with a hierarchical culture. Its business model requires structure and focus to deliver customer solutions, particularly market intelligence to its customers, and to compete in a very competitive space.  Its company culture is synthesised by its 5Hs: Hard Work, High Standards, Hunger, Helpfulness, Humility.   

Hard work: We believe hard workers do two things: focus on solutions and focus      on execution. 

High standards: Those with high standards are deliberate decision makers driven by personal excellence and have mastery over the details. 

Hunger: We search for those who set ambitious goals for themselves and stay restless until their targets are hit. 

Helpfulness: Helpfulness is a key element of our organisation. We value those who communicate simply, stick to commitments, and can adapt to change. 

Humility: Humility shows up in many ways across CBI, characterised by someone who assumes good intent, is open to new ways of thinking & doing, and sweats the details.”  

How does it contribute to innovation?  

Formalised structures provide stability and predictability, which allows team members to focus on driving efficiency by improving and/or streamlining processes, which, by definition, is a form of innovation.  

How does CB Insights’s culture contribute to its success? 

These 5Hs show that CB Insights emphasises on employee performance, and provide support for their employees to continue to improve. Moreover, CB Insights is intentional about learning from past mistakes, particularly poorly throughout or lack of established processes, and making sure that they do not repeat history. Anand Sanwal, CEO of CB Insights, has a published “running list of screwups at CB Insights” to remind everyone and himself of these mistakes in order for everyone to learn. He believes that improving how one works and operates is part and parcel of building a company and driving success. 

One of the things that Sanwal learned in the years of running CB Insights is the importance of developing processes and structures. Two of his mistakes made him realise and learn this valuable lesson. One structure that he was intentional in creating and improving upon was their onboarding process to ensure that new hires know what to do, what to expect, and how to succeed in the company as soon as they enter the door on the very first day. Sanwal also learned the importance of establishing clear workflows and a well-executed sales process. 

Workflows, rules, and structures help streamline the decision process. It simplifies many things for managers and even regular employees because they don’t need to worry or be distracted about the small things that could have been automated or streamlined, and instead focus their attention on the more important things, such as achieving business goals.

How can small businesses nurture a hierarchical culture? 

The key phrases here are “establishing efficient structures” and “putting effective systems in place.” The idea is to enable the team to focus on achieving their business goals, which means that your mandate as a business leader is to create and cultivate an environment that makes it easy for your team to succeed. 

CB Insights provided excellent areas where you need to have good structures in place. Onboarding is essential because this is where your team begins to understand and appreciate your organisation’s culture.  

The sales process is also another area to consider. Establishing a sales process does not mean creating a rigid system that limits what your sales personnel can do—what it means is providing a structure and a system that supports your sales to push your product. For example, do you have an efficient and effective system to capture leads and follow through with those leads? Do you have a system that allows your sales personnel to create several touchpoints for your customers so that you’re always top of mind? 

Again, the focus is on creating and cultivating stability, predictability, and efficiency. 

TO SUMMARISE: 

  • An adaptable culture empowers teams, encourages creativity within teams, and affords them flexibility and discretion to address customer needs and to compete with their rivals.  
  • The hierarchical culture is the opposite of the adaptable culture. The hierarchical culture is characterised by a formalised and structured place to work, emphasising stability, predictability, and efficiency. 

In the next video, I will be discussing learning culture and innovation-oriented 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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