Executives looking to create a culture of innovation must stop focusing on artifacts and espoused values and instead address a business's holy grails and lived values, according to a renowned leadership expert.
Northwestern University Associate Dean Bernard Banks said that culture often morphs from supporting the execution of strategy to determining the actual strategy itself in organizations that have been around for a long time. Banks is a retired Army brigadier general, and previously led West Point's department of behavioral sciences and leadership.
"Culture is this invisible force that everyday guides our actions, in ways that sometimes we're very cognizant of," said Banks Sunday at XChange Solution Provider 2018, hosted by CRN parent The Channel Company. "Many other times, we're not actually aware of how the culture is influencing our actions."
Businesses looking for a quick fix to their cultural shortcomings often turn to artifacts, which include visible structures and processes such as logos, typefaces or dress codes. Even though companies spend an inordinate amount of time focused on artifacts, Banks cautioned that changes here can never permanently alter an organization's culture.
"Artifacts matter," Banks said at the Loews Sapphire Falls Resort in Orlando. "But artifacts are not where cultural change truly resides."
Espoused values are the formal statements made by a company about why they do what they do, and are often put onto laminated business cards or displayed prominently in corporate headquarters. These typically include statements such as "we have a deep and abiding respect for the customer," or "we believe in financial integrity," according to Banks.
Far more information than espoused values, though, are the values in use, or the behaviors that organizations really reward on a daily basis, Banks said. Good organizations have one-to-one congruence, Banks said, meaning that the values they state are actually the ones they live by.
But in many organizations, Banks said there's a divergence, with businesses afflicted by an unhealthy culture typically suffering from a tremendous divergence here. For instance, Banks said he was once employed by a financial services company that claimed to treat everyone with dignity, but was told by colleagues that would need to be combative in order to get ahead.
"Leaders should focus on the values in use, not what's printed on the laminate," Banks said. "The laminate is always going to be great, but those values in use can many times be different."
Businesses almost never start out with the intent to be nefarious, Banks said, but instead suffer from a slow and steady uncoupling of their espoused values from the values in use. This is the reason why companies like Uber, Volkswagen and Wells Fargo ended up in trouble, according to Banks.
"As leaders, you always have to ask, 'What are our values in use today?' Banks said. "Because if you're not keeping an eye on them, they can quickly get away from you."
At the root of culture are a company's underlying assumptions, or the most holy 'thou shalls' and 'thou shall nots' of an organization, Banks said. They usually pre-date the leader's arrival, Banks said, but always influence how people view right and wrong.
As a result, Banks said businesses that try to imitate a move made by someone else in the industry often face strong internal pushback since the action is perceived to violate one of the organization's underlying assumptions.
"If you try to institute something inside your firm that violates one of the 'thou shalls,' you will have a hard time making it happen," Banks said.
In order to have a culture of innovation, Banks said leaders must embrace creativity, engagement, risk-taking, and customer focus by embedding those values in use, supporting them through the company's underlying assumptions, and making structural decisions that allow these practices to flourish.
From a creativity standpoint, Banks said businesses should focus on being open to new ways of doing things. As far as engagement is concerned, Banks said employees should want to be involved and proactively ask how they can help rather than simply pointing fingers.
Businesses should also ensure they're avoiding dumb risks, or uncalculated experiment that could cripple a company if they're unsuccessful, Banks said. Instead, Banks said they should seek out smart risks where the risk factors are understood from the get go, mitigation initiatives are put in place, and the organization can absorb the loss if the experiment doesn't turn out as it was hoped for.
"You have to continually foster smart risk," Banks said. "You should never underwrite dumb risk, but you have firms that do."
Success resides in being relentless in attempting to address the needs of customers, Banks said. Companies should stay away from becoming enamored with what they're currently doing and searching far and wide for customers that value that, according to Banks.
Finally, Banks said organizations need great leadership teams that drive innovation. Specifically, Banks said that effective leaders underwite smart risk, maintain an obsessive focus on the customer, allow creativity to flourish, and avoid shooting down ideas all the time.
Saratoga Technologies has excelled at living its core values, with everybody from network technicians and software engineers to executives and salespeople on the same page around why the Chattanooga, Tenn.-based solution provider does what it does, according to Jennifer Patterson, employee support specialist.
Upon returning home, Patterson said she plans to pay more attention to how risk-taking is rewarded or discouraged within the business.
As a business leader, Boca Raton, Fl.-based Computers Plus President Norman Rosner said he needs to make sure that reality aligns with the company's stated values and that he reacts quickly whenever something goes wrong. Rosner believes he can most effectively model the company's values by publicly owning any mistakes he makes and taking concrete and tangible steps to avoid a repeat incident.
"You have to practice what you preach," Rosner said.
Video by Diana Blass.