This document discusses how organizations can develop a culture that supports radical innovation. It argues that having a general "culture of innovation" is not enough, and that a whole systems approach is needed where the entire organization is aligned behind radical innovation through its strategic mandate, leadership, metrics, structures, resources, processes, skills, and continuous evolution. The document also examines some key cultural differences that do and do not matter for radical innovation, such as an organization's orientation to talent, network richness, and resource fluidity. It notes challenges around leadership, metrics, early market participation, and governance that can get in the way of successfully incubating and accelerating radical innovations.

1. So what is a ‘culture of innovation,’
anyway?
Gina Colarelli O’Connor
Associate Professor
Director, Radical Innovation Research Program

2. Radical Innovation Research Program, Phase II
Corporate Capability Development for the Management of Radical Innovation
• Objective: To understand how organizations can
systematically develop, evolve and sustain their radical
innovation competencies.
– What firms are doing to develop and support radical innovation, as a
distinctive activity, requiring distinctive management techniques:
• Leadership and Culture
• Organizational Structure and Interfaces Management
• Governance and Decision Making
• Specific Processes and Tools
System
• Skills Elements
• Metrics
• Mechanisms to enhance an organization’s RI capability.
• Most effective implementation techniques for instituting
those mechanisms.
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3. Companies in the Study
Phase I Phase II
Cohort I Cohort II Cohort III
1995 to 2000 2001-2005 2004 to 2005
IBM Bose
GE 246 interviews Dow Corning
Air Products Guidant
DuPont H-P
Analog Devices 3M Intel
Polaroid Albany Int’l P&G
Nortel Networks Corning PPG
Otis Elevator (UTC) Shell Chemicals Rohm&Haas
TI Kodak Xerox
GM Mead-Westvaco
Sealed Air
J&J Consumer
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4. Agenda
• Is a ‘culture of innovation’ enough?
• Cultural differences that really matter.
• Cultural differences that do not really matter.
• A systems approach and cultural challenges.
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5. Is a Culture of Innovation Enough?
Organizational Approach
Clear Strategic Mandate Culture of Innovation
Local Approach Whole Systems Approach
# of Whole Systems Mandate
Firms
Local Culture
Mandate
5
Radicalness
R

6. Cultural Differences that Matter
• Orientation to Talent
– Only some people can be successful in innovation
space vs. most everyone can be and should be multi-
dextrous.
• Network Richness (vs. Network sterility)
– Many contacts and ability to tap expertise of internal
and external networks.
• Resource Fluidity (vs. Rigidity)
– Flexibility to borrow and trade the right people.
• Organizational Fluidity (vs. Rigidity)
– Ability to create new structures to accommodate new
businesses that do not fit.
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7. Cultural Differences that Do Not Matter
RI System
Capabilities
Emphasis:
4 Approaches
Competency &
Competency & Strategy Driven
Strategy Driven
Readiness
Readiness Model
Model
Model
Model
Execution
Execution Rational
Rational
Driven
Driven
Build Technical Model
Model Define New
Model
Model
Competencies Technology
and Sense Growth Areas
Market and Commit
Opportunities Identify and Integrate Aligned with Current Resources
Growth Platforms in Businesses and Other
to New Businesses Structure for Unaligned 7

8. DIA Systems Approach
Oversee Transitions/Interfaces
Discovery Incubation Acceleration
Evolving the Ramping
Creation,
opportunity into up the
recognition,
business to
elaboration, a business
stand on its
articulation proposition own
of opportunities.
Exploration Experimentation Exploitation
•Basic Research •Technical •Focus
•Internal Hunting •Market Learning •Respond
•External Hunting •Market Creation •Invest
/License/Purchase
•Strategic domains
/Invest
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9. Culture and Leadership Challenges
• In every case, Discovery is ‘owned,’ at senior
leadership level…
– But in most cases, I and A are not, so resource and
organization issues get in the way of success.
• More important to remove disincentives than to
give incentives.
– Individuals can get burned in this system.
• Incubation is about experimentation and
generation of options.
– Metrics frequently drive for targeting and financial
results.
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10. Culture and Leadership Challenges
• Early market participation and early
harvesting may violate company culture.
• Aligned opportunities are strategically more
comfortable, but tactically more difficult.
– GE CEO program the exception.
– Bully pulpit????
• Governance/decision making boards
sometimes double as coaches….
– Conflict of interest.
– Different type of talent needed.
– Time management troubles.
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11. Sustaining an Innovation Culture
Mandate/Scope
Metrics Leadership & Governance
Structures
Portfolio Management
Skills/Talent
System Resources Development
Reward/Punishment
Processes
Systems
11
Evolution Elements