By Karen Helderman, CPA, CISA, PMP
Executive Director of Audit and Compliance Services
Virginia Auditor of Public Accounts, Richmond
Innovation skills are in high demand, but the number of people who would characterize themselves as innovators is not so plentiful. Why? We often view innovation skills as an innate characteristic, something that cannot be learned. In fact, when asked to describe something innovative that we have achieved in the workplace, most of us would likely struggle — we do not view our small changes as being particularly deserving of such distinction.
While it is fair to say some people are inherent innovators, think Bill Gates, Oprah Winfrey or Steve Jobs, most people actually become innovative by working for an organization or in an environment that cultivates the skill — a company whose behavior and attitudes foster an innovative culture. Think for a minute of some companies that are characterized by their innovation. What comes to mind? Apple, Amazon, SpaceX? Do we believe these companies have cornered the market in recruiting all of our most talented and innovative people? Absolutely not! We know innovative companies become such because they promote a culture that encourages its employees to act innovatively, and this is something we can all replicate to some extent.
Start at the top
A company’s culture is largely defined by the values, backgrounds and vision of its original founders and is modified through the years as the industry forces those values to change. One fast way to learn about a company’s culture is to read its mission and values statement, but it’s just as instructive to observe what values are emphasized through its rules and policies. If it’s not clear from these documents that innovation is a key value, then modifying the corporate culture is an important first step.
So how does a company begin to change its culture? As is usually the case, the first thing is to do is start at the top. Company leaders must take a hard look at themselves, choose to make a commitment to changing the culture and hold themselves responsible for setting the organizational tone. If the desired tone is one that rewards achieving innovation, then priority must be given to modifying how the company measures success to support innovation, or else a cultural shift will not occur. Leadership should:
Take an honest accounting of their attitudes towards change
Commit to the process
Admit that experimentation and failure are part of innovation and a cost of doing business
Give employees time to innovate
Accelerate the decision-making process to act upon innovation
Acknowledge and reward innovation
To send a clear message about its commitment to innovative thinkers, the organization should first set a solid foundation through its mission and values statement and let all employees know that this document affects how they behave each and every day. Second, leadership should review its rules and policies to ensure they align with the revised values statement. For example, if the old policy indicates that promotions are based on seniority, leadership should consider new promotion policies whereby being innovative is also a key measure.
Simply saying “we are changing our culture” or only changing certain aspects of a company’s operating norms is not enough. To really change the culture, everyone must commit to the change, ensure consistent messages are sent by leaders to the employees, stop old behaviors that do not conform to the new rules and policies and simply walk the talk.
One way to walk the talk is to create programs that give employees the opportunity to learn, practice and gain the capacity to innovate. Here are some low-cost, simple actions that a company can take to foster a culture of innovative thinkers and get the best out of the employees it has.
Create opportunities for employees to collaborate
Collaboration allows staff to work with individuals outside of their normal business units and areas of expertise. It is through these collaborative activities that the best new innovations or reworks of existing processes occur because different perspectives provoke thought, challenge status quo and offer solutions that a homogeneous group of employees may not consider.
Collaboration can be formal or informal. A formalized program may include cross-training, whereby staff have an opportunity to work on a temporary assignment in another department to learn how it operates and contributes to the organization’s mission. This allows employees to learn more about the organization, broaden their professional network, expand their questioning skills and exposes them to individuals who think differently. The expanded network provides new confidantes with whom the employee can consult when in need of feedback about ideas for change. Collaboration also encourages innovation because employees gain exposure to different systems and technologies and learn to appreciate how others perform their work. Innovative ideas are spawned as employees return to their normal jobs and begin to associate what they do with something they learned while cross-training.
Collaboration can also be less formalized and can occur by presenting a business idea or problem to matrixed team of employees and asking them to develop solutions. Since a matrixed team brings together individuals from different disciplines, they each contribute unique thoughts and experiences that, when combined, can lead to innovations.
One example of collaboration at the Virginia Auditor of Public Accounts (APA) occurred as they readied the organization for a major upgrade of SharePoint, a document management and storage system. Since this upgrade was expected to significantly alter how SharePoint operated, it presented then with an excellent opportunity to re-engineer how they use the software. To get started, they formed a team of field auditors who brought different expertise to the table along with the SharePoint administrator who could provide information about the software’s capabilities and limitations. This team imagined SharePoint’s potential and delivered a product to the office that radically changed how they organized their work.
The new solution now allows the APA to maximize the amount of useful information they can compile simply through improved organization and the use of metadata standards. The new design allows them to adopt better principled practices with regard to the common aspects of their work, making it easier to view the status of an audit and giving them the ability to generate analytical information to evaluate the effectiveness of their audit work by linking procedures and recommendations across all audits.
An even less formal collaboration practice is to provide “innovation days,” when departments share information about innovations they have made in hopes of motivating other staff to do the same. Innovation days allow leadership to publicly recognize its innovative staff and provides a networking opportunity for individuals in the organization to meet. Traditionally, many staff choose to opt out of attending these types of events because they are focused on getting their jobs done or do not see how the topic directly affects them. To create a culture of innovators, leadership must demonstrate its support of these activities, clearly communicate why these opportunities are so important and check itself to ensure that getting one’s job done is not the only activity it values.
Support initiatives to experiment by testing new ideas
Leadership can support employee efforts to try new things by giving them some latitude to experiment. The purpose of experimentation is to learn which innovative ideas may work and which are just flat-out failures. Experimentation is risky, however, because it takes time and effort to build and test a new model — reducing the time an employee has to execute work. One way to lessen this risk is to dedicate a small amount of a company’s annual resources toward innovative research and development, and carefully vet and test only the most promising innovations. Remember, experimenting can be fun!
One idea is to conduct an innovation competition — think “Shark Tank.” Give several small teams a real business problem that needs an innovative solution or have the teams brainstorm their own innovation or new service offering. Give the teams a fixed amount of time to collaborate, develop their idea and pitch it to company leadership, with the best ideas being awarded additional time and resources to be more fully developed. This fun competition may generate multiple great ideas and the company may reap rewards in way they never dreamed possible.
Trevor, a young engineering consultant in Cincinnati, described his participation in a corporate competition as not only fun, but also career-changing. His company’s “Shark Tank”-style competition allowed him to work with a previously unknown teammate from another office to brainstorm new applications the company could offer to its main customer, a jet engine manufacturer. The goal was to create a new service offering to make previously difficult-to-interpret simulation reports more intuitive and informative. Trevor and his teammate, along with other teams, had two days from concept to prototype and then they pitched their ideas to the Board of Directors. All ideas had promise and received accolades, but for winning the competition, Trevor and his teammate received a day off and more time and assistance to further develop the application and train the main customer on its use. The public recognition inspired Trevor to continue to view much of his work through an innovation lens, leading him to spend his own time creating even more prototype applications that his company could use and sell. Only one year later, Trevor now leads a team of six engineers specifically pulled together to satisfy the demand for new applications because of the value they add and the money they save.
By encouraging employees to experiment, organizations can create an innovative culture that inspires. The main take away about experimentation is that it takes time, so employees must feel there is a way to receive the time, and leadership must realize that experiments will fail — but there is stock to be gained from the lessons learned.
Encourage employees to exercise a questioning mind
"The important and difficult job is never to find the right answers, it is to find the right question." — Peter Drucker
Questioning the status quo is scary because it puts oneself at risk of appearing ornery; however, leadership needs to encourage staff to ask why things are done the way they are so they can explore ways to do things better. Interview any innovator and they will likely say their idea was sparked by asking why and forcing themselves to make new associations. However, if innovation is as simple as asking more questions, then why do we fail in this regard? The answer is quite simple: Most of us fear looking foolish by asking bad questions. To improve our chances of asking good questions, staff need training and management must create an environment in which even bad questions are treated with respect.
Staff’s questioning skills can be improved if we train, encourage and reward them to employ “what is,” “what caused,” “why,” “why not” and “what if” questioning techniques. These are referred to as open-ended questions because they elicit more information than a mere one-word response, and this additional information can spark innovative ideas. After training is given, leadership should have staff retool customer surveys and other customer-facing interactions to focus on asking open-ended questions to maximize the amount and nature of information collected. In addition, internal surveys to staff should be retooled in a similar fashion. Open-ended questions elicit answers that are most likely to suggest a change or divulge a problem that then sparks an innovative solution in the employee’s mind.
Another idea to spark employees’ questioning minds is to have them participate in question-storming activities about business operations, product design and service offerings. One questioning-storming technique is known as “Five Whys” and is credited to the founder of Toyota. The concept is to have staff ask “why” five times as so to drill down to the root cause of a particular problem so that an innovative solution can be developed that addresses the right issue. Here is an example:
Why did our accounting system go down?
Because the system became locked.
Why did the system become locked?
Because there were too many simultaneous users.
Why were there too many simultaneous users?
Because we never tested the system to that level.
Why did you never test that level of users?
Because we do not have a process set up to test the user load on new systems
Why don’t we have a load test process?
We’ve always been a small organization but are now hitting new employment levels that indicate that load tests are more important.
Innovation is for every firm
Creating a culture of innovative thinkers is not limited to high-tech companies and those with huge research and development budgets. Even small firms desire staff who want to improve the organization, save money or create new lines of business, and most employees desire to work for a company that provides a culture that recognizes and rewards innovation. Leaders must remember that their commitment is key and making this change is likely the toughest task — it requires new ways to measure and reward success. Once the commitment is in place, providing opportunities for staff to collaborate, being open to changing things up a bit and engaging staff to ask open-ended questions are three simple activities that can set you up for success.
Karen Kyte Helderman, CPA, CISA, PMP, is the executive director of audit and compliance services at Virginia Commonwealth University. She has extensive experience directing financial, compliance and performance audits of state agencies and universities throughout the Commonwealth and is a member of the Disclosures Editorial Task Force.