Building a Culture of Innovation: What Leaders Get Wrong

Speaker A: Foreign.

Speaker B: The HR Happy Eye Network is proudly supported by Workhuman. We talk a lot on this show about where HR ah is headed. And one of the most exciting developments I've seen lately is what Workhuman is doing with future leaders. Future Leaders is the first talent intelligence tool of its kind, helping companies identify high potential VP plus talent already inside their organization up to four years before they step into the role. And it's not based on gut instinct or on visibility. Using real time recognition data and proprietary AI, it reveals who's already influencing and elevating the people around them. Future Leaders from Workhuman is setting a new standard for internal development. Learn more@workhuman.com that's W O R K H U-M M-A-N.com welcome to the HR Means Business podcast, which is part of the HR Happy Hour Network. I'm your host, Mervyn Dinner. Very recently I attended the Global HR Summit in Istanbul and one of the keynote speakers, Chris Bezik, uh, who is an expert and author on leadership, culture and innovation, um, put forward a very, very strong, uh, case for innovation, leadership and why we possibly don't do things the right way. Um, and so I've invited Chris to come and talk about leadership, culture and innovation on the podcast. Um, he's an advisor and speaker on leadership and culture, serial entrepreneur, former CEO, and as I said, bestselling author of the book Building a Culture of Innovation. Chris, welcome to the HR Means Business podcast.

Speaker A: Thanks, Mervyn, it's an absolute pleasure.

Speaker B: Um, did I miss anything out in your list of achievements?

Speaker A: I don't think so. I think, um, yeah, I'll take all that. I'm more than happy with that as an intro. Yeah.

Speaker B: Okay, that's great. Uh, so I suppose let's start with the big picture. So when people talk about innovation in organizations, what do you think they still get wrong?

Speaker A: Um, that's a great, that's a great opening question. Um, in fairness, I think one of the challenges is that the word itself has been bastardized and devalued over the last, let's say, decade, just to make the context of the conversation easier. So over the past decade, innovation has meant different things to different people. Um, and, and organizations have pursued innovation, or what they've deemed to pursue innovation. And because they haven't approached it in the right way, a huge amount of investment in innovation, um, hasn't returned any roi. So it's been really devalued. There's a lot of conversation in organizations around. Well, we've tried to innovate before, and it didn't work. Um, I think the challenge with it is that it's been devalued and therefore is largely misunderstood.

Speaker B: Okay. Um, I mean, is it, do you think it's a product thing, it's a technology thing? Uh, or is it something, I suppose, for like, almost a separate team rather than being just a way of working?

Speaker A: No, no, no, no. Absolutely not. So if you look at the way I describe innovation in all of the organizations I work with, and in fairness, we quite rapidly move away from the word innovation. And I'll explain why. Um, firstly, we have to look at innovation as an outcome. I m think one of the challenges with organizations is they've looked at innovation. To your point a few seconds ago, they've looked at innovation either as well that's about a team or it's about a department or, or it's about a very, very specific focus on a, uh, product or a service. And the reality is M, for me, and the way I position it with clients is innovation's an outcome. So innovation predominantly is and should be a label that we apply to something we've done, whether that's a product, a new proposition, a new experience, a new service. Um, when that product proposition, service experience, whatever it is that we're doing as an organization, when we've implemented that and we've got it into the hands of customers or whoever we're solving challenges for and it's received and deemed demonstrably better than what existed before and of greater value and a genuine solution to the problem of that was occurring before. At that point, we've probably done something sufficiently different and valuable enough to warrant starting to call it innovative. I think the challenge with organizations, though, is they're too caught up on the word, as opposed to why we as organizations want to be more innovative in the first place. And that's because we want to drive growth. We want to be different, we want competitive advantage. We want to be able to solve problems faster. We want to be able to. And this is some specific language I'm hearing at the moment from CEOs and leadership teams. We want to be able to lead the organization at pace. Um, and there are obstacles in the way that are slowing us down from that kind of pace that we don't know how to solve. And innovation is a capability that we can build inside an organization that is, we can build the capability to be more innovative. And it's that capability that allows us to drive growth and lead at pace, et cetera. And I think When I talk to leadership teams and put innovation in that context, then even though we might discuss this now and talk about it, think, well, yeah, that sounds intuitive, that sounds simple. Then there's just a real aha, uh, moment from boards when it's positioned and discussed in that kind of context.

Speaker B: M Is there an element, do you think, of organizations thinking they can just launch an innovation program and kind of somehow expect it to happen?

Speaker A: Yes. And I've literally had that conversation with a client this morning. Um, because the client has, and this is a, a global brand, multiple offices around the world, tens of thousands of staff, and they've done the typical, the typical approach was, um, if we give people new skills, so if we en masse, if we teach people what entrepreneurship is, you know, as a theoretical construct, right. Not something tangible. If we teach people design thinking and give them some skills and teach them how to facilitate creative sessions, things like if we just give people some tools, then by default we will build this mythical culture of innovation. But there hasn't been any shift in. And to that point, a lot of organizations over the past decade have approached innovation in that way. So they've looked at what I would call the front end of the innovation process. They've said, let's start using some canvases and some tools and some frameworks, what I would call the mechanics of innovation. And that will drive innovation for us. Uh, what a lot of CEOs and boards that I speak to now have realized is we've done the yin of the yang, if you like, we've done one part of the equation. And what we've missed is that innovation as a capability therefore means it's about collaboration and creativity and thinking and risk and psychological safety and the right environment and how we build that environment to promote the kind of behavior where radically different thinking emerges as a natural component of that, of the way the organization works. And they haven't done enough work on that side. So the tools are in place, the canvases, the frameworks, but there's been no focus on what does it take to lead for an organization that wants innovation to become a natural byproduct of how it behaves, and what does the culture need to look and feel like on a day to day basis, like the lived reality, what does that need to be so that all of the behaviors and the ingredients that creating new things or solving problems that hopefully will be deemed innovative, uh, have we put all those in place? And the answer with a lot of leadership teams is we haven't done enough work on that we haven't balanced the equation out. So we're heavy on tools and processes and innovation frameworks, but we're very, very light on the leadership and culture that innovation requires.

Speaker B: Mhm. Are there any, I suppose, specific, uh, or recurring cultural barriers that organizations come up against, uh, that you can spot in different organization, but it's the same kind of barrier.

Speaker A: Yeah. So one of the big ones is where we sort of started this conversation is definition and communication. Um, and this is really acutely played out in organizations that have probably invested in innovation historically and then it hasn't worked. So communication around, why will it be any, you know, what you don't want is employees of an organization saying, oh, here we go again, the innovation things come up. You know, um, we've tried this before, it didn't work. So you have what I call organizational cry wolf. You know, you can only do that two or three times before the whole of an organization just says, uh, uh, with another, we've tried this initiative before, I just don't believe it this time. So communication and positioning, what, like what is innovation in the context of my organization? How will we drive innovation? Um, how will it be facilitated? Are the leadership, is this a genuine pursuit now or is it another initiative? Um, so getting the positioning of what innovation is in the context of the organization is really important. Um, there's a huge focus at the moment and I've literally just written a few LinkedIn pieces around the restructuring of middle management layers. Um, organizations saying, well, we're going to reduce the bulk of middle management layers. We're replacing it with AI. We're now building what we're calling the intelligence layer rather than the middle management layer. All of these things. And I'm seen a lot of organizations where that's now backfiring, where they've stripped management layers out, uh, in the name of efficiency and then realize that that creative and cultural capacity in the middle of the organization has been thinned out too much. And when you thin that out, you then lose, you lose the capability for driving innovation and differentiation and, and continuous change in an organization. Because leaders aren't going to drive that behavior on a day to day basis. Employees won't do it unless they're incentivized and championed and led to behave like that. You slice that middle management layer out and you lose the conduit that on a day to day basis brings that kind of behavior alive. There's a couple of core themes and then you know, there's a few others, like leaders. Not that some of the Language that you might remember from Istanbul, I talk about leadership teams need to own the innovation agenda, like genuinely own it, proper ownership. Whereas at the minute there are too many leadership teams that sponsor uh, innovation, but they don't really take ownership of it. And that's quite a recurring theme

Speaker B: actually leads me on to my next question. Um, which you didn't know was coming. Uh, but I suppose it's a bit like what does innovative leadership look like in practice? But I suppose more specifically to an individual, if you join an organization or you walk into an organization where innovation I suppose is genuinely part of the culture and what they do, um, what would you notice that leaders do differently on a day to day basis or maybe on a more of a kind of monthly or quarterly basis?

Speaker A: Yeah. So I think, um, my first just reaction to that is because I think again the language is really key here. Um, it's not about innovative leadership. The leadership itself isn't innovative. How I, um, but what it is about is, and the language I use, how I phrase this with senior teams is it's about leading for innovation. So if an organization wants innovation to be a natural byproduct of what it does or an outcome of what it does, then how do we as leaders, how do we lead for that outcome? What do we need to do as leaders to build the right environment and lead in a way that naturally promotes all of the ingredients that innovation takes? So that's things like candor, uh, psychology, all of the things that you will know and your listeners will know. Um, radical candor, psychological safety, understanding what creativity is like, genuinely understanding what creativity is, understanding how the process of innovation works. That it's not a case of just saying, hey, we've got X opportunity or X problem here. It's a beanbags and post its exercise, let's solve it tomorrow afternoon. You know, there's a whole. Innovation is just as much of a corporate discipline as everything else. There are frameworks, it's very process driven, it requires the right governance, the right management. Um, so as a leader it's about understanding how you get from a problem or an opportunity that you've identified through to a really creative solution several months down the line that people say, wow, that is super innovative. And that process, that journey from A to B is a muscle and a discipline that you can build, but it's a system and um, it has governance, it has frameworks, et cetera. So leading for innovation is about understanding how innovation works and the kind of environment and the behavior and the habits that are required to Bring that alive on a day to day basis. And organization.

Speaker B: Okay. Um, when organizations are hiring at say manager level or above, what should they be looking for? Um, or how can they determine whether, uh, I suppose the people that they are assessing will be able to contribute towards innovation.

Speaker A: Yeah, and contribute's a really, um, good word there. And we may get onto that in a minute because I think again, I use that word in one of the frameworks that I use and the word contribute is really important. Um, but in terms of that management layer, and it's not just management, this is heads of team leaders, anyone with a significant sphere of influence or any position that you're hiring that has a sphere of influence. Um, if innovation and driving growth, being more adaptable, being able to lead an organization that wants to lead at a certain pace, the kind of qualities you want are, uh, uh, whether it's managers or team leaders, you want the kind of qualities that will enable collaboration. That, you know, people that are, that understand that multiple perspectives are valuable and that, you know, differentiation is not our enemy. Um, that we want multiple perspectives, that we need collaboration. You know, people that are able to help others, um, you know, surface their voices and their opinions. You know, people that can create that kind of inclusive environment around them to contribute to culture. Um, also people that understand innovation takes a bit of risk and solving problems and creating new propositions and solutions takes risk. So does that, that individual, you know, have some of the key traits that make them comfortable with risk? Bear in mind, we have to bring them into, we want to hire them into an environment that embraces risk. Um, you know, are they the kind of person that is looking for, to find creative solutions? You know, are they, are they curious in terms of their personality? Because curious people tend to want to experiment more. And people that experiment are constantly looking for new and different ways to solve things. So there's lots of different behaviors that would, that, that contribute to the right kind of sort of profile.

Speaker B: Okay. I'm guessing a lot of leaders, uh, uh, senior management, uh, are under pressure to deliver short term performance, manage risks, keep everything moving, keep the business growing. Um, how can leaders, or how do you recommend leaders create space for innovation in an environment where possibly efficiency is squeezing out experimentation, if you like.

Speaker A: Yeah. And um, that capacity is a big issue that I've seen certainly over the past year, 18 months. Um, there's no easy way around it. And I had this conversation with a CEO and a head of strategy last week. I've never walked into an organization anywhere in the world and sat down with the senior team. And they've said, hey Chris, what can we do with all of this spare capacity we've got? So that's always, you know, you almost as a leader have to take that as a given. There's never the perfect time to do anything. Um, and capacity in most organizations will always be a challenge. Our job and our challenge as leaders is to figure out how we deal with that now when we are trying to drive innovation in an organization. I think the other thing that's really important for, for listeners to understand is the type of innovation that shifts the needle for organizations that really drives growth is not incremental or continuous improvement, which most people will know. And for the vast majority, almost all organizations, it's not the other end of the scale, the radical or the disruptive, um, type of innovation. It's the middle ground. It's something I call differentiated innovation. So what are the opportunities and what are the problems that are either stopping us being different as an organization or uh, what are the opportunities that if we could solve them, would differentiate our organization? And typically they are quite meaty in terms of. So I'll give you an example of scale. Um, I'm working with a client at The Moment, a UK based company. They are 120 million pound a year business. They have multiple problems in the organization that are a joint issue between them and their customers. So they affect the customer and they affect them. Those problems range anywhere from costing them half a million pounds a year to one and a half million pounds a year. And they have a dozen of these problems. Now those are the kind of things that you want to be solving as a hundred million pound a year business. The challenge is you're never going to be able to solve all of them all at once. You might have the capacity to look at uh, three or four of them at any one time. So when we talk about the leadership challenge around the capacity to solve these problems, you're talking about spinning a small team of three or four people up, uh, for maybe half a day a week for the next six months. So in terms of capacity, you're not talking a huge amount of time and resource and capacity to free up. So for each one of those problems, you're talking three people for half a day a week. Now that's not insurmountable. It's not like saying we need 30 people to be working on these problems full time. So again, I think because the structure of innovation and the process of it is so misunderstood, most leaders think, well, we just don't have time to do all this because they have an assumption or a bias that solving these problems is just going to take so much time and effort and energy and resource that they just don't have it spare. Um, and that is a big challenge. I think that's what's holding a lot of organizations back.

Speaker B: Yeah. Um, also, what would you say is, I suppose, the role of trust? I suppose a lot of innovation depends on people challenging, speaking up, trying ideas. Bear with me a moment on this one. Uh, and obviously sometimes getting them wrong. Um, so what role is trust or what role does psychological safety play within an organization?

Speaker A: A huge role. So there's a couple of things. So psychological safety specifically between leadership, um, teams and management teams is really, really important. What we want to do as leaders, our job really as leaders, if we own that innovation agenda, and whether it's growth or innovation or leading at a different kind of pace, whatever our agenda is, what we're doing as leadership teams predominantly is then pushing down the ask to the middle of the organization to say, can you now enable that and bring that alive on a day to day basis? So the connection between leaders and managers in terms of psychological safety is really, really important. If I as a leader want you as my middle management layer to bring all of this stuff alive on a day to day basis, you need to know that I've got your back and you need to know that it's safe for you to do that. And then the next layer down in terms of middle management, down to employee, that relationship in terms of psychological safety, um, is then different. Again that's now about can I challenge the business, can I challenge my colleagues, can I challenge you as my manager? Can I throw something into the pot that might be a little bit controversial or off the wall and what I call what's the social risk that goes with that? So is the culture and the environment safe enough for me to be okay to doing all that so that there's, there's no sort of, you know, I'm not at risk of upsetting the boss and I'm not at risk that uh, there's no social risk, I. E. What will my peers think of it? So we have to handle psychological safety different ways as we layer down through the organization. When you come to risk in terms of the innovation process itself, the innovation process, if built correctly in an organization, is actually wholly designed to mitigate risk. And again, it's because it's not understood well enough. Most organizations think innovation is inherently risky when the process of innovation itself and the frameworks that you get people to work, um, in line with are actually designed to mitigate as much risk as possible. So again, it's one of those myths of innovation that when you explain it to a senior team they go really well. I didn't realize that. I thought this stuff was, you know, inherently going to be risky.

Speaker B: Mhm. So I suppose looking at um, some positive examples of organizations that you've seen or work with that I suppose made a real shift, real change here and not just about innovation, but maybe genuinely changing their culture. Um, what did they get right?

Speaker A: Well, um, I think I may have shared a few of these when we were in Istanbul. But if you look at things like let's look at um, psychological safety for example. So gary Ridge took WD40, um, which we'll all know the WD40 is a product. He took that, and don't exactly quote me on the exact numbers, but he took that from something like 300 million to 3 billion because he recognized that no one was taking any risks. So no one was coming up with ideas. No one was, was willing to sort of step outside business as usual to challenge anything. And he dealt with language and he dealt with risk and psychological safety by removing the fear of people trying things and people voicing opinions about new products or new ways of doing things. Um, and there's lots of organizations that uh, over the past few years have started to come out of the woodwork that have, that have dealt with the culture and the leadership component of innovation. Um, which is what I was talking about before. Many of these companies have had the processes and the tools and the frameworks already in place, but they've realized that actually we haven't changed leadership and culture. Therefore the adoption of these tools and practice and processes is very low. Which is why we've got no return on our investment in innovation. Um, you know, we've seen the same thing at Levi's 170-year-old brand. Um, Michel Gass came in as the new CEO and again realized that risk, uh, had been so ingrained in the culture that no new products were being created. Nothing new was being, was being. You know, the business itself wasn't being challenged. So again, she created a license to challenge bau, challenge the status quo, you know, come up with new ideas and you then, you know, you get the turnaround of a 170 year old brand which was on the verge of extinction purely by shifting the leadership and the cultural approach, um, to allow people to start to come up with new ideas and challenge the status quo. So there's lots of examples of where an intervention on leadership and culture has shifted an organization's ability to be innovative.

Speaker B: M One of the things as well I wanted to um, ask you about, I suppose, um, the role of middle managers because a lot of culture, a lot of day to day feelings, uh, come I suppose most strongly through them, you know, for the people in the organization they are the main conduit. So how important are they in I suppose in either enabling or blocking any form of uh, innovation. And do you see organizations particularly at leadership level, um, senior leadership level, underestimating their impact?

Speaker A: Yeah, I actually think they're the most important layer. So it's interesting, over the years as I've built different frameworks to aid the work that I do with senior teams, there seems to be this real. I've landed on um, when I've built approaches, whether it's subconsciously or not, I've, I've built different frameworks and the middle of the frameworks that I've, that I've designed is always where the value is. So you know that uh, um, incremental, differentiated, radical, you know, the, the innovation scale, the value and the growth and the sweet spot is in the middle. When I look at um, own, drive, contribute, which is the framework I alluded to earlier where leaders own the innovation agenda, employees contribute to innovation. But right in the middle, the middle managers, that middle layer of the organization, they drive that on a day to day basis. I actually think the middle of organizations is disproportionately important. Um, but we can't get away from. It's not used as much now but you'll know this and your listeners will know this. The narrative, the historical narrative around the middle managers are the frozen middle or the permafrost. And I use that in conversations with senior teams where I've been in the organization and after a little bit of orientation it's obvious that the senior team are blocking the middle. So the senior team's perception is the middle are uh, holding us back. What they don't realize is, and what they're blind to it is that actually they are holding the middle back but then blaming the middle for holding the organization back. And I use a phrase which slightly tongue in cheek but senior to IP they get, you know, they instantly reflect and I say um, if the middle of your organization is frozen, where's the cold north wind blowing from? And senior teams instantly go oh okay. But the middle of an organization doesn't freeze itself of its own volition.

Speaker B: Right?

Speaker A: It doesn't do it to itself. What you typically have is an organization historically which was probably super efficient, has been doing really well. And that middle of the organization has been built and has been asked to work inside of a system that has been designed to continue the organization on its current path. And that middle management layer is probably exceptional at doing that. They're probably brilliant at, uh, doing that. What we now have is a senior team that says the winds change, the direction of the market's changed, the world's changed, we now need to be faster, we need to be more adaptable, we need to drive innovation, we need to be different, we now need to work at, uh, a different pace as an organization. And we go back to the middle again and we say, hey, middle, you're brilliant, we need you now to do this. But if you don't change the system that you're asking them to work inside of, you're now asking them to deliver completely different type of performance, but within the constraints of, uh, the old system that wasn't designed for that. And that's the big challenge. You can't build a system around efficiency and risk mitigation and applaud your middle management teams for being brilliant at that. And then overnight, say, actually now we want you to be creative and innovative because that behaviour will not survive in inside a system that has been built for a different kind of behavior. That's one of the big challenges. So most of my work is helping leaders see that and then helping them redesign the system so that innovation can operate in the, be operated by and be driven by the middle of the organization.

Speaker B: Now, I'd probably be failing in my duty, uh, asking the questions if I didn't mention the letters I and A, but not necessarily in that order. Um, so, I mean, talking about innovation, uh, at the moment, uh, you know, a time of AI, rapid technological change, uh, is this changing the leadership challenge? Is it making culture even more important? Or is there almost a bit of a clash?

Speaker A: Well, I think there is a clash. Um, we only have to look at the Latest news on LinkedIn or from any of the main sort of media outlets where, um, there's challenges around AI adoption. What does that mean? Um, this morning there was a piece, I think it might have been in Bloomberg or somewhere, where we're now getting CEOs saying, actually we've done this whole reorganization around AI and we've realized it was terrible and it's not gonna work. And now we've gotta sort of reorient back to this happy medium. I think what I'm seeing with AI is a very similar thing that's happened post Covid. Um, you know, we all went to work pre Covid, we all worked from home in Covid. And we are now hybrid post Covid. What I'm seeing with organizations that are, uh, looking at AI is they've gone all in. So they've done the, you know, the, the COVID esque. It's now not about humans, it's all about AI. What I'm seeing come out of that is, is the realization that, okay, well, that, that won't work. That's too, we've swung too far. What's the happy medium now? There are things that AI is brilliant at, but there are things that are still inherently human that AI can't do yet and maybe for the foreseeable future won't be able to do. And the organizations that will win are the ones that figure out what that happy medium is as fast as possible and then supercharge the people that are in that are left, um, to do the stuff like turn the volume up and the focus on the stuff that is specifically human. And that's predominantly when you then look at how will AI enable innovation? AI enables innovation because it does two things. It gives people solving problems faster and better access to data and analysis and insights. But it also frees people up to spend more time solving problems and understanding customers and collaborating and being creative. And organizations that get that balance right, I think are the ones that are going to emerge faster. Now the caveat to that is there are some organizations that uh, are by default just purely AI based and they were never about people in the first place. They're the new tech AI companies. Um, they're on a different trajectory. But for the majority of organizations, using AI to enhance the people that are in the organization is the best formula.

Speaker B: Okay, um, it's been a fascinating conversation. Um, I suppose that my final question to you is, uh, for leaders who are listening to this thinking, you know, we really need to get better at this, um, other than contacting you, uh, where would you tell them to start? What are the first practical things they should look at if they want to be, I don't know, more innovative culture or a more kind of forward thinking culture?

Speaker A: Well, I would first off start by having a really honest and frank conversation at that leadership level and gain absolute alignment on what that means. Because there's no point having a general conversation about, you know, do we want to be more innovative? What does growth look like? What could our organization look like unless there's Complete alignment and agreement at, uh, leadership level. So I'd unpack. What does our organization look like today? How do we behave? Um, what do we settle for versus, you know, what do we say is important? But versus, what do we actually settle for? I. E. We say this is important, but in practice we actually accept X, um, and map that against what that leadership team thinks is the kind of culture and the kind of operating environment they need to be able to become the kind of organization they want to be in the future and, and get really aligned on what that looks like. Um, and it doesn't matter whether that's your agenda is innovation, whether it's growth, whether it's differentiation, doesn't matter what the agenda is. Get really aligned on that agenda and then agree as a leadership team if we want to do this, what does absolute ownership at our level look like? Like genuine ownership. Not sponsorship, not this is important. We want the organization to do it. What does absolute ownership of that agenda look and feel like? And, um, when you've got to that point and you're agreed, then start to talk to the organization about it. But start, you know, look at the work of people like Francis Fry and Amy Edmondson. You know, start to look at psychological safety and things like that and radical candor. Look at those, the behaviors and the mindsets that we know high performing organizations need and start to have those conversations at leadership level before starting to push all of that agenda on the organization.

Speaker B: Okay, Chris, been an absolute pleasure to talk to you today. Um, if people are inspired by this conversation. Well, anyway, things you had to say, um, what's the best way to connect with you or contact you?

Speaker A: Um, well, my name doesn't have a H, so it's C R I, S. Um, so it's Chris Beswick. C R, I S B E S W I, C K. Um, they can find me on LinkedIn. Pretty easy to find on LinkedIn. Um, the website is the same chrisbeswick.com or, um, chrischrisbeswick.com as an email.

Speaker B: Chris, it's been an absolute pleasure to talk to you today. Thank you for your time.

Speaker A: Pleasure, Mary. Thank you very much.