Poor Organizational Culture Kills Innovation and long term sustainability

There is a direct correlation between a healthy culture and the organization's ability to innovate, remain sustainable in an ever-changing marketplace environment, and continue to be profitable. If nothing else grabs our attention around culture, this one should.

Innovation is the lifeblood of any enterprise. It is the ability to find new ways to accomplish your mission. This includes identifying cost savings, developing new products or solutions, forming internal and external partnerships, addressing the threats and opportunities presented by new technologies (such as AI), and leveraging the expertise and abilities of your staff to stay ahead of competitors in your market. 

This will not happen if the culture is not healthy. An unhealthy culture kills the environment that stimulates innovation, sustainability, and ultimately profitability. The damage may not be immediately apparent, but an unhealthy culture slowly erodes an organization's ability to adapt as needed and remain profitable in the long term. What are some of the barriers to innovation? While it may take time, the lack of innovation due to an unhealthy culture will catch up and hurt the organization.

I had conducted a culture audit in an organization with a very controlling leader. This leader was slow to listen, quick to criticize and demean others, arrogant in his abilities, and blind to his shadow side. I knew all of this because I had interviewed all of his present and recently departed staff. And now, I was in a room with all his staff to debrief them on my work with the organization. In the middle of the room sat the number two organizational leader, who was not supposed to be present, so I could have a candid conversation with the staff - all this arranged by the board. 

You could cut the air with a knife. No one was going to say anything with the "enforcer" in the room. I already had his agreement that he would not be present, so I respectfully asked him to leave so that I could interact with the staff. He made no effort to move. There was a tense exchange between myself and him before he relectantly stood up to go.

An organization that desperately needed new ideas would not receive them due to the insecurity and micromanagement of its leaders. Where fear rules the day, innovation that is needed takes a back seat and rarely happens.

When fear rules the day, innovation takes a back seat and rarely happens. The problem is that innovation is tied directly to the sustainability of the business, which is tied directly to its profitability. When you styfle innocation, you put sustainability and profitability at risk. And if you think it does not matter, your environment can change almost overnight, putting your organizaiton at risk.

Here are some of the barriers to innovation which directly impacts sustainability and profitability.

Lack of organizational clarity. If we don't know what we are about and what our focus is, we cannot get better because we are unable to focus on the most important.

Micromanagenent of staff. This sends a message to staff that they are unable to make key decisions (or even small decisions) without permission and oversight from above. In this environment, few staff members will take the initiative to share innovative ideas.

Lack of a culture where honest dialogue is encouraged. This kind of culture is absent from many organizations. I champion a concept called Robust Dialogue, where any issue can be put on the table with the exception of a hidden agenda or a personal attack. Insecure leaders won’t allow this. They don’t like to be challenged, are threatened when suggestions are made that they take exception to, tell people what to do rather than engage them in dialogue, and silence anything they don’t want to hear.

Organizational structures that hinder change and innovation due to multiple layers of sign-off and the need to obtain permission from multiple groups.  Our very organizational structure can discourage innovation and change, making it difficult for new ideas to be tried. Bureaucracy is often designed to control rather than unleash ideas. We are frequently so scared of failing at something that we put in place multiple layers to ensure we don’t fail – and in the process, we end up not trying new methods or strategies.

Cultures where it is not OK to fail. If you cannot fail at something, you are not trying very much. Fear of failure is the wrong fear. What we need to fear is not failing at a few things, but rather finding strategies that will get us to where we want to go. Without failure, there is no innovation; without innovation, there is no sustainability or profitability. Healthy organizations don’t punish failure. They learn from it and go back and try again. They understand that failure is an integral part of the innovation and forward movement process.

Cultures where key information is not shared with the staff. Some leaders are secretive and don’t share key information except with those they choose to. It is often a form of control because the one who has the information has power. However, to improve, innovate, and address issues that impact the business, the lack of information becomes a barrier to new ideas and candid conversations.

Cultures characterized by politics, silos, and turf wars (to quote Mr. Lencioni). Why does this hurt innovation? Most innovations require the cooperation, participation, and energy of multiple teams. Where such collaboration is absent, it is difficult to champion new ideas. If people and divisions are competing rather than cooperating, it is difficult to get everyone on the same page.

Cultures where a senior leader changes course often creating instability. If staff don’t know where the organization is going because the direction changes whenever the senior leader has a new idea, change is often seen through a cynical lens. A healthy culture requires a clear, long-term vision, along with values and practices that support it. It is in this environment that new ideas flourish because you are clear on the ultimate objective of your work and your commitment to be as effective as possible.

Cultures where people are not treated with respect and dignity. We share our ideas when we know we are respected and know that our views will be taken seriously. Ideas are shared when there is trust, and trust is formed through relationships, dialogue, and a healthy culture.

Cultures where staff are not actively encouraged to bring their ideas to the table. Staff bring their ideas to the table when they are encouraged to do so and when they work in a trusting environment. Where that is not true, it is too risky to go out on a limb with new ideas.

All of this illustrates the absolute necessity of a healthy organizational culture if you desire innovation to flourish and achieve true sustainability and profitability. These will not happen unless the cultural barriers are removed and replaced by healthier practices.