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Management structure tends to discourage innovation. Structure breeds list-making and rules, organizational politics, and CYA behaviors. I’ve seen that more often than not, in several decades of consulting with larger companies and building smaller companies.
Innovation takes an unpredictable mix of tolerance for risk and mistakes, freedom to follow guesses and hunches, creativity, abilities, learned skills, caring about improvements, values, and luck. How much of each is all case-by-case.
Good management can easily stifle innovation by tracking results mechanically, dealing with mistakes in ways that discourage taking risks, taking more time second-guessing than guessing, and so forth. Innovation needs room to fail. Penalties for failure keep people inside the lines, or the box, not motivated to do anything different. Structure can institutionalize the tracking, the penalties, the metrics, and hierarchy and order that discourages innovation.
The solution is leadership. There are some well-known stories about businesses whose culture encouraged innovation at one time or another. Read into Google and how Google has been institutionally building in innovation with its hires, its compensation, and its culture. The Google culture (so I read, second hand) rewards innovation with words, priorities, rewards, and money. At the beginning of the years I consulted with Apple Computer (1982-1994) that culture loved innovation as long as it didn’t contradict Steve Jobs; and Jobs loved innovation, so it started at the top. Towards the end of those 12 years, structure, management and metrics had taken over (and Jobs was gone). I had dealings with Microsoft during those years too, and there too, the culture, from the very top with both Bill Gates and Steve Balmer, encouraged innovation at every step.
Leadership has to keep managing corporate culture as the organization grows. The tendency of management, middle managers, and management structures is to grow red tape and institutional friction and negative politics and environments hostile to mistakes, guessing, and innovation. Leaders have to stay active and become guardians of the organization’s encouragement to do things differently.
How, exactly? Encourage guessing, trying, experimenting, caring, and failing for good reasons. But beyond that generalization, there are no reliable best practices. Everything is case by case, depending on the specifics of the organization, its market, its resources, and so on.
This article was originally written on August 26, 2014 and updated on August 25, 2016.
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