Saturday, July 4, 2009

Open Up to Innovation.

Most of us would probably agree that corporate cultures stifle innovation. This has become an expectation in large firms, where the voices of customers and employees may be lost in the filter of layers of management. It's similar to the game telephone, in which the first person in a circle whispers a phrase to the next person, and that person passes it around until the last person in the chain says out loud what they heard. The message the last person hears is rarely similar to what the first person said.

Organizational distortion is subtler and even more misleading because what is filtered out may be anything upsetting to the next level of management. Often this is not a conscious process. We all try to see things in the best possible light.

Data suggesting employees are terrified of a particular manager may come out as, "Some of the employees have some issues with Manager X." Data that customers are unhappy with the latest upgrade may be translated into, "Consumers are pleased with the new features but find the user interface confusing." This is not exaggeration. Both are real examples of losing the message in context and translation.

Yet, innovation comes out of disruption. We all have heard the expression "fat, dumb and happy" applied to companies whose past success has made them complacent, so they stop innovating. Failure to anticipate market changes has brought down many companies originally known for their innovation.

In my career, I have seen a few practices that worked consistently - even in large, global firms - to create an environment in which innovation thrives, despite past success. These include:

A CEO survey, with no filter allowed. At GE, employees received periodic surveys directly from the CEO at their home addresses. The survey asked for the type of information most likely to be filtered out in the normal course of business. For instance, questions included whether the employee was proud of the quality of the company's products or whether a key initiative for the CEO was being effectively communicated and acted on deep within the organization. At Cisco, we launched a similar process in 2002-03 that continues today. With this detailed feedback, the CEO can find problems that have not come to his or her attention and act on them.

We also use "Skip Level" Meetings, at which leaders get together with the first level of nonsupervisory employees to gather feedback and talk about issues they are seeing. This approach opens a direct communications channel and sends a message that the leader really wants to hear the truth, without filters or spin. The approach also has the advantage of exposing leaders directly to talent, which helps them gauge the quality of their subordinate managers' people assessments.

Many companies gather customer data via surveys, but this can become "non data" over time. If you bought a car in the past few years, you have probably been asked to "give me a good rating" on particular questions in the survey sent to you after the purchase. Tying the pay of salespeople to customer feedback is a good idea in principle, but it can interfere with the quality of customer data received.

Direct feedback on salespeople is valuable, but an occasional face-to-face customer meeting by a higher-level leader will yield more textured data. Further, having more than one point of customer contact is important when a salesperson joins a competitor. Soliciting multiple types of feedback from a variety of sources in the customer's business is important to understand the relevance and quality of products and the customer's thought process when selecting a vendor.

In addition, moving people around within the company will put fresh eyes on business issues, which can improve the quality of data received. This also is a good hedge against salespeople who leave and take your business, as you can establish that the relationship is between the customer and your company, not the assigned salesperson.

Perhaps the most important thing to ensuring your organization hears the truth and allows the disruptions necessary to innovation is to visibly reward the courage to deliver bad news or to challenge accepted business theories and assumptions. The company culture that values truth over conflict avoidance has a big advantage in fostering innovation.

Kate DCamp
[About the Author: Kate DCamp is the senior executive adviser at Cisco.]

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