Organizational culture Innovation

The most important factor in building a culture of innovation

Building a culture of innovation

Over the next two decades, organizations will experience profound changes in their operating environments. There have been many recent instances where large organizations have either ceased to exist, or have become a shell of their former selves because of disruption in their own industries. Kodak, Blockbuster, and Research-in-Motion (the maker of BlackBerry smart phones) are just a few examples of organizations that failed to take the threat of disruption seriously. 

“500 dollars? I said that is the most expensive phone in the world. And it doesn’t appeal to business customers because it doesn’t have a keyboard. Which makes it not a very good email machine.”
– Research-in-Motion’s co-CEO, Jim Balsillie, on Apple’s iPhone 

While Balsillie’s quote may seem arrogant in hindsight, his attitude is not entirely uncommon among organizations that have experienced sustained success. It can be difficult for senior leaders to picture a scenario where a previously successful business model becomes unprofitable, and a culture of complacency can easily spread throughout an organization. 

To combat disruption while driving organizational performance and growth, organizations need to create value for customers in ways their competitors cannot – and it starts with innovation. To do this, organizations need to develop a culture of innovation that permeates all aspects of the business. An innovative culture is a work environment that leaders cultivate where innovative thinking – and its application – is encouraged. But where to begin?

Metacognition: thinking about your thinking 

Translated to plain English, metacognition means “thinking about thinking.” It’s an awareness of one’s own thought processes. More importantly, metacognition is concerned with using specific strategies for learning or problem solving, and knowing when and how to use them. As it applies to innovation, metacognition can be particularly useful for an organization constantly thinking about how to innovate. Generally, there are two types of thinking that businesses use to achieve goals and solve problems: causal thinking and effectual thinking. 

Causal thinking

Causal thinkers begin with a goal, define the resources needed to achieve that goal, and then develop and execute a step-by-step plan to achieve that goal. For example, a causal thinker would first decide what to have for dinner, purchase the ingredients required, and then prepare the meal. 

Business schools are traditionally good at teaching causal logic. There is nothing inherently wrong with causal thinking – it’s particularly useful for established businesses with clearly-defined projects or goals.

Effectual thinking

Effectual thinkers are more agile than causal thinkers. Instead of formulating a goal first, effectual thinkers begin by focusing on the resources currently available to them, and then create a plan by utilizing the resources available to them and adjusting their plans as they progress. For example, when deciding what to have for dinner, an effectual thinker would take stock of the items available to them in their pantry, refrigerator, and freezer. Then, based on the items readily available to them, a decision on what kind of meal to prepare is made. Should unforeseen obstacles present themselves – such as an expired ingredient – adjustments to the final outcome of the meal can be made.

Effectual thinkers don’t begin their process with clearly-defined goal, they allow the goal to emerge organically out of the process instead. If the goal is ambiguous, such as the need for new growth opportunities or refreshing a product line to ensure it is relevant to today’s consumer, effectual thinking is the best way to achieve that goal. Because effectual thinking is inherently creative, it is ideally suited for entrepreneurs and organizations that are trying to innovate in dynamic business environments.

An innovation strategy rooted in effectual thinking 

"In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment."
Civilization Past and Present, 1942. 

The most important factor in building a culture of innovation is to train employees to think effectually. Effectual reasoning demands something more than causal thinking – imagination, spontaneity, creativity, and risk-taking. It allows for innovative teams to rapidly sense, act, and mobilize – even under uncertain conditions. It also helps organizations that know they need to change, but are unsure of what direction to take. 

With training and real-world practice, an organization can upgrade its innovation skills and capabilities. Whirlpool Corporation’s strong innovation performance in recent years is the result of an organization-wide initiative to train 15,000 of its employees to be business innovators. Train employees to think effectually in your own organization and you’ll have a business that can compete – and win – in today’s contemporary business environment.

Gain the tools to build a culture of innovation 

For senior leaders, the ability to combat disruption has never been more pressing. Innovation is as essential a leadership skill as communication or motivation. The Ivey Academy’s program for senior leaders, the Ivey Executive Program, will give you the tools you need to build a collaborative culture that encourages idea sharing and creativity. You’ll learn about design-driven innovation, how to develop innovative skills at the level of the individual, how to spot opportunities, and think entrepreneurially. You’ll also gain the advanced skillset to lead in today’s changing business environment and be able to develop practical solutions to problems your organization is facing today. 

Upon your return to your organization, you’ll have a deep understanding of what it takes to lead and empower innovative teams – and transform breakthrough innovation into a competitive advantage. 

To learn more about the Ivey Executive Program, please download a program brochure.

About The Ivey Academy at Ivey Business School
The Ivey Academy at Ivey Business School is the home for executive Learning and Development (L&D) in Canada. It is Canada’s only full-service L&D house, blending Financial Times top-ranked university-based executive education with talent assessment, instructional design and strategy, and behaviour change sustainment. 

Rooted in Ivey Business School’s real-world leadership approach, The Ivey Academy is a place where professionals come to get better, to break old habits and establish new ones, to practice, to change, to obtain coaching and support, and to join a powerful peer network. Follow The Ivey Academy on LinkedIn, Twitter, Facebook, and Instagram.