From Little Things, Innovation Cultures Grow

May 27, 2020 Massimo Garbuio

A compounding approach to building innovation cultures

THE INNOVATOR’S BUILDING BLOCKS

When executives and company directors find out my areas of research focus they always ask a similar question “How can I create a culture of innovation in my company?”

Usually, companies that ask you these questions are in some sort of stressful situation. Sometimes their market share and margin have been shrinking, customers' habits have changed, or some startups have entered what they thought was their space and are now offering a more convenient offering with novel business models. They say that they are being disrupted.

What they are looking for here is a quick fix that makes them look like they are doing something in front of senior executives and shareholders, hoping they will get a large payoff at some point. They jump on the first agile, or design thinking 2-day course that promises them to transform the entire force into a machine for innovation and their business will disrupt someone else.

Why is this too often not working as they originally expected? Innovation is an often misunderstood word, which leads to further confusion in implementing innovation programs.

There are fundamentally two types of innovation: incremental, the ones in which you improve little things over and over again (an improved formulation of your product, or better customer service) and radical/disruptive innovation, the ones that create a brand new market for your business. What they want is a disruptive type of innovation and they forget the power of small things that they can do right now, by changing small things that over time compound and potentially can achieve bigger results.

Let’s look at a company that over and over again has created what could be seen as small innovations that set new standards for an entire industry, that have delighted discerning customers for many years, and kept them leaders over and over again: the Four Seasons Hotel. From their approaches to hiring and managing people to their processes and system, this is an exceptional example on how to build a culture that will determine the financial and non financial success of a company.

In his book, Four Seasons: The Story of a Business Philosophy, founder Isador Sharp, shares many insights. Starting from a strong belief that “ every person has potential”, you realise that your role as leader is twofold: leverage everyone’s individual strengths rather than expect that everyone is going to contribute in the same way to innovation and, of course, keep in mind that key to that vision is about excellence in meeting customers expectations.

The thing to highlight here is that your frontline people are the eyes and the ears of your organisation. Often people want to include everyone as part of the innovation journey and offer exactly the same tools and responsibilities. But these don’t work. Frontline do sense what is happening, propose new solutions and over time this accumulates to something that makes you as benchmark for innovation and customer service. Makes you thrive, not just survive.

Innovation starts with anyone in the frontline being very attentive to reading how the customers feel, whether happy or upset about something that is happening during the stay. Did the customer look annoyed even if he said nothing about a delay in getting the car to the office? Yes, the General Manager will call at the office and apologize. But this does not stop with the apology, admission of mistake and making sure that similar mistakes happen during the stay of the customer. The turning point is anticipating what can be done to go beyond what is expected. Does the customer have a dinner reservation with the hotel? Yes, what can you do to make sure the best table and service is provided. Not matter what the initial problem was, the solution is solving the problem and doing something else on top of that.

But this can’t stay unnoticed if you want the entire organization to excel. You need a system to extract and keep track of the insights gained by the frontline in order to scale improvement across the organization, so that learning that happens at the local level (the frontdoor) is scaled up (across the same hotel or across hotels).

A daily practice and ritual of morning meetings at the Four Seasons is the so-called Glitch Report. Every department is represented and every mistake from the previous day is reviewed. What was wrong, what steps have been taken to address the mistake. Everyone knows what happened and which guests have been affected. This is about everything that might seem small like missing a turnaround service, but that has an impact on the eyes of the customer. I’m sure that your organisation, as many others, is pretty good at scaling initiatives. You have processes and systems in place for that. What it might not be as good at is letting the frontline know that their observations do matter and that their insights are valuable and can be actionable.

Why has this worked so well for The Four Seasons? Why is the first step so powerful? From an innovation theory perspective, this power goes back to two “innovation things.”

While the frontline is clearly the eyes and the ears of the organisation what The Four Seasons does is shift the frontline’s focus from problem solving to idea generation. Frontline is empowered to go the extra step and think “what else can be done to delight that customer”. Innovation is risky, innovation makes people scared of not being creative or being good enough, not coming up with the most brightest game changing idea. By asking the frontline to focus on the very specific case at hand, you meet employees where they are, you empower them to come up with new ways of doing things and new things to delight the customer.

It’s really the power of Kaizen, the power of small things that over time might become bigger things. Kaizen asks for small, comfortable steps towards improvements. Sometimes, thinking about innovation is daunting as a large goal may create fear for some people; the brain response is to shut down creativity. Kaizen, using small steps to improve a product, process or habit, or using very small moments to inspire new products and inventions, will help the human mind to overcome the fear that blocks success and creativity.

There is a whole book dedicated to the power of small questions, small rewards, entitled One Small Step Can Change your Life: The Kaizen Way, written by Robert Maurer, Director of Behavioral Sciences for the Family Practice Residency Program at Santa Monica UCLA Medical Center and a faculty member with the UCLA School of Medicine, talks about the Kaizen approach. Originally a Japanese word, kaizen is both about small steps to improve a habit or process or a product, but also, using very small moments to inspire new products and invention.

Second, this customer-first by future thinking how to delight them also recognised that innovation is cumulative and often evident only in hindsight. The small changes that one employee makes day after day and are then scaled across the organisation are then going to change the market, as Four Seasons has done over the years from introducing amenities to introducing residence and much more.

You never know whether the change you do today may become a big part of the market tomorrow. I had the pleasure to interview Victoria Vallstrom for my recent book “ 6 Building Blocks for Successful innovation”. Victoria has run large teams across the world, and worked in innovative companies from VMWare to Lifesum, Spotify, Interflora and many more. She started our conversation by saying that “When I think about innovative ideas, I think about two things. First, I view innovative ideas as cumulative. They do not come from a genius who comes up with a grand idea – and this might be different from other peoples’ point of view – but I think that usually, they are cumulative and because they're cumulative they build on each other. Since they build on each other, the second view is that innovative ideas are usually in hindsight. So, in hindsight, you can say, "Yeah! That was really innovative."

So, if you want to create a culture of innovation, start by changing the way you ask questions to the people around you. Ask them to keep their eyes and ears open to sense the customer. Then ask them to do something to delight a customer beyond solving the initial problem. By doing this and capturing these learnings day after day, you are on your way to create an innovation culture.