If I had to isolate one thing that keeps companies from innovating, it’s that they don’t want to bet the farm on something that might not succeed. Executives are generally risk averse and don’t feel like they have the freedom to fail, especially when they face constant pressure to exceed – forget merely achieving – quarterly expectations.
They need a culture that permits them to take a risk. They need to know that small failures are perfectly acceptable and that the learnings from those failures are what truly matter most.
As we get closer to GE’s Minds + Machines event on Nov. 15-16, I’ve been talking about the digital transformation of industry and the five keys to making it happen. But the heart of that transformation – the one thing that it can’t live without – is a culture that’s willing to embrace it.
It’s about giving the organization a sense of freedom to make mistakes and, hopefully, find the next big thing.
Permission to Innovate
When we talk about culture change, what we’re really talking about is granting permission – to devote time to a project that isn’t connected to a quarterly goal, to iterate and adapt ideas, and, ultimately, to fail. Some companies are founded on those principles. At one point, Google famously encouraged employees to carve out 20% of their time to pursue ideas outside their core responsibilities. That’s how we got Gmail.
I realize there’s only one Google, a true unicorn among unicorns. So, instead, consider the culture change that took place at a 124-year-old industrial company: GE.
We enshrined the culture of digital transformation in FastWorks, which emphasizes speed and agility, taking smart risks and pivoting quickly when ideas don’t pan out. We also made each business unit a mini venture operation with a portfolio of bets on the future—some adjacent existing product lines, some outlandish. Twenty ideas might flop, but the 21st will be wildly successful. It creates a growth mindset.
Culture is a sales tool
A successful cultural transformation can also be a great advertisement for your company.
It was our culture change, as much as our technology and service offerings, that led the technology services company Pitney Bowes to start developing apps on Predix, the operating system for the Industrial Internet. Pitney Bowes, along with many of the industrials we deal with, noticed that GE’s digital transformation mirrored their company’s innovation efforts as it moved up the maturity curve from reducing downtime for customers to improving productivity to helping customers find new revenue models.
“We speak regularly not just about the technology and the applications, but also about this digital-industrial transformation,” Roger Pilc, Pitney Bowes’ chief innovation officer, told GE Reports earlier this year.
How are you changing culture?
Of course, organizations can still “go digital” while keeping their old, risk-averse cultures intact. The danger is that they’ll stall out as they ascend the digital maturity curve.
Early steps, like increasing asset utilization and uptime to reduce operating costs are simpler to implement and show faster ROI than creating brand new products and services like data monetization and software-based services. That’s why it’s important to set achievable goals up front and then use the early successes as proof points that the company can rally around.
Most cultures are “show me first” cultures - once you show tangible results, it’s easier to advance the culture changes needed to take on more complex tasks like creating new business models.
How is your company changing its culture to enable its digital transformation? This will be a key discussion topic at Minds + Machines in San Francisco in a couple of weeks. We hope you’ll join us.