Your Company Culture Is Probably Killing Innovation

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Your Company Culture Is Probably Killing Innovation

Many companies are in dire need of a cultural shift that encourages innovation. Adapting an Agile methodology could help, but it's unfortunately not that simple.

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It’s been more than 10 years since Gartner reported that between 60 and 80 percent of all IT budgets were being spent on simply “keeping the lights on,” and according to a new report from OutSystems, this is still very much the case today.

The low-code development platform company released their 2019 State of Application Development Report earlier this week, and their findings, reached with the insight of more than 3,300 IT professionals in the app development space, “broadly concur with industry analyst reports which estimate that ‘keeping the lights on’ activities consume around 75 percent of most IT organizations’ resources.”

Indeed, nearly half of all respondents reported that new innovations took up less than a quarter of their time, while only nine percent claimed they spent most of their time (>75 percent) on such endeavors.

These findings are particularly striking given how many “corporate directors and executives [claim to] recognize that today’s pace of change continues to accelerate and that firms need to innovate to stay ahead,” a recent report from Harvard Business Review reminds us.

So, what’s going on here? Why are firms still spending so much of their time and energy on simply maintaining what’s already been built?

As with most things, the answer is complicated, but I believe it can be boiled down to one thing: Traditional corporate cultures are getting in the way.

(True) Agile may very well be the key to innovation

“Highly evolved product development teams have been using [the Agile method] for upwards of two decades,” write corporate consultants Ben Edwards and Sol Sender in an article for Quartz.

And for good reason: Innovation and agility do tend to go hand in hand. “Companies that are thirsty for innovation,” writes Karine Sabatier, “are discovering that the two things are indeed very close, and this is probably why the agility market is maturing right now.”

“Agile methods can create exceptionally valuable and productive teams,” Edwards and Sender explain, in large part because of this emphasis on “customer pull versus management push and [the empowerment of] self-organizing teams to improve how they work together.”  

It’s this championing of the group over the individual that really allows creativity to thrive. “Listening, respect, and direct communication are the foundations of Agile methods,” Sabatier continues. “These values … are also at the heart of innovation. Without them, it's impossible to create an open, fluid, and caring corporate culture in which everyone feels empowered to test things, to fail, and to continue searching.

This framing of the methodology in terms of supportive culture building is right in line with the experience of Agile advocate Jeff Patton. “Agile development is more culture than process,” he writes on his blog, which is why he and other coaches like him often face so much “resistance and difficulty in teaching and learning the approach.”

“Contrary cultural values,” he goes on to explain, “may [even] lead people to use their new found Agile process and techniques for evil instead of good.” While he doesn’t go into detail about what exactly he means by ‘evil,’ Edwards and Sender can help us fill in the blanks:

“Too often executives give lip service to Agile but are only invested in a superficial sense of it being a way to work faster – an industrial-era measure of success whose value is dwarfed by the potential for teams to work smarter.” 

But this isn’t the only reason many companies fail at Agile. “Much can and does go wrong at every level of the organization,” they explain, “from the individual team member all the way up to the CEO. Which is why most companies, despite their intentions to adopt Agile methods, often end up working in a way that doesn’t look much like true Agile at all.”

What this ultimately comes down to is a competing corporate culture that prioritizes top-down thinking from a select few.

“All too often,” Edwards and Sender continue, “the drive for sales and profit growth gets translated into directives that are then driven through management chains, reinforcing what one organization we have worked with labels “executive-driven innovation” (another oxymoron). This top-down behavior undermines team autonomy, degrades morale (“shit rolls downhill”), and blinds the organization to the signals from customers they might otherwise become more responsive to.”

For Agile to truly work, they argue, there has to be a democracy in place, which can certainly explain why some Agile coaches have found smaller companies with leaner management structures to be easier to motivate towards real agility. OutSystems’ report also seems to mirror this, with smaller companies (<500) reporting above average agility scores when compared to all organizations surveyed.

But the report also shows that “Agile maturity is still lacking in many organizations, the average assessment being somewhere between ‘just started’ and ‘well defined.’" It’s no wonder innovation is similarly lacking.

How do we overcome this resistance to change?

For most corporate boards, Harvard Business Review found, innovation ranks well behind other priorities like compliance, financial planning, and risk management, so there appears to be very little incentive, at least at this point, for them to approve whole-hearted cultural shifts, not to mention budgets, that prioritize new endeavors over tried-and-true money-makers.  

As digital disruptions continue to rapidly transform industries, though, perhaps this tide will shift.

Until then, HBR also points out, greater diversity on the board could help speed up the process.  

“Boards need to have honest and thorough discussions about the board’s weaknesses and needs when formulating criteria for new directors. Some might even want to consider increasing their membership to ensure that they have the skills they need as a team and that they represent a wide enough array of perspectives.”

As this article from Scientific American reminds us, "diversity [itself] enhances creativity. It encourages the search for novel information and perspectives, leading to better decision making and problem solving." 

We certainly hope more boards choose to take this route.

agile, creativity, digital disruption, innovation, keeping the lights on, legacy software, market relevance, new projects

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