Innovation Roundtable Review: Assessing & Building Culture

(The following research was gathered through a literary review and a focus group of upper level IT and business leaders who shape culture in their organizations that attended the TAI Innovation Roundtable on these topics in January of 2020. Below are ways in which data can be used to assess culture and build a more innovative culture.)

Looking beyond employee satisfaction to organizational culture

Culture is easy to sense but difficult to measure. Traditional tools such as employee engagement surveys are flawed and can be misleading, presenting static pictures in time that tell you how your employees feel instead of measuring how they are behaving. Others focus on external analytics such as customer and sales data, but these analytics fail to provide a full picture o fan organization’s culture. Organizations need to build analytical muscle and find ways to use data to measure important elements of culture such as the way values are lived out by employees and how people are led.

Big data and analytics give leaders the inputs to quantify and measure culture, ensuring there is alignment between rhetoric and reality. For instance, studying the language that employees use in electronic communication has opened a new window into organizational culture. “Digital traces” of culture in electronic communications, such as emails, Slack messages, and Glassdoor reviews, can be mined to reveal novel insights about how culture actually influences employees thoughts and behavior at work and how managers can harness culture as a strategic resource (Corritore, Goldberg, & Srivastava, 2020).

Last year, MIT Sloan Management Review and Glassdoor introduced an online interactive tool, Culture 500, which combines big data, artificial intelligence, and insights from existing research to quantify culture at scale. The tool allows users to compare company cultures along nine cultural dimensions - collaboration, integrity, agility, diversity, customer orientation, execution, innovation, performance, and respect.

To develop this tool, researchers analyzed text from 1.2 million online Glassdoor reviews from current and former employees using a natural language processing methodology that classified text into more than 90 culture-related topics; those were then categorized into the nine cultural values (Sull, Sull, & Chamberlain, 2019). Other organizations turn to personality assessments to help better define sub-cultures that might exist in different divisions.

Drivers of an innovative culture

Leaders agree that innovation should occur from all corners of an organization, but who drives this effort? Leaders found different driving forces of innovation in their organization. A bond company found that no one was driving innovation, but it naturally transitioned to the IT team as they began supporting the business in improving product delivery. Another organization found that IT drives innovations and even establishes regular learning events and innovation days for employees to continue to foster innovative thinking.  A manufacturing company recently established a Director of Innovation that has a dotted line to all divisions to drive innovation across the organization. The Director of Innovation manages a pipeline of innovative ideas and supports the launch of projects in the market. An online recruiting company established an incubator that reports directly to the CEO and has dedicated staff working to launch innovative ideas. Projects are purchased by different units across the organization and employees working in the incubator are free to join teams to continue to work on their projects. Additionally, a bank based in Iowa had an informal innovation team that generally works on initial innovation projects and it is made up of those that are curious and thrive in new environments. A recent study found that transformation innovation “innovation that creates entirely new business in new markets,” is owned by central innovation teams (65%), followed by R&D teams (33%), and business units (24%) (Kaplan, 2018). Innovation is found from all areas of the organization and takes a strong understanding of culture to know who should drive it forward.  

Creating psychological safety among employees

Leaders find that employees aren’t able to innovate unless they feel a sense of trust, freedom, and encouragement; this takes time to establish for even the most innovative organizations. Organizations that leverage analytics to assess and innovate culture must ensure their people don’t feel watched and unsafe. Employees should be involved in the assessment process to establish buy-in and create an eagerness to improve their organization’s culture.  Leaders have found some measurements of culture and performance, such as placing sensors in seats, do not create psychological safety. Leaders must be cognizant of the way they measure productivity and honor sub-cultures across to foster innovation.    

Psychological safety is also established by allocating time to innovation. A bank in Iowa encourages innovation by allocating 10% of the time toward learning and tinkering with new ideas. Employees are encouraged to share what they learn from this dedicated time and teach the rest of the team to reinforce their learning. A manufacturing company supplying goods to consumers and businesses assesses their people and then allocates employee time accordingly; 5-10% of each team across the organization is dedicated to innovation, creativity, and finding new solutions to problems their customers are facing. One of their teams practicing this process, the application development team, created significant cost savings due to this allocated time. Innovation is encouraged from the top down, as the CEO made innovation one of the top six objectives for the organization during the year. A medical insurance company took a page from Google’s playbook and offered employees in their IT department “Google Fridays.” Employees are able to work on any project at the end of the work week, including personal projects.

Incentivizing innovation across the organization

Organizations that truly believe in creating a culture of innovation must properly incentivize their employees. For instance, some organizations, like General Motors and UBS, allow those that are the owners of new ideas to become the idea owner and share in a percentage of profits that derive from innovation. Other organizations, such as Westin hotels, provides experiential incentives to big ideas produced by employees. Each quarter, Westin gives an employee with the best idea an all-inclusive trip to their preferred location (Bodell, 2019). Leaders also found that informal incentives, such as encouragement and celebrations of innovation delivered by managers and team members, were impactful for their teams. Most importantly, organizations should celebrate employee failure to encourage their people to continue to take risks in challenging the status quo (Krippendorff, n.d.). Incentives should be customized for each division and employee as they bring different skills, talents, and ways of thinking to less defined problems.  

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Physical workspaces’ influence on culture

The physical space that companies offer their employees sets the tone and brings culture to life, affecting how people work, communicate, and innovate. Physical workspaces should reinforce company culture and match the values of their people. For instance, young people who are used to transient lifestyles, studying from classrooms, coffee shops, the library, and dorm rooms, may not be as innovative working from a cubicle than if they were to work in a more flexible environment. Companies have to understand and welcome different styles of work, providing an environment where their employees can ideate, strike inspiration, and live a healthy lifestyle.  

Flexible and remote work is a strong trend across geographies and sectors. Grinnell Mutual, headquartered in Grinnell, Iowa, has locations in metro Des Moines and offers flexible work time for employees in order to attract and retain workforce talent with flexible work. Regular standups occur via Microsoft Teams and teams are accommodating of employees who virtually call into meetings where most employees are located at their headquarters. A bond company in Iowa supports flexible work as they highly encourage video conferencing for all of their meetings. They have found face to face interactions facilitates stronger connection and helps provide better context during a meeting.

To understand the impact of physical workspaces on workplace collaboration, researchers at Harvard tracked face-to-face and digital interactions at the headquarters of two Fortune 500 firms both before and after the companies transitioned from cubicles to open offices. Through data obtained from advanced wearables and electronic communication servers, the researchers found that face-to-face interactions dropped by roughly 70% after the firms transitioned to open offices, while electronic interactions increased to compensate. Instead of increasing collaboration, the open architecture was causing employees to create psychological fourth walls (like wearing headphones) to protect their privacy (Bernstein and Waber, 2019). As demonstrated in this study, workspace configuration can have a big effect on company culture. By using technology to detect and analyze flows of communication, leaders can design workspaces that increase effective communication, resulting in more innovation.

Culture enabling transformational leadership

Transformational leadership is a leadership style in which leaders encourage, inspire, and motivate employees to innovate and create change that will help grow and shape the future success of the company. New technologies such as analytics and AI can be used to amplify human insight and talent, transforming leadership for the benefit of employees. For instance, Butterfly is an employee intelligence and management coaching software designed to transform managers into exceptional leaders. Butterfly’s platform allows managers to gather feedback from their teams in real-time based on the key factors influencing workplace engagement. Through regular pulse surveys, managers can act on feedback and improve their soft skills through the ongoing guidance of an artificially intelligent leadership coach. Through its actionable insights, Butterfly builds stronger leaders and more transparent cultures (Training Industry, 2017).

“Networks” and information flow within organizations and impact on culture

Organizational network analysis (ONA) is a quantitative method for modeling and analyzing how communications, information, decisions, and resources flow through an organization. It relies on data collected actively (for example, through surveys) and/or passively (for example, through emails, calendar invites, shared drive access) to reveal the invisible communication patterns and flows of information, and, often, the motivations behind them that the traditional organizational chart cannot capture. By showing who is working with whom to get their jobs done on a day-to-day basis, ONA can be used to increase engagement, productivity, creativity, innovation, and organizational performance (Borowska, 2019).

Humanyze is one vendor that offers software that can help companies map these internal connections. In one case study, Humanyze worked with a U.S. bank to identify why certain call centers were more productive than others. Humanyze technology was deployed across a model call center to analyze communication patterns, employee satisfaction, work habits, and tenure. Results revealed that the employees with the most cohesive networks, those who regularly socialized and communicated with others in the office, had the highest levels of productivity and engagement. The majority of this communication happened during scheduled break times. Using these insights, the bank implemented a new break schedule at underperforming centers to boost interactions between employees, decrease stress, and build cohesive employee networks. Within one year, the bank saw a 23% increase in productivity in all call centers and a 28% increase in employee retention rates (Humanyze, n.d.).

Towards a culture of innovation

Creating and sustaining a workplace culture that fosters innovation is imperative for success. To build a culture of creativity, employees need to see that innovation is a true priority for the leadership team. Leaders can show their commitment by giving employees – who are at the root of innovation – the resources and opportunities to be creative. However, a culture of innovation does not just happen overnight. Growing and leading an organization towards innovation requires information, especially data about employees and how work is accomplished. People analytics can help leaders improve the ways they support their teams. By taking this data and using it strengthen their employees, leaders will, in turn, strengthen their culture of innovation making it safe for employees to experiment, take risks, and share their ideas.

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References

• Berstein, E. & Waber, B. (2019). The truth about open offices. Harvard Business Review, 97(6), 82–91. Retrieved from https://hbr.org/2019/11/the-truth-about-open-offices
• Bodell, L. (2019, January 31). 3 Non-Basic Ways For Incentivizing Employees To Innovate. Retrieved from https://www.forbes.com/sites/lisabodell/2019/01/31/incentivize-employees-to-innovate-from-futurethink/#508602c53d11
• Borowska, K. (2019, June 21). Data-minded or data-blinded? Retrieved from https://www.forbes.com/sites/kasiaborowska/2019/06/21/data-minded-or-data-blinded-2/#76a07a5f7e8c
• Corritore, M., Goldberg, A., & Srivastava, S. B. (2020). The New Analytics of Culture. Harvard Business Review, 98(1), 76–83. Retrieved from https://hbr.org/2020/01/the-new-analytics-of-culture
• Humanyze. (n.d.) A U.S. bank improves call center productivity and employee retention. Retrieved from https://www.humanyze.com/case-studies-major-us-bank/
• Kaplan, S. (2018, August 15). Who Should Own Innovation in Your Company? Retrieved from https://www.inc.com/soren-kaplan/who-should-own-innovation-in-your-company.html
• Krippendorff,K. (n.d.) 5 Ways To Incentivize Innovation From P&G, 3M, Google, and more.Retrieved from https://blog.growthinstitute.com/business-strategy/5-ways-incentivize-innovation
• Sull, D., Sull, C., & Chamberlain, A. (2019, June 24). Measuring culture in leading companies. Retrieved from https://sloanreview.mit.edu/projects/measuring-culture-in-leading-companies/
• Training Industry. (2017, October 16). Butterfly raises $2.4 million in seed funding. Retrieved from https://trainingindustry.com/press-release/leadership/butterfly-raises-2-4-million-in-seed-funding/
• Winston, A. (2016, June 13). Sensor technology can improve office design and create happier employees, says Haworth. Retrieved from https://www.dezeen.com/2016/06/13/haworth-white-paper-sensor-technology-happier-employees-future-office-design-research/