Measuring Cultural Change

This challenge was brought up in a recent exchange at the online Innov8ors un-conference Scott McDonald and I have been speaking at (worth checking out if you haven't done so, we have discount vouchers available so get in touch if you want to attend.) Measuring cultural change is one of the more challenging aspects of understanding enterprise-wide transformation. How do you keep tabs on attitude adjustment or the alignment to norms?

There is much to be said for acting our way to a change in culture. David Marquet focused on this in his powerful book Turn the ship around. One of the topics he explores is the dynamic of introducing behavioral patterns that at first artificially impose cultural norms and over time become deeply woven into the DNA of an organization. An example is the three name rule that he promoted on board his submarine. The rule introduced a requirement that whenever a sailor met a visitor on the ship they needed to say their own name, the name of the visitor, and the name of the ship. This was in service of the culture he wanted to establish that members of the crew would be proud of the ship and liked their work, with many downstream benefits accruing from that cultural dynamic. The higher the percentage of crew members that got in the habit of following the three name rule, the more Captain Marquet was able to track the progress towards a ship culture he aspired to.

So besides fully recommending that anyone thinking about culture change read Marquet’s book, I want to point out how focusing on measuring behavioral change can drive cultural change by touching on one area I see as a bellwether when I am working with large corporates to drive the maturity of innovation culture: Saying no - Measure how often we shut down emergent opportunities.

The cultural phrasing we love to throw around is some version of getting comfortable with failure. Fail fast, Eat failure for breakfast, All failures are learning opportunities etc. How do we translate this cultural change in a way that is additive to our innovation teams and our overall business goals both in practical and cultural terms? What I see as a powerful approach to answering this question has been measuring how leaders embody this in their decision making. We can track how often leaders actually accept failure and tell teams to refocus their energy on alternative opportunities. In other words, when deciding on whether to continue to invest in innovation opportunities how often are they using the option to pivot or even kill rather than simply persevere because a team is in motion.

If leaders never acknowledge failure and never make the tough calls and verbalize that a team has failed, then I see two possible conclusions: The first is that teams are only bringing up safe ideas that are pre-positioned to get a green light. This is innovation theater at its finest. Teams are staying too close to the legacy product mix to stimulate even the possibility of a negative reaction. If the corporate strategy is to continue to generate more of the same, then everything is rosy. However, if the strategy is to use innovation to drive growth then safety is not going to get you there.

As stated recently in the always on-point twitter account @picard tips:

The second possibility is that leaders don’t have a strategy to begin with. They say yes to every idea because there are no guide rails to constrain them or their team. ‘Any idea is a good idea’ soon becomes a portfolio of misaligned opportunities that quickly derail the focus of an innovation framework. Worse still by blowing all available investment dollars on poorly thought out ideas, there is no budget available for ideas that do display traction, and certainly a very low possibility any of the random ideas will deliver bottom-line returns.

Let’s take this one step further - How often are corporate startup teams saying no to continuing their own opportunity?

I was coaching a growth board inside a large corporation this week where a team that had been working on an opportunity for several months emerged from their discovery process clear that there was no there there. They recognized that their vision of a new business opportunity in the battery testing space simply wasn't differentiated enough from the business's own portfolio or the competition, they hadn't found a high margin path to manufacturing the envisioned solution and when they had offered prototypes to customers they found lukewarm reactions. In other words, they hadn't found anything close to product-market fit.

For me this is peak innovation culture. If a team can emerge from a period of discovery, from having invested substantial time and their own career capital into exploring an opportunity only to fail to uncover traction and still have the courage to tell leadership that they should not continue, its a powerful moment. The team are flipping the narrative. Instead of focusing on how much money was spent to date on the exploration and being uncomfortable writing off the expense, they are saying, look at all the money we just saved the company by pulling the plug now rather than continuing to throw good money after bad.

That is something to celebrate and reward and it tells us a few things.

First it is a clear signal that the culture has made it acceptable to fail. It says the team is not only unafraid to declare failure and take the sunk cost in their stride, but they have the confidence to know that their next adventure will not be an exit from the company, it will be a chance to leverage those learnings on a better opportunity inside the same organization.

Second, it says that leadership has communicated their strategy clearly to their product teams. By making it clear what good looks like, the leadership team is communicating a message that startup teams can use to powerful effect. But it takes a confident leadership with a clear strategy to do it.

Measuring the capacity to say no at leadership and product levels is a powerful indicator of cultural change.