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EXECUTIVE WHITE PAPER

Innovation Culture: The Big Elephant

in the Room
Introduction
As the window of opportunity for capitalizing on innovations becomes
ever shorter and the pace of innovation moves ever faster, becoming
competitively unpredictable is the key to business success in the coming
decades. The bedrock of being able to outmaneuver the competition
in ways they never see coming is, of course, a strong innovation
culture that sets the right framework and conditions for fast-paced,
breakthrough innovation to thrive.
A strong innovation culture helps the organization work equally well
(and comfortably) with internal and external input, and it relies on strong
networks to bring even better innovation to market faster. Such a culture
not only rewards outcomes, but also behaviors as this is a key driver for
supporting more risk taking, encouraging experimentation, and learning
from failure.

An innovative culture is
key to outperforming your
competitors. Having the
appropriate mindset and
behaviors engrained in the
organization is especially
essential for companies
pursuing open innovation.
This white paper describes
how an innovative culture
operates and provides
advice on how to move
toward creating such a
culture in your company.

Yet all is not well on this front in far too many global companies. Each
year, the global consulting firm Booz & Company does a survey of R&D
spending at 1,000 public companies from around the world. Along
with tracking spending trends, their annual report, Global Innovation
1,000, provides insights into what makes companies truly innovative. In
their 2011 report, they tackled the importance of an innovative culture.
After defining the elements of an innovative company as a focused
innovation strategy, a winning overall business strategy, deep customer
insights, great talent, and the right set of capabilities to achieve successful
execution, they go on to say that more important than any of the individual elements, however, is the role played by corporate culture the
organizations self-sustaining patterns of behaving, feeling, thinking, and
believing in tying them together.1 Yet, strikingly, only about half of all
companies surveyed said their corporate culture robustly supports their
innovation strategy.
Wherein lies the disconnect? Everyone agrees that having a corporate
culture that supports innovation is imperative. Business leaders talk
about it all the time; in fact, theyve been talking in this vein for at least
three decades, if not more. Yet as the Booz & Company study reveals,

Innovation Culture: The Big Elephant in the Room

only a minority of corporate cultures are capable of pulling together the
essential elements of innovation and propelling the company ahead of
competitors.
One key cause of the alarming distance between talking about the
importance of an innovative culture and actually building one is that key
aspects of a companys culture are often carved in stone during the first
few years of its existence. Thus, it is quite dangerous, for example, for an
organization that has been around for a while to be inspired by programs
like Googles 20 Percent Time project, in which employees can work on
their own projects for 20 percent of the time. This worked at Google in
the early years, but it will be very difficult to implement such a concept
in anything other than a start-up. The mindset and processes needed
to support this are simply not in place, thereby making the outcomes
highly unpredictable. Furthermore, employees will have a hard time simply finding the time as they are already very busy doing their day jobs.
Creating any significant change in complex organizations is difficult, but
cultural change is particularly challenging. Generally, only two things can
really change a culture quickly. One is a true burning platform in which
everyone realizes that they need to change more or less everything to
survive (not many companies are in such a condition, which is actually a
good thing). The other is the full support of the top executives, and not
just one or two who really understand innovation, but a clear majority
led by the CEO. Unfortunately, this is very rare, although things are
changing for the better as a new generation of executives with a better
understanding of innovation climb the corporate ranks.

Generally, only two things

can really change a culture
quickly. One is a true
burning platform in which
everyone realizes that they
need to change more or less
everything to survive. The
other is the full support of
the top executives, and not
just one or two who really
understand innovation,
but a clear majority led
by the CEO.

Innovative Culture Elements

Before diving into ideas on how to drive cultural change, lets first look
at the elements of a culture that will support becoming competitively
unpredictable:
People who have strong networking skills and can successfully
manage relationships with customers and partners. This requires
agile and flexible people who have the soft skills of emotional
intelligence fundamental social skills such as self-awareness,
self-fulfillment, and empathy in addition to traditional intelligence
skills. These skills enable companies to build the type of open
global communities both virtual and real-life that are essential
for pursuing and achieving breakthrough innovation.
Recognition that not all the smart people work for your company,
or even in your department, and a willingness to find and work
with smart people both inside and outside the company. Many
of the ideas that will help organizations become competitively
unpredictable will come from the outside via open innovation and
crowdsourcing. A culture that features a strong hubris about its
overall intellectual capabilities closes itself off from possible ideas,
answers, and opportunities coming from the outside.

Many of the ideas that will

help organizations become
competitively unpredictable
will come from the outside
via open innovation and
crowdsourcing.

Innovation Culture: The Big Elephant in the Room

This type of thinking can even block people from working
across departments to find innovative solutions. Comments like
these are all too common: Those people over in the marketing
department are all dopes or Dont ask Engineering; they dont
know anything. This type of thinking blocks innovation and often
requires job rotation programs or similar initiatives to help expand
the mindset and the empathy for other business functions. With
open innovation, these types of programs can even cross over
to partners and customers.
Understanding that failures represent opportunities to learn, and
a willingness to reward those efforts and that way of learning.
Failure is a fact of life for companies that pursue innovation
seriously, and a leaders response has a huge effect on company
culture and therefore on future projects. An innovative culture
allows the organization to embrace experimentation and the
failures that come with it.

The organizations that make

the best use of internal and
external ideas, and do not
need to own everything and
keep it under tight wraps,
will win.

Dismissing NIH (Not Invented Here). The organizations that make

the best use of internal and external ideas, and do not need to own
everything and keep it under tight wraps, will win. Companies need
to learn how to profit from others innovations, and intellectual
property should be bought whenever it advances the goals of the
business.
Willingness to strive for balance between internal and external
R&D. External R&D can create significant value; internal R&D is
needed to claim some portion of that value. It is impossible to
overstate the value of embracing open innovation in the drive to
outpace competitors. It is, simply put, the only way forward.
Be constructive around intellectual property issues in relation to
open innovation. Legal teams can either choose to play offense or
defense. Hopefully, they will adopt a constructive approach that
supports progress toward the companys business development
goals. Too often, however, legal teams establish barriers that
impede progress. This needs to change.
Understand that open innovation requires open communication.
Companies need to work around confidentiality and intellectual
property rights issues to create an environment built on trust. It
is not only the legal team that hinders open innovation progress.
As companies need to communicate more openly and much
more frequently with external partners, there will be clashes with
traditional-thinking corporate communication teams that want
to control the flow of information. This shows up when corporate
communication teams do not understand innovation; this is an
issue that corporate innovation teams must address by educating
communicators about open innovation.

Legal teams can either

choose to play offense or
defense. Hopefully, they
will adopt a constructive
approach that supports
progress toward the
companys business
development goals.

Innovation Culture: The Big Elephant in the Room

LEGO Embraces Open Innovation and Cultural Change
The LEGO Group is a good example of a company that has begun embracing
open innovation while recognizing that it requires cultural change. As Erik
Hansen, senior director of Technology and Open Innovation, made clear in a
presentation at last years European Open Innovation Summit, the companys
ability to leverage the power of open innovation rests on building a culture
that accepts key elements of the culture described in this white paper.
For example, LEGO is working to foster the belief that people dont have to
work for us to work with us. The company is also forming stronger relationships than ever with its huge customer base, knowing that consumers of
today are intelligent, they are creative, and they have an opinionAnd they
expect you to listen!
LEGO has over 20 million adult fans, called Adult Fans of LEGO (AFOLs).
There are also thousands of companies wanting to work with LEGO. There is
an enormous potential pool of innovative ideas and the company recognizes
that building a reputation for being open brings high expectations among
AFOLs as well as their B2B partners. Yet, LEGO is dedicated to pursuing
open innovation because it believes participation is the new brand.
Today, LEGO runs open innovation pilots in the production area, solving the
hard unsolvable problems. They are also using open innovation to find
ways to improve the LEGO core experience and improve core HR processes.
To get to this point, LEGO did some very smart things early on, including
doing a thorough job of researching open innovation and setting a clear
strategy. LEGO began by establishing a taskforce to:

Today, LEGO runs open

innovation pilots in the
production area, solving the
hard unsolvable problems.
They are also using open
innovation to find ways to
improve the LEGO core
experience and improve
core HR processes.

Assess the opportunities, needs, and benefits of introducing new practices of open innovation across LEGO
Define what next practice would look like while building on internal
practice as well as insight from the best open innovation practitioners in
the world
Make a firm and evidence-based recommendation on what and where
the value could be, how this could be delivered, and what would be
needed to achieve this
Set out a viable roadmap based on how to move forward, balancing
risk and rewards, etc.
As Hansen set out to learn more about open innovation, he focused on three
elements:
Learning from others by conducting a dozen interviews with leading
open innovation companies
Learning from LEGO through collecting input from over thirty
practitioners
Learning by doing by setting up four micro pilots to test capabilities,
culture, and appetite

Innovation Culture: The Big Elephant in the Room

This helped Hansen express the goals for the open innovation program at
LEGO this way:
GOING FROM

TOWARD

Creativity from the few

Systematic creativity from the

many

Select strengths put to play

Full potential realized

Succeeding together

Succeeding more together with

more people

A relatively closed culture

A culture of openness

Another LEGO fellow, Stiven Kerstegian, senior manager of Open Innovation,

also spoke about the companys approach to open innovation. He said their
adoption strategy is based on broad communication (humor), knocking
door-to-door (private groups), role models (from CEO to the line worker),
gifts and prizes (cake), and HR (KPIs and employee reviews).
Also according to Kerstegian, LEGO divides its innovation objectives into
categories and levels such as business, product, communication, and process, and works to extract value from four pools of people: employees,
entrepreneurs, kids and AFOLs, and companies and institutions.
LEGO is clearly on the right track both with regards to open innovation and,
more importantly, on building a strong and sustainable innovation culture.

Achieving Cultural Change

The further away an organization is from the Innovative Culture Elements
described above, the greater the change that will be required. Here are
some ideas on how to achieve that change:
Embrace a grassroots approach. Commitment from the top as well
as the bottom is required. If the former is lacking, then engage
employees to create a grassroots effect in which more and more
employees (followed by managers and perhaps even executives)
get involved in innovation initiatives. Examples include initiatives
related to intrapreneurship, business plan competitions, and skunk
works.

A helpful framework for thinking about how to generate commitment from all levels is called the TBX model. In this model, T stands
for top down. It is all about the need to get executives on board
and require their personal commitment to the innovation activities.
Without executive support, no change occurs.

The B in TBX stands for bottom up. Value creation begins with
people one by one, team by team. Nothing happens unless
employees are engaged, involved, and trusting that their voices
are heard by those higher in the organization. If ideas just seem to
fall into a sinkhole, never to re-emerge, or if leaders are not able
to commit resources to any ideas, trust of the employees will most
certainly erode.

A helpful framework for

thinking about how to
generate commitment from
all levels of the organization
is called the TBX model: Top
down, bottom up, across.

Innovation Culture: The Big Elephant in the Room

The X represents across. The biggest challenges will come from

the middle managers placed across the organization, because
they typically have a narrow focus on their own profit-and-loss
responsibility. They do not often see the full picture, and thus will
not give up resources when doing so does not benefit them in the
short run, even though it may be the right thing for the company
in the long run. If not dealt with appropriately and effectively, they
can bring innovation to a grinding halt, which will destroy the trust
of both executives and those doing the actual work of innovation.
The irony is that they actually do so by just doing their jobs.
Incentive structures may well have to change to overcome this
challenge.

Understanding the overall corporate strategy better. It is often

said that culture eats strategy for breakfast. However, it is
important for corporate innovation teams to gain a very solid
understand of the overall corporate strategy, then identify a
number of important corporate moves (near future) and try to
pull the current innovation resources in this direction.

This could help bring more awareness, recognition, and perhaps

even respect to the innovation team just for their efforts and in
particular if it results in some early wins. Over time, this can help
change the culture for the better.

Focus on a single business unit, at least initially. Large multinational companies most likely have pockets of the right
innovation culture. Try to identify these pockets and then secure
full commitment from the leadership and work together to
develop and launch strong initiatives. If this works well, then build
out further throughout the company with similar initiatives.
Educate upwards. It is the responsibility of corporate innovation
teams to educate their executives. Yet many teams miss out on
this or they do not really know how to do it. The challenge is to
find the ways that work in a given situation. Executives may want
to learn, at which point establishing a training program would be
appropriate. If they do not seem interested, then finding the
unique triggers is important. This often involves identifying ways
in which the executives can benefit personally from a stronger
innovation culture.

Educate upwards: It is the

responsibility of corporate
innovation teams to educate
their executives. Yet many
teams miss out on this
or they do not really know
how to do it.

Senior executives often think about what their peers in other

companies are doing. Thus, it might also be relevant for a corporate
innovation team to set up sessions in which executives from
different companies learn from one another. As the organizer, it
is possible to control or at least influence which companies to
invite and thus help select companies that can build further on the
innovation agenda that the corporate innovation team is pursuing.

Step up the communication efforts. Every company already has

some good initiatives going on and this can be used to start
building the perception that the company already is innovative
(although there is a lot of room for improvement). Communicate
internally in order to get the support needed to make innovation
happen and communicate externally to be able to bring in the
best external resources to the innovation process.

Innovation Culture: The Big Elephant in the Room

Getting Started at General Mills

First in an article in IndustryWeek, and later in a guest post on 15inno.
com, Jeff Bellairs, senior director of Connected Innovation for the General
Mills Worldwide Innovation Network, wrote: In my role overseeing open
innovation efforts at General Mills, Ive learned that when you start an open
innovation program, its critically important to expect, address, and embrace significant culture change within your organization to establish a
successful program.
Jeff went on to provide tips for jumpstarting an open innovation program;
here is a shortened version of his advice:
Benchmark Others. Do not underestimate the challenge in beginning to
shift your culture toward one of more connectedness. Look to other
companies that already have done so and learn from them. When planning our open innovation strategy, we sought insight from organizations
both outside the consumer-goods industry as well as from our peers.
We talked to many best-in-class open innovation practitioners, from
Henry Chesbrough to Procter & Gamble, and the learning we gathered
from them helped us jumpstart our program.

When planning our open

innovation strategy,
we sought insight from
organizations both outside
the consumer-goods
industry as well as from
our peers.

Tailor to Your Existing Culture. There is no one-size-fits-all solution

to open innovation. Rather, its important to build an open innovation
program that works in your companys culture.

To start our open innovation focus, we needed to ignite a cultural shift

to transform from an internally focused to an externally focused organization. What worked for us was creating a dedicated team, which we
named The X Squad, to facilitate the organization in finding and tapping into external innovation. The X Squad is charged to catalyze this
new thinking, to help people think differently about their overall skill sets.
We are actually building on what we have done in the past. But today,
this full-time team travels around the globe looking for potential partners that have a product or technology solution that would fit within
our existing businesses.
Go Where Youre Wanted. Not everyone is going to jump on board
right away. So as an innovation group, you have to focus on the biggest
potential opportunities, and also the biggest risks.

Certain groups and certain

leaders will be more
enthusiastic about open
innovation than others, and
that is okay. Help the people
who want your help, and
do not waste time worrying
about those who do not.

Your open innovation group, above all else, is a resource for your business teams. Youre not there to launch your own new products, but to
engage and support the various leaders in your business and get them
committed to tapping open innovation as one way to meet their
business needs.
Certain groups and certain leaders will be more enthusiastic about open
innovation than others, and that is okay. Help the people who want your
help, and do not waste time worrying about those who do not.
Appreciate and Communicate Early Wins. When you have an early
success, shout it from the rooftops to help build your case for open
innovation. One of the first wins for open innovation at General Mills was
a natural fruit bar that we brought in from a partner in Canada. At that

Innovation Culture: The Big Elephant in the Room

point, we had customers who were looking for more innovation in the
fruit category, a very willing business partner, and a marketing manager
who really wanted to demonstrate how nimble General Mills could be.

We ended up launching the Nature Valley fruit bar from that effort. It
only took about six months from the time we agreed on our approach to
the time of launch. For us to develop the product from scratch internally
could have required millions of dollars and potentially two years. Even
though the product is no longer on the market, we have continued to
build the relationship with that partner, and they have been an ongoing
source of new-product innovation for General Mills.
The more your employees, vendors, partners, potential partners, competitors and so on learn about the initial success of your open innovation
strategy, the better your chances for sustained success.

Great Innovators Are Great Communicators

Communication in the broader sense story-telling, networking, stakeholder management, and traditional communication efforts is a key
element for corporate innovation teams in general and in particular when
they work with their colleagues to change the innovation culture for the
better. Here are some suggestions on how to ramp up communications
efforts that will support the culture needed to become competitively
unpredictable:
Get started: This sounds obvious, but it is kind of scary to witness
the number of corporate innovation teams with no focus on the
communication aspect of their corporate innovation capabilities.
They have no idea why this even matters and as such they do not
have any strategy or tactical tools with which to work. They do
not develop their skills and mindset either.
Have a clear message that resonates with the audience: Too often,
corporate functions involved with innovation efforts are too caught
up in their own world and thus they communicate with their own
terms and words even though this might not resonate with the
audience. Therefore, seeing the bigger picture is important. Some
might argue that this is why corporate communications teams
should do the work as they are trained for this. This is true, but
only to some degree. The biggest problem here is that corporate
communication people do not really know about innovation and
how it happens. This lack of understanding can create problems
internally as well as externally.

Too often, corporate

functions involved with
innovation efforts are
too caught up in their
own world and thus they
communicate with their
own terms and words
even though this might
not resonate with the
audience. Therefore,
seeing the bigger picture
is important.

Use a range of communication tools: Since most corporate

innovation teams are not trained communicators (and definitely
not in the broad sense advocated for in this paper), they might
assume this is just about exposure on their intranet and in traditional media channels. They need to go beyond this, and three
unconventional ways for many would be the use of stakeholder
management, networking, and social media. The first two can be
categorized as communication tools if used properly. And, do
not forget to explore your innovation business partners capability

Innovation Culture: The Big Elephant in the Room

to help you both develop and deliver your messages effectively.
Combine internal and external focus: Communication has
become trickier for corporate innovation teams in the era of open
innovation as they need to communicate internally as well as
externally. A key reason for internal communication is that good
things can happen faster if employees believe that they are being
innovative. A key reason for external communication is the need
to court potential innovation partners in the organizations efforts
to become the preferred partner of choice within the innovation
ecosystems in a particular industry. Perception is a powerful
element when creating a strong innovation culture.

Good things can happen

faster if employees believe
that they are being
innovative. Perception
is a powerful element
when creating a strong
innovation culture.

Conclusion
The pursuit of competitive unpredictability is an organization-wide, never-ending journey that requires smart leadership, clear strategies, constant focus, and a willingness to embrace change. Above all, it requires
a culture that supports innovation that in the future will be more open
and externally-focused than ever before. No matter the industry or sector, competitors are either already or soon will be pursuing innovation
partnerships and initiatives with all sorts of external innovation sources,
including intermediaries, academics, entrepreneurs, and domain experts
from around the world.
Keep this external perspective top of mind to improve culture within
your organization. Failure to do so will most likely require a start-over in
a couple of years, and in the meantime, competitors will have gotten a
big jump. So, why not prepare your innovation structure and culture for
the future today? This is not something that can be achieved overnight,
so the journey should start now.

No matter the industry

or sector, competitors
are either already or
soon will be pursuing
innovation partnerships
and initiatives with all
sorts of external innovation
sources, including
intermediaries, academics,
entrepreneurs, and
domain experts from
around the world.

About the Author

Stefan Lindegaard is an author, speaker, and
strategic advisor. His focus on the topics of open
innovation, social media tools and entrapreneurship has propelled him into being a trusted advisor to many large corporations. He believes open
innovation requires a global perspective and he
has given talks and worked with companies on
open innovation in Europe, South America, the
U.S., and Asia. Stefan Lindegaard has written three books: Social Media for
Corporate Innovators and Entrepreneurs: Add Power to Your Innovation
Efforts (August 2012), Making Open Innovation Work (October 2011),
and The Open Innovation Revolution (May 2010). His blog is a globally recognized destination on open innovation. You can read further at
www.15inno.com.

Want to solve pressing

problems or build
a sustainable open
innovation capability?
Contact InnoCentive
online or call
1-855-CROWDNOW to
learn more.

Endnotes
1. Barry Jaruzelski, John Loehr, and Richard Holman, The Global Innovation 1000:
Why Culture Is Key, http://www.booz.com/media/file/BoozCo-Global-Innovation1000-2011-Culture-Key.pdf, p. 2.

Innovation Culture: The Big Elephant in the Room

Appendix
On 15inno.com, you can download a free copy of Innovation Insights and
Exercises by Stefan Lindegaard, which is a workbook with more than 40
exercises on topics such as open innovation, innovation culture, communication, the corporate innovation team, and networking. Here are some
of the exercises that you will find.

Internal Readiness Overview

The starting point for undertaking culture
change is to analyze how close to (or far
away from) your organization currently
is to possessing a culture that supports
the level of innovation required to become
competitively unpredictable. Here is an
exercise that will help you perform the
needed analysis. Rate your organization
on all 18 points, using the 1 to 6 scale,
with 6 being the strongest.
With this analysis of your current position
in hand, as you begin to determine next
steps, it is important to bear in mind that
the fast pace of change that exists today
means there is no real blueprint to follow.
This is because conditions are changing
so rapidly that any blueprint quickly
becomes obsolete. So your objective is
to create the framework and attitudes
that will enable your organization to be
agile, fast, and fearless in its pursuit of
innovation.

Common Language
Companies need to develop a common
language on innovation so their employees
and external partners can better
understand and frame the issues related
to innovation.

10

Innovation Culture: The Big Elephant in the Room

Innovation Killers / Boosters

Which innovation initiatives work within in
your organization? The more informed you
are, the better decisions you can make.

Which innovation initiatives do not work

within in your organization? The more
informed you are, the better decisions you
can make.

11

Innovation Culture: The Big Elephant in the Room

People and Projects

Many companies focus too much on ideas
and projects. They should also develop
people pools and learn how to best match
the right people with the right projects at
the right time.

Foundation and Perception

Dont ever tell your employees they are
not innovative! It is better to identify the
pockets of innovation in your organization,
build further on this to create a stronger
foundation, and then let perception
become proof.

12

Innovation Culture: The Big Elephant in the Room

Toolbox and Mindset
What is the mindset and toolbox needed
for your company to be successful with
innovation? Do you have them?

Need for Education

Once you have identified the mindset
and the skills needed for the future
of innovation, you can begin to look into
innovation training programs that are
becoming increasingly important.

About InnoCentive, Inc.

InnoCentive is the global leader in crowdsourcing innovation problems to the worlds smartest people who compete to
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