Innovation and Change Management Reflect Culture
Change Management, Briefly
Let’s briefly review change management, which we’ve written about before. Change management is a structured approach to managing change. The thing that makes this more than merely rearranging the words is the “structured approach”. Change management is not responding to change, though that’s part of it, or planning change, though that’s part of it. It’s applying a systematic, repeatable approach to planning, monitoring, carrying out, and finally concluding change within an organization.
Culture in change
The culture of organizations is its own large topic. We’ve written about it before, and we’ll write about it again. For this particular post, let’s assume that we mean the culture at a particular organization at a particular moment in time. Culture in this way will include dimensions such as psychological safety (how willing people are to extend themselves to the possibility of rejection or ridicule), incentive alignment (whether people trust they’ll be rewarded for doing what’s asked), and trust (whether people believe others will do their part in cooperation).
In planning change, if psychological safety is low, the planning process is likely to generate unrealistic, infeasible, or incomplete plans. Nobody wants to proffer ideas that will be ridiculed or will be dismissed without being actually considered. When incentive alignment is low, managers can be reluctant to offer resources, knowing that this offer will result in little thanks on the project’s change and may even hurt them by taking up their team’s time. When trust is low, it’s hard to get volunteers, who know that they’ll be shouldering a disproportionate amount of work.
In the other parts of change (monitoring, carrying it out, and concluding), the effects of poor company culture are similar and predictable. This bears discussion at all because many companies with a poor company culture do not know it. Importantly, when company culture is poor, no one person is incentivized to raise this issue. They’ll simply be directly or constructively fired, sidelined, or otherwise excluded. It’s easier to just find a new job and hope the next company has a better culture.
Innovation
Innovation can mean different things in different contexts. Here, let’s focus on suggesting and trying out ideas that are new or novel to an organization or a part of the organization. This can incorporate invention (novel innovation), but the novelty is not a necessary part.
Innovation can be initiated by anyone at a company, and supported innovation is usually either very small (e.g., “Let’s try ordering coffee from a new place”) or leads to a change management process.
When innovation leads to change management, all of the previous notes about culture will apply. Even when it doesn’t, innovation is the primary way that companies adapt to change over time. Outside of hyperscaling companies with venture capital funding — which have their own culture, often dysfunctional and nearly always temporary — companies grow from small to large by iteratively incorporating new people, who will bring with them new ideas, new personalities, and new skillsets.
A Few Signs of Unhealthy Culture
Above, we touched briefly on the effects of having an unhealthy culture, and the risk it poses to companies. Only leadership can address bad culture in anything but an accidental way.
A few signs that your company’s culture is unhealthy:
A 100% approval of everyone for everything. This either reflects fear, not true approval, or indicates that dissent leads to dismissal. Both are wildly unhealthy and will cause company stagnation within a couple of years.
Multiple re-organizations to perform targeted layoffs. For true performance issues, companies don’t use layoffs. Layoffs are used to get rid of people in deniable ways. Not necessarily for illegal reasons, but certainly for reputational reasons.
Team size determines influence. This relation is, at minimum, backward, and leads to poor budgeting decisions. falls under “incentive alignment” above.
What to Do
Cultural health is complicated, but how change management and innovation go can be a litmus test for that health. If you’re near the top of an organization, see problems, and have significant leverage, address the problems directly. Otherwise? Be wary. Dissidents only last when the culture is healthy (where they are known as innovators).