Shift your culture

We all know fear of failure can paralyse decision-making and progress, and that means people not taking the small steps that make innovation, in all its forms, happen.

Preconceived ideas and solutions block innovation and change. Your culture is critical. Organisations need to embrace a fail-fast, no-blame culture if they are serious about innovation.

Technology is embedded in everything we do. Rather than the latest tech in itself, innovation is much more about the application of knowledge enabled by technology to create solutions.

In such an environment, you have to be open to learning and taking small steps forward: creating a culture where people can safely say “That didn’t work – so what have we learned?” This is a shift from a traditional groupthink mentality that makes judgments about personal failure, or forces an investment or programme to continue because it has sponsorship.

Take, for example, PwC’s recent Innovation Challenge. This year there was enormous interest and a record number of entries: more than 2,000 people engaged, with 185 entries from 54 countries.

But this isn’t a science fair for nice ideas and good presentations. It proves to me how much we are progressing as an organization that, this year, finalists only qualified if they had identified commercial revenue streams, clients or markets. This is a multi-disciplinary commercial viability test. From a tax-fraud prevention platform to a new approach to psychometric testing, the application of knowledge, technology and client need were anything but “business as usual” for our people – or our clients.

From India to Australia, South Africa to the US, Poland to China, the ideas had one thing in common apart from their customer value: they came with no fear of failure.

Make more portfolio plays

Last year, annual worldwide R&D outlay for the top 1.000 corporate R&D spenders broke $700bn for the first time. The spending was dominated by the computing and electronics, healthcare and automotive sectors, and the top four spenders were all high-tech companies.

That’s innovation at an enterprise level. It’s vital for both competitive and economic reasons. The investment is large, and the payback can be long.

At the other end of the scale is a small-step innovation culture that relies on a portfolio of ideas being constantly created and tested. In the culture of innovation we are driving, you test often, fail fast and learn quickly. Innovation like this, at an individual venture level, is a portfolio play, with lots of small spinning plates, ideas and changes.

A culture of innovation, with a portfolio of ideas, might sound like you are creating some wild west of new concepts. But it won’t be if, at an individual enterprise level, you are creating solutions that respond to specific client demands.

It’s a different conversation with your clients, too. You’re not looking for 100% perfection. You’re looking for validation of whether you are targeting the right problems, and whether they have the potential and commercial interest to address them in a new and more valuable way.

Our new-ventures business invests across the world in this type of fast start, scalable ideas generation, constantly validating the value to our clients. We are investing because it is the future of our business, and clients are demanding higher value at a lower cost, faster. It’s the culture point again: enabling a fail-fast, start-up mindset in our new-ventures business is creating new solutions faster.

We put the emphasis on early and extensive customer validation: setting up gates at which you stop, review, time-box activities and decide if the project continues. Three- and six-week milestones are typical. It’s a tough, intense environment. But in a portfolio play, a fail-fast approach constantly interrogates why things might not work, rather than extolling the virtues of why it will.

Get (digitally) fit

Technology alone doesn’t solve the bigger issue organizations face: developing and embedding a culture of innovation that drives growth. The speed of technology’s development and ubiquitous nature of its impact in business is not just a question of recruiting people with the right skills, but of whether you’re keeping up.

For me, this is an issue vital for a culture supporting continuous, embedded innovation. If leaders are not digitally fit, how can an organisation’s culture foster it? Consider the 2017 World Economic Forum report on workforce reskilling, which noted that one in four adults report a mismatch between the skills they have and the skills they need for their current job. Meanwhile, 70% of CEOs say they’re not sure their own senior leadership teams have the digital skills to compete.

Digital fitness is about developing fluency in how new approaches to work are fuelled by technology – understanding that how we work is changing, not just the technology itself. It’s a mindset shift of continual learning, enabled by technology. In less than a year, nearly 40,000 of our people across the PwC network have voluntarily enrolled to use a new digital fitness application. It offers bite-size training to improve their fitness in everything from data analysis to AI to social media.

It’s a prime example of how, if the culture in organizations is right, you won’t hear people talk about innovation in terms of a project, a product or a technology.

Innovation is a mindset. And as leaders, it starts with us.