2. If innovation is the top priority –
why are so many companies bad at it?
• Most CEOs don’t understand what innovation is
• Most organizations don’t measure it
• Most leaders don’t realize they limit innovation
• Most people don’t comprehend what to change
3. Innovation is about changing
• Your products, customers and your business models
• Your people, distributors and your supply chains
• Your culture, attitude to risk and your processes
• Your partners and your partner relationships
• Your behaviors and your decisions
4. Trust, weak ties and innovation
Dr. Andrew Maxwell
Associate Professor, Entrepreneurial Engineering
Director Bergeron Entrepreneurs in Science & Technology
Lassonde School of Engineering, York University
Chief Innovation Officer, Canadian Innovation Centre
5. • Changing decision processes that led to prior success
Christensen, C.M. (1997) The Innovator’s Dilemma
• Sourcing innovation from outside the organization
Chesbrough, H. (2003) Open Innovation
• Partnering with smaller, less established, organizations
Granovetter, M. (1973) The strength of weak ties
• Modifying role of leadership to
one of catalyzing and coaching
Hamel. G. (2002) Leading the revolution
• Changing how individuals in
organizations behave
Kotter, J. (1985) Leading change, why
transformation efforts fail
Changing organizational design necessitates
6. • Decision processes are faster, and accountability is
spread through organization
• Organizational culture incents risk taking,
experimentation and a portfolio approach
• Communication is accurate, timely and frequent
• Information flows are two way, rapid and
transparent
• Reliance on cross functional teams and
developing new relations with external partners
• Relationships within the organization and with
partners embed higher levels of trust
Characteristics of innovative organizations
7. “..willingness to be vulnerable to actions of another party,
without direct means of controlling their behaviors”
• Reduces concerns about misappropriation or
misuse arising from knowledge exchange
• Accelerates knowledge sharing/absorption,
enabling rapid identification of relevant
opportunities
• Reduces transaction and verification costs
associated with knowledge exchange
• Speeds relationship development by facilitating
incomplete contracts with multiple partners
Relationship Trust:
8. Increasing evidence that innovative companies are those
able to build relationships with companies with weak ties:
• Characterized by informality, infrequent
communications, and complementary knowledge
• Limited track record reduces perceived ‘reliability’
• Difficult to participate in standard agreements
• Outcomes from relationship difficult to quantify or
predict
Importance of weak ties
9. • Standard approach is to minimize risk, without asking:
• What are risks of delaying, or not making, a decision
• What are the costs of managing relationship
• Expensive to include all possibilities in contract
• Contracts to manage process - timely and expensive
• Alternative - use trust… but not a skill we develop:
• How do you decide who to trust, and how much?
• How do you persuade them to trust you?
• Requires understanding of trust development process
• Relies on personal development skills
What they don’t teach you in business school
10. • Trustevolvesduetoindividual behaviorsinfluenced by:
- Individual personality; previous relationship experience
- Corporate culture, processes and organizational design
• Manifestations of specific behaviors influence trust:
- One party displays trust behavior, reciprocated by other
- Each behavioral manifestation audited by other party
- Specific trust behaviors build, damage or violate trust
• Achieving specific trust levels enables relationship
• Damaged or violated trust can destroy relationship
(although damaged trust can be repaired)
Trust development process
11. Lewicki and Bunker (1995)
Level of trust changes over time
Knowledge
based trust
Competence
based trust
Identification
based trust
12. Behavioral manifestations that build trust
Trust Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
Capability
Competence Displays relevant technical and/or business ability
Experience Demonstrates relevant work/training experience
Judgment Confirms ability to make accurate and objective decisions
Trusting
Disclosure Shows vulnerability by sharing confidential information
Reliance Willingness to be vulnerable through task delegation
Receptiveness Demonstrates ‘coachability’ and willingness to change
Communication
Accuracy Provides truthful and timely information
Explanation Explains details & consequence of information provided
Openness Open to new ideas or new ways of doing things
Trust Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
Capability
Competence Displays relevant technical and/or business ability
Experience Demonstrates relevant work/training experience
Judgment Confirms ability to make accurate and objective decisions
Trusting
Disclosure Shows vulnerability by sharing confidential information
Reliance Willingness to be vulnerable through task delegation
Receptiveness Demonstrates ‘coachability’ and willingness to change
Trust Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
Capability
Competence Displays relevant technical and/or business ability
Experience Demonstrates relevant work/training experience
Judgment Confirms ability to make accurate and objective decisions
Trust Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
77% of multinationals rank innovation as top 3 priority (24% as number one) – source BCG
in customers, technology and global economics
Annual change in Fortune 500 rankings is 8%
Organizations are perfectly designed to obtain the results they achieve
Different outcomes require organizational redesign - change how individuals behave/make decisions
Redesigning the organization is hard because it is out of people’s comfort zones:
Changing attitudes to risk
Faster decisions with more limited information
Incentives for showing initiative not for success
Strategic partnerships with previously unknown organizations
How do we measure innovation:
Ask people – BCG survey..identify innovative companies
Financial performance - % of revenue from innovations
Mine data – number of patents issued
Problem is – all of these are outcome measures
Doesn’t tell you how to become more innovative
Even if they can measure it – how to change their organization to make better results
Don’t understand the barriers to innovation.
the creation of new & better products, processes, services, technologies, or ideas that are accepted by markets, governments, & society
the opening of a new market, securing of a new source of supply or the creation of a new organization (Schumpeter, 1936)
the creation of a new business model or perceived value
Importantly, innovation involves doing something which the organization has not done before, and changing the way people in the organization behave and make decisions
Not to be confused with:
Invention - the creation of an idea or method
Improvement – enhancement of existing products or servicesProduct Innovation
Process Innovation
Service Innovation
Business model Innovation
Financial Innovation
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Companies wanting to innovate must learn how to rely on trust to mitigate risk and address these issues
Senior management molded by their environment and experience: where speed/risk taking viewed as negatives
Traditional approach to risk mitigation relies on formal processes, established relationships and contractual controls
However, unintentionally increases risk of being disrupted:
slows down decision making and information flows
discourages risk taking and experimentation
inhibits new partnership formation and technology sources
stifles innovative technology and business opportunities
Called the universal lubricant
This is another option for an overview using transitions to advance through several slides.
Real challenge is ”moving at the speed of trust”
persons trust behaviors – a natural skill that allows you to develop personal relationships
How to audit trust behaviors
How to display trust behaviors
How to repair damaged trust
Is a context dependent staged process over time
Initial relationship trust based on proxy (i.e. background)
Certain controls enable trust development: while others make it more difficult for trust to develop