By Tom Sommerlatte (Right) and Wilhelm Lerner (Left), Arthur D. Little
There is often a mismatch between the intellectually best solution that emerges through innovation and the implementation of that solution. This gap can be attributed largely to the human factor, and recent research has revealed a strong link between the climate of trust within a company and its innovation performance.
Many companies try to enhance their innovation performance by formalising their innovation process and project portfolio management. However, this success is often limited and recent investigations have shown that sustainable innovativeness is conditioned by a climate of trust in the organisation.
In Arthur D. Little’s recent Global Innovation Excellence Study, it became apparent that maintaining a lead in innovation performance is getting harder and that one of the most important success factors is the ability to mobilise the whole organisation to develop new ideas.
While using technology and R&D more systematically as a competitive tool was the name of the game for most companies until the late 1970s, innovation requirements have changed over the years and in the 1980s and 1990s, the focus shifted to introducing new approaches that concentrated on customer needs more effectively, and optimising the deployment of their R&D resources to respond better to these needs.
Innovation has always been the result of a complex interaction of many functional areas and people in the organisation who are involved in creating, evaluating and selecting innovative ideas, those responsible for decision-making processes about risky resource allocation, and who manage development efforts in an environment of uncertainty.
We have always found that there tends to be a difference between the intellectually-convincing best solution and what actually happens when it gets implemented, whether consciously or unconsciously. It has been said that this is because of ‘the human factor’.
Recent research has shown that there is a strong link between the climate of trust and the innovation performance of companies, and furthermore that the climate of trust has deteriorated in many companies over recent years.
According to the findings of the research, there are six measurable parameters that largely determine the climate of trust:
1. The quality of communication within the company in terms of the clarity and credibility of commitments made by the leaders, as well as their openness to the arguments and views of others
2. The reliability of the rules of the game and of values in terms of being adhered to under changing conditions and in terms of room for initiative
3. The soundness of the perspective in terms of the likely future of the company, of job security and of the ability to master change
4. The identification of employees with the company in terms of their view of the company’s reputation, their feeling of being part of it and their assurance of playing a constructive role
5. The appreciation of the employees by the company’s leadership in terms of recognising their contribution and effort, of fair compensation and of their ability to progress
6. Belonging to a community in terms of the role of team play and the quality of teams, of pursuing a joint objective and of benefiting from joint success.
Once the climate of trust has been measured through an internal company survey, and once the weak spots have become apparent, management can and must take the lead in overcoming them.
In many cases, mobilising the whole organisation requires open and interactive communication about the potential areas of and the criteria for strategically desirable innovation, enhancing the active exchange with lead users about their unfulfilled needs and fostering innovation initiatives among cross-functional teams.
Consciously cultivating the climate of trust and stimulating innovative thinking go hand in hand. Leaders dedicated to managing both are the ones that achieve sustainable innovation success.
Tom Sommerlatte has been with Arthur D. Little for over 40 years specializing in innovation and strategy consulting. He has authored a number of books on innovation management. He is now Chairman of the Advisory Board of Arthur D. Little GmbH.
Wilhelm Lerneris a Partner at Arthur D. Little’s Frankfurt office and leads the Strategy & Organisation Management Practice in Central Europe