David Foster Wallace has this haunting line in his profound 2005 commencement speech, “This is Water.” He talks about “day in, day out.” He was addressing graduating seniors from Kenyon College and his reference of day in, day out refers to how adult life turns from spontaneity into going through the motions. When I heard the line, instead of thinking about adult life, I thought about companies.
There are mechanisms that work in the backstory of companies that keeps it performing day in, day out; it’s the churn of big companies. These organization mechanisms, which I call endosystems, are efficient and relentless at eliminating anything that is new and potentially threatening to the mix.
The endosystems are working even when you are not, keeping things operating, stable and predictable; rolling out reports, numbers, warnings, comparisons and day-to-day operational data that allows managers to do their jobs. The endosystems are tacitly communicating what it takes to score and what decisions are necessary for success. If innovation is counter to what the endosystems are trying to do, they will see will see it as a threat and will work behind the scenes to eliminate it.
Endosystems are the result of a billion linkages made over time. You know the front end of endosystems of if you ever started a company or worked for one in its infancy. At each turn in the new company, you are creating and documenting new processes, standardizing, digitizing and building systems that hold it all so that it is at your disposal. You are putting in place management systems and business processes that make up endosystems. Endosystems are invisible to all but those who look for them. They are shellacked with layers of veneer from standard operating procedures put in place over the lifetime of your company. Endosystems are vital to the company. They exist for a good reason; to proliferate data that drives desired behaviors and decisions and to ensure your company against total operational meltdown. You need endosystems, without it everything would be a one-off and your competitors or regulators would kill you. Make no mistake, endosystems represent the day in, day out of organizations.
Imagine you and your significant other are living together in a home that you have spent a decade filling with the latest designs and things that a delight you, with all their sharp edges, straight lines, high BTU cooking flames and the best set of chef’s knives to fulfill your culinary passions. You put certain procedures in place to make your lives run on a dime. You created your endosystems, the things that run your home. You built your dream house, day in, day out. Then you learn the happy news that you are pregnant. Months pass, and you bring the baby home, and in no time, she starts walking. Thankfully you spent your maternity preparing your home for your baby. You baby-proofed it to reengineer your home endosystems. You institute a new procedure for cooking, for example, where you turn the handles inward on the cooktop to keep toddlers from reaching hot pots. You make sure that the sharp edges, moving parts, flames other dangers that are lurking in your home day in, day out do not harm this fragile young life.
Innovation has the same fate if you do not innovation-proof your organization. These endosystems that were built by previous generations of managers were likely not built with innovation in mind. Quite the opposite, the endosystems of your company were built to:
- create certainty
- ensure consistency
While these are necessary for your company, they can be harmful to innovation. The endosystems also migrate into individual jobs, the mindset of the company, new processes and into the culture. Day in, day out, without renovation, puts innovation in danger.
Calling Out Culture is Arm-Waving
If you are one of the thousands of people struggling with why innovation is not working well in your company and blaming it on your company’s culture, this is arm-waving. It is more than the culture, anti-innovation is coded in the DNA of the endosystems, it is embedded in the day in, day out of the company. It is in every management system that drives performance, including financial, budgeting, talent management, rewards, legal, and operations systems, to name a few. Moreover, this DNA is secretly coded into your key business processes. It’s in your free cash flow process, product development process, quality systems, continuous improvement protocol, cost reduction initiative, manufacturing and logistics processes. If you do not take proactive measures, as the couple did above to baby-proof their home, innovation has a half-life of about 18 months. This is the fate that many innovation initiatives face. Good intentioned leaders and innovators start innovating, without thinking about the day in, day out of the company and how that will wreak havoc on their ability to innovate.
Reengineering Endosystems to Enable Innovation
In the Innovation Universe, there are four categories that represent the type of work that organizations must carry out to enable innovation: FRAME, GENERATE, EMBED, and LEAD. While they are not mutually exclusive, it is the EMBED category that focuses on transforming the organization to make innovation work. Considering the discussion above, EMBED transforms the day in, day out to allow innovation to thrive. The subcategories in EMBED are:
- endosystems (management systems + key business processes),
- the company’s change profile (addressing change from a positive orientation),
- culture evolution (slowly adapting culture to drive innovation) and
- new management principles (the organization’s belief systems about people and innovation) that will enable innovation.
Organization transformation is onerous. It takes several years of single-minded focus to EMBED innovation. There is so much to do that I urge you to triage and start with the most pertinent areas. This might be making sure that leaders know that they are accountable for the steps required in EMBED. It might be assigning the overall innovation intuitive to a single leader who will be accountable for innovation transformation. EMBED is the step that most companies miss. It could be that they just don’t see it, possibly given that EMBED is the one with the cloaking device. Whatever the reason, trying to renovate your company to be innovative will be a fool’s journey unless you have a plan to re-engineer the company to EMBED innovation.
It helps to take stock of where you are in your company’s innovation journey to decide where to start EMBED. If you have a few innovations under your belt, innovation is not abstract, and you and others can begin to see where the endosystems are constricting innovation. If you have not assigned EMBED as an accountability of your leadership team, that is a good next step. I can tell you from years of experience that this tends to be a hard sell. It’s hard for leaders to comprehend this invisible category and even harder for them to see how they can begin to effect it. Getting the leadership to understand their overarching role in EMBED is critical to the success of innovation in your company.
Good places to start EMBED by making small tweaks to open up space for innovation are in:
- resource allocation (budget, capital, funds, people),
- the talent management system
- the reward+ recognition systems
Your innovation head will need to work with the senior leaders who head up the systems or processes that need tweaking. If leaders start to understand their role in EMBED, it will be a much easier task. The innovation head should bring specific examples of EMBED barriers from management systems and or key processes to the meeting. For example, if your budgets are allocated annually and there are no funds available in July for small scale experimentation, you might re-engineer the budgeting process to set aside seed fund money to be allocated in small ($20-$25 K) increments to innovation teams who meet a minimal innovation threshold. If people resources are the barrier, you might also go to HR leads and talk about how to free up diverse talent to be assigned temporarily to the innovation teams, perhaps new hires could spend their first six months on an innovation team. Another option is to look at open innovation approaches to bring in talent from the outside, in this case, you may additionally need to work with legal to re-engineer the partnership agreements or intellectual property systems that your company has in place that might not be innovation friendly.
OVER TO YOU
Embed is the invisible planet in the Innovation Universe. Embed addresses the day in, day out of the organization. By re-engineering the endosystems (management systems + key processes), to make them innovation friendly, innovation can one day be part of your company’s day in, day out.
Dr. Nancy Tennant for the Innovation Universe
To learn more visit Dr. Tennant’s blog and join the conversation. Innovation Universe: Renovating Your Company for the Innovation Age.