Lean Culture: Fostering an Environment of Innovation

This environment creates the perfect breeding ground for big ideas and innovative solutions.

Sounds great, right? It certainly can be, but most companies, even those who consider themselves to have a Lean culture, don’t ever achieve it.

To foster an environment of innovation, you have to be willing to innovate not just in what you create, but in how you create it. Giving employees twenty percent of their time for innovation, as Google famously does, won’t get you anywhere if your culture isn’t equipped to embrace disruption or conflict.

The image we often see of the world’s most innovative companies is one of ping pong tables, ergonomic bean bag chairs, and nitro coffee on tap. But beneath the surface of this utopian workplace is a culture that is intense, disciplined, and radically candid.

Fostering an environment of innovation requires innovating the way we approach hiring, talent management, performance evaluation, experimentation, and more. Here are some of the defining characteristics of a Lean culture

Hire Competent, Diverse People

There is no substitute for a competent team. The Lean principle of Respect for People says that everything you do as a company should be done with respect for every person involved in the process. Showing respect for your customer means hiring the right people, who will use the voice of your customer to create exceptional products.

Innovative companies require innovative people. But beyond this, they require people who are humble, hungry, and smart – in that order (using Patrick Lencioni’s definition of an ideal team player as described in his book of the same name). In order to sustainably innovate, you need people who will:

• Ask hard questions
• Challenge the status quo
• Fight for the voice of the customer
• Communicate respectfully and candidly with those around them

These people are a rare breed, which is why it’s especially important to design a hiring strategy that attracts and retains collaborative, innovative thinkers. “…. Innovation is probably the most intensely human activity we have today,” says Guy Pisano, professor at Harvard Business School and author of Creative Construction: The DNA of Sustained Innovation, despite all the technology we have to help us innovate.

“If you’re really serious about being an innovator then your most scarce resource and your most important source are your human resources,” Pisano continues. “If you set out to say we want to be an innovative company, but we don’t have or we don’t think we can create an A+ team of people, you’re just fantasizing. You really need great people.”

Protect Your Culture from Mediocrity

A phrase that is often used when discussing innovative cultures is the idea of “celebrating failure.” A Lean culture, an innovative culture, has to have a tolerance for failure. As the saying goes, to make an omelet, you’re going to have to crack a few eggs.

However, not all experimentation is necessarily productive or helpful.

The point is not to celebrate failure, but to celebrate learning from failure. And to really gain valuable learning from experimentation requires discipline and foresight.

It’s not for everyone, Pisano says, “The truth is that a tolerance for failure requires having extremely competent people….You’re much more likely to tolerate the kind of experimentation and recognize the potential value of learning from a failure if you know the people you’ve got are super competent and that they’re not messing up because they didn’t think things through or they’re designing sloppy experiments. But that they’re actually kind of pushing the envelope and that’s why you need super competent people.”

Hold People Accountable

In addition to hiring humble, hungry, and smart people, holding people accountable means you have to be willing to make tough choices if someone is not performing at the level you expect. This also means that you must have objective, data-driven ways of evaluating individual and team performance.

The world’s most innovative companies evaluate performance obsessively and will terminate those who are not meeting expectations. Pisano defends the cultures of companies like Amazon, who are known for terminating people who cannot meet expectations in their rigorous environment: “I think that’s just part of the deal of being an innovative culture. They have to have outstanding people. They hold people accountable. So strong accountability is part of it.”

Realize It’s Not for Everyone

Another harsh reality of building a truly innovative culture is recognizing the fact that being in a highly innovative organization, with a high level of individual accountability, is not for everyone. To excel in an innovative environment, you need to not only be brilliant and technically skilled, but also collaborative and communicative in a way that will support an innovative culture. You must be open to talking about your mistakes and providing constructive criticism to those around you.

Sometimes, companies are founded by a few people in a garage and then grow to hundreds of employees within years or even months. A less-talked about reality of those companies is that sometimes, the people who took the company from point A to point B aren’t the right people to take it from point B to C and beyond.

Innovative companies are incredibly selective in their hiring, and candid and thorough in their talent management as well. Returning to the Lean principle of Respect for People, if someone is not equipped to thrive in a Lean culture – if they’ll feel uncomfortable working in that environment every day – the most respectful thing is to release them to find an environment for which they are better suited.

Foster Psychological Safety

For those who are well-suited for a Lean culture of innovation, it’s critical to create a space that is, as Amy Edmondson, author of The Fearless Organization, calls “psychologically safe.” This means creating an environment where employees feel free to try things without fear of reprimand.

“People must be allowed to voice half-finished thoughts, ask questions from left field, and brainstorm out loud,” Edmonson says. “It creates a culture in which a minor flub or momentary lapse is no big deal, and where actual mistakes are owned and corrected, and where the next left-field idea could be the next big thing.”

This requires buy-in from everyone in the organization, especially leaders. Creating a psychologically safe culture isn’t just about letting people ask the “dumb question” or try something with no concrete plan for ROI. It’s about creating a safe space for conflict, because it’s through conflict that we are able to make the most of our diverse perspectives.

This means that leaders have to demonstrate respectful ways of giving and receiving feedback. They have to demonstrate the concept that conflict is inevitable, and that our job as employees and people isn’t to avoid conflict, but to handle conflict constructively and candidly.

Guy Pisano explains it this way: “If I can speak up and be critical of your ideas, then I’ve got to be willing to accept the criticism of my ideas. And so as a result in these organizations when people are free to speak up, when you sit around the table, you realize, wow, these are pretty tough places.”

Psychological safety, he argues, does not have to come at the expense of candor: “I mean you’ve got to have a thick skin. I’ve sat through many of these meetings and you see people kind of really getting at it. Now. The key is it’s about the idea, it’s about the data. It’s about the concept. It’s not about you.”

Smart organizations will choose to undergo training around conflict management and resolution to protect the integrity of their culture. They will also have low tolerance for employees who don’t seem to be able to handle conflict respectfully.

To Innovate, Be Innovative

There are many practices and thinking tools that can help you foster an environment of innovation, but these three are the first steps towards developing an environment of innovation:

• Hiring competent, diverse people
• Holding people accountable
• Creating a sustained sense of psychological safety

Each of these present complex challenges that are not easily unraveled, so you’ll need vision, discipline, and the right people to do so, but any organization truly motivated to innovate will find a way. Learning more about Lean culture, practices, and principles can provide an excellent framework to do just that!