Your Company is Not Innovative and Here's Why!!

Every company, not just innovative ones, build their cultural foundation positioned between the operational and entrepreneurial systems.

The operational system is driven by budgets, strategic plans, and the formality of business disciplines with regulatory bodies, such as: FASB/IFRS for accounting & financial reporting, ISO 9001 for quality assurance, and PMBOK for project management. Similarly, the entrepreneurial system is buttressed by less formal disciplines, such as: creativity, flexibility, vision, and questioning. The difference is that innovative organizations embrace, encourage, and expect the friction between the two organizational systems.

The challenge for most organizations is allowing the two to co-exist without one dominating the other. An organization that is operational-system dominant tends to be more bureaucratic, mechanistic in nature, and lumbers in their market or industry. These are the organizations that are content to maintain the customer base and only take initiatives that have already been proven and tested in the market. Even then, their iteration substantially lags behind early adopters.

See what happens to companies like KFC or Kodak who wait for products to be market tested

An entrepreneurial-system dominant organization is ultra creative but lacks the discipline and rigor to fully back concepts into commercially viable profit centers. These organizations have the ability to cultivate small followings behind their product or service but doesn’t have the framework to transition past the small set of early adopters.

Look at these examples of organization that have a small following but are not mainstream yet; MOD or MVMT

Lack of Employee Engagement

The most innovative companies engage their employees in a way that encourages them to flourish in the adaptive space.

There are two scenarios where an organization will struggle to be innovative:

  1. The organization is overly entrepreneurial, despite the effects of the operational system; or

  2. The organization is so bureaucratic that it has no entrepreneurial spirit.

If you are an employee or a business leader in an organization that is solely dominated by one of the systems mentioned above, ask yourself the following questions:

  • How would you feel if you were a member of the system that was getting dominated?

  • Do you feel a sense of belonging to something bigger than you? Would you feel like you were a part of a cause?

  • Do you trust the leaders of the organization if there was a lopsided balance of power?

  • How committed are you?

  • Do you feel empowered?

Ukil (2016) discussed the latter as the key to organization improvement and employee happiness. As a business leader, you set the tone for the organization and are integral to the development of cultural parameters. You can foster an environment that produces contexts that combine design thinking (entrepreneurial system) with tactical business (operating system). By managing the power distance between system leaders and the tension between the two systems, you can ultimately create a more innovative organization. (Wattanasupachoke, 2012).

See how we did this for one of our clients, take a look at our Case Studies section.