Sustained Innovation: Corporate Culture is da Bomb

Even in this economy, Microsoft is not slowing our internal innovation efforts. One needs only to listen to Rick Rashid of Microsoft Research during his PDC08 keynote to confirm this. Microsoft Research remains well-funded, our customer and partner outreach programs work diligently to deploy our technologies in interesting and monetizable situations and we’re on top of most of the spaces "outside the box".

Microsoft recognizes innovation is an integral component of our growth and success. In fact, innovation is critical to the growth, success and wealth of all companies and of entire countries.

Evaluating innovation? That’s another matter. On one level, you can stand back and say "cool" or "wow" (check out "It’s About the Business, You – The “Wow” Factor (Part 1)" and "It’s About the Business, You – The “Wow” Factor (Part 2)" from a few years back). The key thought in those writings: different audiences have different reasons for saying "wow".

Is a "wow factor" enough, though? In a challenging economic environment, wouldn’t you want to consider a profitability (top-line expansion or bottom-line reduction) component as a means to prioritize innovation paths? Probably. But is it worth the risk of stifling innovation?

As important as evaluating innovation is evaluating the factors that nurture, encourage and reward the acts of innovating. What makes innovation happen in one environment over another? Many firms are trying to sort this, and similar questions.

The answer that rises above all others is a mysterious and intangible thing commonly called Corporate Culture. Companies who employ innovators and have a record of successful innovation efforts will likely bring them into the public eye to talk about it. You will, no doubt hear a quote about their corporate culture and how it fosters innovation.

A recently released paper titled "Radical Innovation Across Nations: The Pre-eminence of Corporate Culture" addresses this. The paper was authored by Rajesh Chandy, a professor of marketing at University of Minnesota, Gerard Tellis of the University of Southern California and Jaideep Prabhu of Cambridge University. The paper calls out:

• Corporate culture is the strongest driver of radical innovation.
• Commercialization of radical innovations translates into a firm’s financial success.
• Innovation is a stronger predictor of long-term financial success; better than other popular measures (such as patents).

Very interesting concepts and well worth a read.