Culture Trumps All
One of the advantages of having worked at several companies is that you really get to understand how different cultures can be. In the newest strategy + business study — The Global Innovation 1000: Why Culture is Key, the researchers make the point that the most important ingredients in building an innovative environment is strategic alignment and a culture that supports innovation. They found after studying the world’s biggest spenders on R&D over seven years that “there is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.” That’s a very revealing statistic. It is natural to assume that high R&D spenders would have the best bottom lines and most success. It just is not true.
Now that innovation spending is back on track after a poor economy, the authors conclude the following below. This is such a critical point for those wishing to understand innovation and what really is important in building a reputation for being a best place to work:
“Culture matters, enormously. Studies have shown again and again that there may be no more critical source of business success or failure than a company’s culture — it trumps strategy and leadership. This isn’t to say that strategy doesn’t matter, but rather that the particular strategy a company employs will succed only if it is supported by the appropriate cultural attributes.”
It always gets back to the people and the culture. The research is alot deeper than this but the quote above about culture trumping strategy and leadership just jumped out at me. I’d have to argue that the leadership provides the foundation for a culture that supports innovation and that leadership might matter even more than strategy but culture shapes success, and ultimately reputation.