Solving THE INNOVATION EQUATION Andrew Maxwell and Helen Leighton Innovators’ Alliance, May 4, 2016 “An established company which, in an age demanding innovation, is not able to innovate, is doomed to decline and extinction” - Peter Drucker

Solving the innovation equation Units of measurement? 01/08/2018 Solving the innovation equation Units of measurement? Possible Outcome Measures: Company’s reputation for innovation – Business Week Percent of new products in last 5 years - Eurostat Number of patents filed – Michael Porter Expect to be most innovative – Forbes Return on new product development – Balanced Scorecard However: Measuring outcomes doesn’t help improve innovation capacity Rather, it requires an understanding of how you change behaviors

Behaviours that increase innovation capacity 01/08/2018 Behaviours that increase innovation capacity Team and cross-functional collaboration Sharing ideas with internal and external partners Two way, open, knowledge exchange, Deferred judgment and idea exploration Speedy decision making Experimentation and willingness to learn from failure Incentives that reward new activities Access to appropriate resources Achieving the balance between loose practices & tight processes

Innovation happens between gaps in organizations 01/08/2018 Innovation involves: Sharing ideas, knowledge and resources Collaboration Trust Increasing your innovation capacity involves: Changing behaviors Working in new ways Creating new partners Trust is the universal lubricant that enables innovation

Trust is the universal lubricant that enables innovation 1. Mayer, Davis & Schoorman, 1995 “Engaging with another party and being willing to be vulnerable to their actions without direct means of controlling their actions or behaviours1”

Trust as a behavioural construct Moving trust from a sentiment, to a behaviour that can be audited. Developed Behavioural Trust Framework (BTF) to enable individuals to understand how to build, damage or violate trust. Enables individuals to decide who to trust and build trust based relationships Higher levels of trust reduce relationship risk and foster innovation

Solving the innovation equation 01/08/2018 Solving the innovation equation Innovation Capacity = Level of Trust x Available Resources Level of Trust = ∫(Trust building - trust damaging) behaviours – ƒ(controls) Collaboration is an essential ingredient for innovation Trust is a necessary pre-condition for effective collaboration In the absence of Trust, we develop proxies for Trust: Any mechanism which seeks to control behaviour is a proxy for trust (examples: employment contracts, performance reviews, annual budgeting processes, rigid organizational structures and reporting relationships, over-applied lean methodology, outcome-based objective setting) The higher the Trust Level, the lower the need for controls The higher the Trust Level, the greater the level of collaboration, which results in a higher level of innovation

Behavioural Trust Framework 01/08/2018 Trusting: Disclosing: Shows vulnerability by sharing confidential information Reliance: Willingness to be vulnerable through reliance on others Receptive: Demonstrates ‘coachability’ and willingness to change Capability: Competent: Displays relevant technical and/or business ability Experienced: Demonstrates relevant work/training experience Judgment: Shows ability to make accurate / objective decisions Trustworthiness: Consistent: Displays of behavior that confirm previous promises Benevolent: Exhibits concern about well-being of others Alignment: Actions confirm shared values and/or objectives Speak to behaviours in each dimension – can build, damage or violate trust Communication: Accurate: Provides truthful and timely information Explanation: Explains details & consequence of information provided Openness: Open to new ideas or new ways of doing things

Behavioural Trust Framework: Trustworthiness/Capability 01/08/2018 Behavioural Trust Framework: Trustworthiness/Capability

Behavioural Trust Framework: Trusting/Communication 01/08/2018 Behavioural Trust Framework: Trusting/Communication

Apply the Behavioural Trust Framework (BTF) 01/08/2018 Apply the Behavioural Trust Framework (BTF) To explore team dynamics in organizations looking to increase innovation capacity To identify challenges to building partnerships with new innovation partners To facilitate coaching discussions Evidence BTF users can identify short term actions to reduce controls, to increase trust & to repair damaged trust Now gathering data on how people use this tool to share with innovation community (especially Innovators’ Alliance)

Building innovation capacity, one trust behaviour at a time 01/08/2018 Building innovation capacity, one trust behaviour at a time For a copy of this deck or the Behavioural Trust Framework: Andrew.Maxwell@lassonde.yorku.ca Helen.Leighton@gmail.com or download from http://www.slideshare.net/AndrewMaxwellPhD/innovators-alliiance-2016 “A culture of innovation can be a company‘s primary source of competitive advantage, and can pay off steadily over the years” - Stephen Shapiro