How Culture Drives the Economics of Innovation

Create a sense of destiny in your organization

Jeff DeGraff is both an advisor to Fortune 500 companies and a professor at the Ross School of Business at the University of Michigan. His simultaneously creative and pragmatic approach to making innovation happen has led clients and colleagues to dub him the “Dean of Innovation.” Jeff’s thoughts on innovation are covered by Inc., Fortune, and Psychology Today to name a few. Jeff is the Co-Creator of the Competing Values methodology that integrates finance, strategy, management, innovation, and leadership into a system that boosts the business bottom line, and he collaborates with Haworth through the consultancy, Innovatrium.

Independent thinkers have a way of upsetting people. Economics Nobel Laureate Edmund Phelps is a good example. Progressives take issue with his scrupulous analysis of government stimulus spending while conservatives are offended by the way he characterizes their political ethos as having created the corporatist values system. Independent thinkers are often those who are the most innovative, and they are not easy to situate in traditional terms or corral in conventional boundaries. They travel in the undiscovered country of the new.

In an op-ed piece in the Financial Times, Phelps hangs the near collapse of one of the world's largest economies on a failure of the collective culture to produce real innovators. While the recent dynamics in East Asia have raised similar concerns from other voices, Phelps is getting many of us to wonder if America too is losing its innovative prowess: reliance on government incentives, business school training, and monstrous financial institutions for capital. He espouses that innovation competency is forged in the fiery furnace of experience and laments that Americans have grown soft.

Professor Phelps raises important issues about the role culture plays in producing economic growth. In his bestseller Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change, he lays out a sweeping approach for restoring our culture for innovation. Curiously, for a man who eschews the current spotlight on human capital development, for example he believes the educational focus on science, technology, engineering, and mathematics (STEM) is wrongheaded, he espouses a uniquely humanist view. The reading of inspirational literature, exploration of the unknown, and persistence that comes from overcoming grievous challenges are all seen as keys to developing an entrepreneurial spirit. In essence, Dr. Phelps suggests that ambition and courage are prerequisites to personal, artistic, and economic growth.

Culture is created from the knowledge and characteristics of a group that are manifested in language, arts, and social habits. It is based on the beliefs we identify with and value. An innovation culture comes from the desire for something better and new: both evolutionary and revolutionary.

Building on Dr. Phelps propositions, here are some ideas for establishing (or reestablishing) an innovation culture in your organization:

1. Make Creativity a Cornerstone of the Business Curriculum
Support workshops and coursework in the visual and performing arts, as well as literature, crafts, and all manner of artistic endeavor. Though these subject areas do little to directly create value, they provide the underlying capability and quality of mind necessary to produce valuable innovation. The arts require the type of hands-on creativity and problem-solving skills that Professor Phelps sees as essential to establishing an innovation culture. Perhaps it's time to integrate the action learning methodologies of Montessori, Dewey, and Steiner into your workplace to fully engage your people in the creative process.

2. Follow the Juilliard School Model of Talent Development
It is notoriously difficult to gain acceptance to Juilliard. It is a true meritocracy that focuses on refining the skills of their most talented prospects. Students start by mastering difficult pieces and move on to their own compositions, which are critiqued by celebrated teachers and accomplished artists. A high level of ambition is required to support such lofty aspirations.

Why not bring together your best artisans, practitioners, and scholars to establish something akin to the Juilliard School in your organization? Better yet, combine forces with other organizations in your location or sector. Pay attention to individuals that demonstrate talent, drive, and persistence and offer them special forms of support.

3. Make Apprenticeship a Condition of Funding
The perceived failures of the public education system and the cost of higher education appear to have renewed an interest in apprenticeships. For centuries, this hands-on approach was the proven road to craftsmanship and invention. Sometimes apprenticeships are associated with institutions, but historically the most successful ones are loose federations of individuals who share an interest.

Anyone familiar with the backstories of Thomas Edison or George Washington Carver will note that their labs were not only places of great invention but also of great learning. "See one, do one, teach one" is the ancient mantra of craft guilds. This approach still prevails in the training of doctors, master electricians, and design engineers. Give funding preference to apprenticed entrepreneurs.

Dr. Phelps might be on to something. Culture may be far more important than politics or economics when it comes to making innovation happen. Maybe it's time you focused on creating a sense of destiny in your organization and help develop the fortitude to achieve it.


Get more ideas and insights from Jeff Degraff in 6 Simple Ways to Create a Culture of Innovation.

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