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How to Create a Successful Culture of Innovation: Part 3

How to Create a Successful Culture of Innovation: Part 3

Aetna, an American health insurance company, transformed its culture by involving employees in the planning of new strategies and processes, restoring employee motivation and pride. This resulted in a significant turnaround, with daily losses turning into daily earnings and a positive operating income. Microsoft also underwent a cultural transformation under CEO Satya Nadella, restructuring the company based on purpose rather than product and platform units. This shift encouraged cross-departmental collaboration and innovation. Changing company culture is challenging but can lead to incredible results for both employees and the bottom line.

How to Create a Successful Culture of Innovation: Part 3

Is it even worth it, trying to change your company culture for the better or is it just straight up hard work with little effect? Read on to discover two companies that gave their company culture a serious makeover with incredible results

Be innovative! Change your culture! Disrupt the status quo! In these times, it seems like there is more advice on how to be innovative than there is sand in the Sahara. We don’t blame you if you feel a little short of breath at the thought of it. Heck, you might even be asking yourself if it’s even worth it!

Well, it is – and in this post, we are going to share some examples of organizations that actually powered through and changed their culture for the better – for both employees and bottom lines.

So without further ado, welcome back, dear reader, to our third and final blog post on how to found an innovative culture in your team and organization.

A Case of Company DNA Mutation

What happens when your company culture is hampered by fear of failure and passivity? Hint: it’s not the place where innovation seeds grow and blossom naturally…

Aetna, a 150-year-old American health insurance company, was struggling to stay alive. While revenues stayed strong, a deeper look into its business showed a bad reputation caused by lawsuits and national backlash against involvement in a few controversial healthcare lawsuits. The company was roughly losing $1 million dollars a day due to slow processes, massive overheads, and unwise business decisions. Many of these issues could be traced back to its culture and heritage that was built over the course of its 150 years of existence, encouraging employees to be steadfast, silent and obedient resulting in a risk-averse and passive workforce. When merging with another health-care insurance provider this culture was amplified. The merger also started a CEO rotation where the company went through four CEOs in just five years.

Back in 2000 when the fourth CEO, John W. Rowe, stepped in, skepticism amongst the workforce was to be expected. However, instead of copying his unsuccessful predecessors in boasting of new and promising times, of cultural revolutions and the dawn of a new Aetna, he took the time to understand the business thoroughly first. This meant visiting employees at all levels, to understand their perspectives and get them involved in the planning of the new strategies and processes. This helped Rowe not only understand the positive parts of the Aetna culture but also gave him buy-in from the workforce.

This allowed him and other senior members to craft a strategy that put Aetna’s best characteristics in play while getting the full backing from all across the organization.

Rowe started this major company culture turn-around, not by claiming it to be so, but by changing things and behaviors at a small scale, so the risk-averse workers would have time to adjust and acknowledge the new benefits. One of the major things in restoring employee motivation was ensuring pride in working for Aetna job was openly discussed and taken seriously again. Rowe successfully ensured employee motivation, pride, and reinvigoration, a performance that is reflected in the earnings of the company. By mid-2000’s the daily loss of $1 mil. had been turned to $5 mil. in daily earnings. Operating income had gone from $300 million loss to $1.7 billion gain.

Changing company culture

Ending Internal Warfare

Imagine this: You are the new CEO of a huge company, you want to achieve magnificent things. New successful products, experiences, and processes must grow organically from the organization. They must be strong and sturdy, like Ben’s beanstalk. What could go wrong? Well, if the company culture is hampered by individualism and internal power struggles with teams shooting in all directions from their department trenches, a lot of things can go wrong. Just ask Microsoft…

When Microsoft’s new CEO, Satya Nadella, stepped in as CEO in 2014, the company was struggling with staying relevant as new competitors entered the market, e.g. Google sitting heavily on the online market and Apple dominating the market for mobile products. Microsoft’s innovation activities were unevenly distributed and many failed miserably.

The company’s culture was characterized by low employee motivation and low engagement as well as internal wars, and a level of competition between departments that was far beyond what is considered productive. This culture hampered Microsoft’s innovation since it was basically impossible to conduct cross-innovation activities.

To turn this great ship around, Nadella realized major cultural changes had to be made. Hence, he restructured the massive company according to purpose rather than product and platform units, hence ensuring that teams and departments worked towards common goals such as:

  • Reinventing productivity and business processes
  • Building the intelligent cloud platform
  • Creating more personal computing

Nadella gave the employees a new sense of mission; one they needed to work together to achieve, thus increasing the sense of purpose and motivation in employees as well as encouraged and enabled cross-departmental innovation. There’s still some way to go for Microsoft, but the course set by Nadella is an important step on the journey.

Final Thoughts

So, there you have it – a very comprehensive guide to changing your company culture to be more innovative. In case you missed the other two, you can find them here and here. As you might have gathered, this subject is huge and basically inexhaustible, so consider this a teaser. Hopefully, it has given you an understanding of some of the most important factors when considering culture and innovation, and it might even have inspired you to go out and try some for yourself.

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