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Aie 2015 trust and innovation
1. TRUST AND INNOVATION
Andrew Maxwell Ph.D.
Helen Leighton M.B.A.
Aug 20th, 2015
Academy of Innovation and
Entrepreneurship
2. Presentation Outline
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• Importance of innovation to organizations
• How do you know if an organization is innovative?
• What helps and hinders innovation capacity?
• Characteristics of high innovation capacity organizations
• Where Trust fits in – the Innovation Equation
• Defining Trust - moving from concept to practice
• The Behavioral Trust Framework (BTF)
• The way forward – Applying the BTF to relationships,
teams, and organizations in order to catalyze innovation
3. 84%
1
of global executives believe innovation
extremely important to growth strategies
• However, McKinsey1
notes 94 % of these executives are
unsatisfied with their innovation performance.
• These same organizations have seen huge benefit from
reengineering supply chains, boosting product quality, and rolling
out lean six sigma.
• The real innovation challenge is that increasing a company’s
innovation capacity requires a substantively different approach2
.
"It's easy to come up with new ideas: the hard part is letting go of what worked
for you two years ago, but will soon be out of date.” — Roger von Oech
1. http://www.mckinsey.com/client_service/strategy/expertise/innovation
2. https://hbr.org/2015/04/the-5-requirements-of-a-truly-innovative-company 3
4. Whatisinnovation?
The process of transferring an idea to the marketplace
How do we measure it?
A.Company’s reputation for innovation – Business Week
B. Percent of new products in last 5 years - Eurostat
C. Number of patents filed – Michael Porter
D.Expect to be most innovative – Forbes
E. Return on new product development – Balanced Scorecard
Outcome measures don’t help improve innovation capacity,
which led to developing a diagnostic tool to address this.
4
"There is no use trying,” said Alice. “One can’t believe impossible things.” “I
daresay you haven’t had much practice,” said the Queen. “When I was your age,
I always did it for half an hour a day. Why, sometimes I’ve believed as many as six
impossible things before breakfast.” — Lewis Carroll
5. Management is killing innovation capacity
1
• Rely on annual budgets
• When opportunities don’t arrive according to a plan
• Set quarterly short term performance targets
• Rather than long term investment outcomes
• Manage by objectives
• Exploring unexpected opportunities and results
• Incentive systems that encourage predictable outcomes
• Innovation outcomes often unpredictable
• Apply quality improvement processes to everything
• innovation is about doing different things
• Lean systems with no slack
• innovation requires flexibility & experimentation
• Narrowly define roles and responsibilities
• innovation relies on cross-functional teams
Focus of management is risk elimination, rather than mitigation,
which has unintended effect of stifling innovation & risk taking
1. http://www.forbes.com/sites/stevedenning/2011/11/18/clayton-christensen-how-pursuit-of-
profits-kills-innovation-and-the-us-economy/
5
6. Organizations with high innovation capacity:
• Recognize innovative activities:
• Performance metrics associated with collaboration
• Reward action, risk taking and experimentation
• Leadership actively engaged in setting agenda
• Develop innovative processes:
• Faster and more open decision processes
• Embed customers into product development
• Encourage knowledge sharing
• Support innovative practices:
• Encourage diversified cross-functional teams
• Establish ground rules for collaboration
• Are open to input from external experts
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7. Maxwell’s laws of innovation inertia
1. There is a natural tendency for organizations to keep doing
what they’re doing and resist changes. In the absence of a
force, they will continue to do what they’ve always done.
2. Larger organizations require more force to change what they
are doing than smaller organizations.
3. For every force there is a reaction force that is equal in size, but
opposite in direction. When someone exerts a force on an
organization, he or she gets pushed back in the opposite
direction equally hard.
Innovation inertia stops an organization from achieving its potential,
stifling innovative capacity by managing risk through controls
– the challenge is to get the ‘tight’ ‘loose’ balance right by
complementing controls with trust 7
8. The Innovation Equation
• 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
Innovation Capacity = Level of Collaboration x Relevant Resources
Level of Collaboration = ƒ(trust level)
Trust Level = ∫(Trust building - trust damaging behaviours) – ƒ(controls)
9. Defining and Understanding Trust
“Engagingwithanotherpartyandbeingwillingtobevulnerabletotheir
actionswithoutdirectmeansofcontrollingtheiractionsorbehaviours1
”
• Much written about trust; but with limited understanding of
how to apply it as a construct to enhance innovation
• General acceptance that trust is required for building
relationships and collaboration that lead to innovation
• The Behavioural Trust Framework (BTF) allows individuals to
understand trust-building and trust-damaging behaviours
‘trust-as-a-sentiment’ => ‘trust-as-a-behavioural-practice’
• BTF allows individuals to audit their own and others’ trust
behaviours, and to modify these behaviours in order to reduce
relationship risk and foster innovation
"Creativity is not the finding of a thing, but the making something out of it after
it is found.” — James Russell Lowell
1. Mayer, Davis & Schoorman, 1995
10. Twelve trust behaviours
Trusting:
• Disclosing - Shows vulnerability by sharing confidential information
• Reliance - Willingness to be vulnerable through reliance onothers
• Receptiveness - Demonstrates ‘coachability’ and willingness to change
Capability:
• Competence - Displays relevant technical and/or business ability
• Experience - Demonstrates relevant work/training experience
• Judgment - Confirms ability to make accurate and objective decisions
Trustworthiness:
• Consistency - Displays of behavior that confirm previous promises
• Benevolence - Exhibits concernaboutwell-being of others
• Alignment - Actions confirms shared values and/or objectives
Communication:
• Accuracy - Provides truthful and timely information
• Explanation - Explains details & consequence ofinformation provided
• Openness - Open to new ideas or newways of doing things 10
Mistrust Trust
Distrust Suspicion
Impact of behaviours on Level of Trust
11. Behavioral Trust Dimensions
Manifestations
Build TrustTrustworthy
Consistency
Displays of behavior that
confirm previous promises
Benevolence
Exhibit concern about well-
being of others
Alignment
Actions confirms shared values
and/or objectives
Capability
Competence Displays relevant technical
and/or business ability
Experience
Evidence of relevant work
and/or training experience
Judgment
Confirms ability to make
accurate and informed
decisions
Trusting
Disclosure
Shows vulnerability by sharing
confidential information
Reliance
Shows willingness to be
vulnerable through delegation
Receptiveness
Demonstrates ‘coachability’
and willingness to change
Communication
Accuracy
Provides truthful and timely
information
Explanation
Explains details and
consequence of information
provided
Openness
Open to new ideas or new
ways of doing things
Manifestations
Build Trust Damage TrustTrustworthy
Consistency
Displays of behavior that
confirm previous promises
Shows inconsistencies between
words and actions
Benevolence
Exhibit concern about well-
being of others
Shows self-interest ahead of
others’ well being
Alignment
Actions confirms shared values
and/or objectives
Exhibits behaviors sometimes
inconsistent with declared values
Capability
Competence Displays relevant technical
and/or business ability
Shows lack of context specific
ability
Experience
Evidence of relevant work
and/or training experience
Relies on inappropriate
experience to make decision
Judgment
Confirms ability to make
accurate and informed
decisions
Relies inappropriately on third
parties or erroneous information
Trusting
Disclosure
Shows vulnerability by sharing
confidential information
Shares confidential information
without thinking of
consequences
Reliance
Shows willingness to be
vulnerable through delegation
Reluctant to delegate, or
introduces controls on
subordinates’ performances
Receptiveness
Demonstrates ‘coachability’
and willingness to change
Postpones implementation of
new ideas or deflecting
Communication
Accuracy
Provides truthful and timely
information
Unintentionally misrepresents or
delays information transmission
Explanation
Explains details and
consequence of information
provided
Ignores request for explanations
Openness
Open to new ideas or new
ways of doing things
Does not listen or ignores new
ideas
Manifestations
Build Trust Damage Trust Violate TrustTrustworthy
Consistency
Displays of behavior that
confirm previous promises
Shows inconsistencies between
words and actions
Fails to keep promises and
agreements
Benevolence
Exhibit concern about well-
being of others
Shows self-interest ahead of
others’ well being
Takes advantage of others when
they are vulnerable
Alignment
Actions confirms shared values
and/or objectives
Exhibits behaviors sometimes
inconsistent with declared values
Demonstrates lack of shared values
and willingness to compromise
Capability
Competence Displays relevant technical
and/or business ability
Shows lack of context specific
ability
Misrepresents ability by claiming to
have non-existent competence
Experience
Evidence of relevant work
and/or training experience
Relies on inappropriate
experience to make decision
Misrepresents experience
Judgment
Confirms ability to make
accurate and informed
decisions
Relies inappropriately on third
parties or erroneous information
Judges others without giving them
the opportunity to explain
Trusting
Disclosure
Shows vulnerability by sharing
confidential information
Shares confidential information
without thinking of
consequences
Shares confidential information
likely to cause damage
Reliance
Shows willingness to be
vulnerable through delegation
Reluctant to delegate, or
introduces controls on
subordinates’ performances
Is unwilling to rely on
representation by others, or
dismisses participation
Receptiveness
Demonstrates ‘coachability’
and willingness to change
Postpones implementation of
new ideas or deflecting Refutes feedback or blames others
Communication
Accuracy
Provides truthful and timely
information
Unintentionally misrepresents or
delays information transmission
Deliberately misrepresents or
conceals critical information
Explanation
Explains details and
consequence of information
provided
Ignores request for explanations Dismisses request for explanations
Openness
Open to new ideas or new
ways of doing things
Does not listen or ignores new
ideas
Shuts down or undermines new
ideas
17. BehaviouralTrustFrameworkisbeingused:
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• To explore trust issues and team dynamics in organizations
looking to increase their innovation capacity
• To identify challenges and opportunities to building
partnerships with new innovation partners
• To support exploring and addressing trust issues in executive
coaching sessions
• …..
• We have evidence that framework users can identify actions to
reduce controls, increase trust or repair trust damage.
• Now gathering data on use of the tool – to create a valuable
resource for those wishing to enhance their innovation capacity.
Rosanoff: "Mr. Edison, please tell me what laboratory rules youwant me to observe."
Edison: "There ain't no rules around here. We're trying to accomplish something!”
18. Thank you
“A culture of innovation can be a company‘s primary source of competitive
advantage, and can pay off steadily over the years” - Stephen Shapiro
“An established company which, in an age demanding innovation, is not able
to innovate, is doomed to decline and extinction” - Peter Drucker
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If you are interested in the white paper,
accessing the Behavioural Trust Framework, or
becoming a research partner, please contact:
Andrew.Maxwell@lassonde.yorku.ca
Helen.Leighton@gmail.com
http://www.slideshare.net/AndrewMaxwellPhD/aie-2015-trust-and-innovation
19. Hamel’sinnovationmeasurements1
1. Inputs: investment $ & employee time devoted to innovation,
along with the number of ideas generated internally or externally.
2. Throughputs: number & quality of ideas that enter pipeline, time
taken to move from concept to proto type to reality.
3. Outputs: no. of innovations that reach market, % of revenue from
new products / services, and innovation margin gains.
4. Leadership: % of executive time devoted to mentoring innovation
projects, & exhibiting pro-innovation behaviors.
5. Competence: % of employees trained as business innovators, %
who have qualified as innovation “black belts”.
6. Climate: extent firm’s management processes facilitate or
frustrate innovation, and progress in removing blockages.
7. Efficiency: changes over time in ratio of innovation outputs to inputs.
8. Balance: mix of: product, service, pricing, distribution, and
operations, innovations, risk categories & different time horizons.
1. https://hbr.org/2015/04/the-5-requirements-of-a-truly-innovative-company
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