Creating a Culture of Innovation

Yves Karcher, former VP of Engineering for consumer computer devices at Logitech, shares his experiences on how to foster a culture of innovation in a company. Currently, Yves is the founder and CEO of InnoExec, a training company, that coaches and advises businesses and students on how to engage in innovation projects. He hopes that sharing his experiences of not only successes but also failures will prevent listeners from falling into traps.



Tilo Peters: How does a company go about creating an Innovation Culture? 

Yves Karcher: In terms of Logitech, the concern we had was that everything was going very well.  We had great bottom line, market share going on what could go wrong? In these times we were thinking, what would be next? We created an infrastructure, a framework, in which people were feeling secure in providing ideas to their peers but also to their management. That effort continues many years and seem to produce interesting results so far.

What have you seen outside, in other companies you’ve been working with?

Interestingly, some leaders are mandated with the mission of creating innovation. Some companies are looking after radical innovation, encouraging their leaders to come up with ideas and submit them to committees. When working with them, I had to make sure that these leaders knew how to communicate and pitch these ideas in a concise way (instead of a long PowerPoint presentation that made the CEO impatient).  It should facilitate the comparison between ideas to see what the company will be pursuing. In this case it was for disruptive ideas, but any good idea may start from looking within the business rather into a complete new business. Disruption doesn’t happen on command, but it may happen by accident.

How do companies prevent a dominant culture from reinserting itself?

To illustrate this, I often use the paradigm of boxes. Box 1 is where we manage the present, box 2 –  where we progressively forget the past and box 3 is to create the future. We’re irrevocably brought to box 1, because this is the area we know best, a comfortable zone. We know a lot about it and we can measure the activities by performance reviews, KPIs. Box 2 and 3 are about external factors, opportunity gaps, rewarding risks. These are areas of which people tend to be more apprehensive, especially upper management because it has many unknowns. Box 1 is also very tempting because that is where the money is and in a difficult time it is the box that pays the bills and box 3 are the ejectable seats. Some companies also create a box of ideas where all employees can put their ideas, but they are not very interested in pursuing any ideas. They just want to check the box “innovation.” They will look at it from time to time. But this is signing for failure, since nothing really happens and the tool will be abandoned. The idea originator receives no feedback about what is good or can be improved.

Shouldn’t that formulate the paradigm of innovation culture?

In one sense, yes. The tool is the hardware but what really makes a company culture is the operating system, the people and the mindset. How do we stimulate a mindset of curiosity, a mindset of working together to improve the idea of another person, so that ideas submitted are better than just individual ideas? That is the key question. The operating system is there to stimulate, motivate and reward the energy of people put into these ideas.

People say that a lot of these creative ideas cannot be forced? How do you stimulate that?

I have been recently working with an established Swiss bank. They were worried about being substituted in some service areas and about what they could do as a corporate bank for innovation. My suggestion is to stay very small at the beginning. Start with a half a day in a cafeteria where employees are invited to present their ideas. They get the ideas from talking to customers, between themselves, from looking at trends and competition. What ideas would be worthwhile? But don’t stop on the ideas. Tell what pain it addresses, what could be the gain, how it raises the entry barriers to generate more discussion. Display the ideas as posters so that peers and managers would be able to look at the ideas, provide feedback but also understand the mindset of other people, their direction of thought. That could be an experiment that could then be expanded to other divisions or offices.

How do you make innovation stick once you brought it in there?

The critical thing is to have a feedback mechanism for employees. Showcasing ideas regularly gives a pace, makes employees prepare for the event and creates a momentum for these events. People exchange feedback and establish dialogue. Then there is the aftermath: improve the idea to make it better for the next event. This pace is important to build up and keep the momentum. But there is also the reward part. A reward could be a check for the team, but it could also be an improvement potential, a cost-reduction or the possibility to go faster on a market. Getting the right kind of reward is critical and perhaps one should consider changing it regularly since otherwise people would find a different way to get to that reward.

How do you prevent the reward from being the incentive instead of the innovation?

We change the reward scheme every 2 years to make it more an innovation focus rather than about how much someone particularly contributed to an innovation. My learning is that every company is different and goes through different stages. We need to adapt the award to each company and each business or phase. The reward should reflect the strategy you follow.


Join us next week for part 2 of the interview. Yves Karcher will talk about how organization facilitates innovation.