Engineering a Culture of Innovation Part 2: Social Contracts

Continuing the recent interview with Henry Doss, ecosystem architect and co-author of ‘The Rainforest Scorecard: A Practical Framework for Growing Innovation Potential', we now look more closely at the elements of engineering a culture of innovation.

When it comes to innovative cultures, Doss is most interested in the organization as a whole rather than on individual processes, tools, programs, projects or people. According to him, “There is a real danger in labeling something ‘innovation,’ and then assuming innovation can leak out of programs, projects, or offices, into the larger organization. I think of culture in complex system terms - it’s the operation of the system that matters, not the pieces.”

From this perspective, innovation is a product of the dynamic interaction that occurs between all factors within an organization - resources, leadership, networks, risk levels -and doesn’t rely on any one factor more than another. Indeed, creating a culture of innovation means that every single aspect of an organization needs to be tuned to a value set, or what Doss refers to as “a social contract that encourages innovation behaviors across the board.” By this, Doss is referring to factors like trust, risk, tolerance and dreaming.

“When you delegate or isolate innovation into a particular area or program,” he explains,“you are saying that innovation is something that happens there, when in fact innovation has to happen everywhere, all the time.” It is important for organizations to think of innovation as a ‘cultural state’ rather than a series of tasks or projects – and this can be achieved via carefully developed social contracts.

Developing social contracts

According to Doss, social contracts are simply, “A list or catalogue of behaviors and beliefs that everyone signs up for.”Thesebeliefs, when turned into a social contract, become what people within the organization talk about; they become the ‘story’ of the organization.

In order to engineer a culture of innovation, many pharma organizations will have to implement changes within their social contract. Doss believes there are two critical factors involved in this. Firstly, there is the need for a framework or guide that provides a common language, a common set of beliefs, and a common set of meaningful, leading cultural indicators. This can be thought of as a ‘cultural narrative,’which can be made manifest in a social contract.

The second critical element necessary to building an innovation culture is a reliable, empirical set of measures to which an organization can refer to assess progress and change. This means devoting the time and energy to finding or creating measures that are reliable indicators of cultural change, especially when many of those indicators or measures may not exist.Such measures might include a noticeable increase in risk-taking and, subsequently, failure – a key indicator of innovative thinking within an organization.

“You have to have both of these elements,” says Doss. “A narrative that reinforces a social contract, and reliable, widely accepted measures. One without the other is not only an incomplete approach to cultural change, but also an approach that is likely to fail.”

Being part of something big

One reason why social contracts are so influential is that people want to believe they have the ability and opportunity to be part of something bigger than themselves. The most powerful thing they can be involved in is a narrative or story that answers the question: ‘who are we?’Doss explains, “The answer to this question is what guides behaviors, values and decisions.” An organization whose social contract comprises trust, risk-taking, learning from failure rather than fearing it, and a win/win attitude, is an organization most nurturing of creativity and innovation.

How then can the pharma industry use social contracts to develop organizational narratives and a culture of innovation? Doss says, “More and more leaders of organizations in the health care industry are recognizing that the key to their stability, effectiveness and market place success is in approaching challenges through innovation. That means applying principles of innovation to payment systems, delivery, and research.”

With this in mind, Doss believes it might be productive for pharma organizations to examine, articulate and understand the implicit social contract that governs how they currently operate, and then think about the implications for changing that contract or narrative. In other words, careful examination of what narratives or implicit social contracts drive the organization is the path to changing and improving the future of the organization or, indeed, the pharma industry as a whole.

Diagnosing your culture

Once an organization has a social contract under development, they need a set of reliable measures that can be used to ‘diagnose’ the culture. “Is the social contract driving the right behaviors, the right resource allocation, the right networking?” Doss asks.“If you can’t answer these kinds of questions in a reasonably objective manner, you live in a world of anecdote, and that’s a particularly dangerous place.” Indeed, social contracts prevent organizations losing sight of their key mission and ensure everyone is working towards the same mission.

Doss introduces the notion of a culture of innovation being a marriage of two worlds – the world of production and the world of creation. In his book, he uses the metaphor of a farm and the rainforest.“These seem to be opposite - the one carefully planned and focused on efficient production; the other, more random, unplanned, unpredictable and complex,” he says.

According to this metaphor, all pharma organizations are some mixture of farm and rainforest cultures. The smaller and more embryonic a business is, the more it’s like a rainforest, and the older, more mature it is the more it’s like a farm. “What we are talking about,” explains Doss,“is how you begin to understand how each of these two domains can be better integrated into the entire lifecycle of a business. In pharma, it’s very likely that the challenge is more to understand the rainforest/innovation part of the culture and how to incorporate more of that into more mature organizations.”

Both farm and rainforest structures seem to be more present within an organization at various times, but Doss believes an ideal goal is to have both – strong, effective production-oriented practices with an innovatively inclined culture. This may seem a bit counter-intuitive, but when organizations are broken down into component parts and examined individually, it does become clear that both can be achieved together – or at the very least a powerful cultural awareness of both production and creation.

“The real danger here,” warns Doss,” is a reductionist point of view that looks at very small pieces of an organization, but forgets that it’s the pieces operating as a whole that matter. When you remember that organizational innovation is emergent – that it is something that happens in the interaction of a complex system of components –you discover that you can be efficient and production-oriented, but you can do that inside of a culture that is innovative.”

Social contracts within pharma

Doss suggests five particular cultural attributes that pharma organizations might incorporate into their thinking (or social contract) when attempting to engineer a culture of innovation:

  1. Trust and be trusted: Innovation requires a considerable amount of trust due to the risk inherent in implementing new ideas that could fail.
  2. Risk and iterate: The more new ideas we attempt, the more likely we are to create better strategies, products, and approaches. When we trust, we risk. When we risk rapidly, we increase our odds of being successful.
  3. Seek fairness in transactions, rather than advantage: If we are looking for advantage in transactions, we are working in a zero-sum environment that discourages trust. If we focus on ‘what is fair’ rather than ‘how can I acquire an advantage,’ we will create efficiency, trust and risk-orientation.
  4. Operate on a powerfully articulated social contract: If you haven’t taken the time to authentically investigate and articulate what and who you are as an organization, you won’t have a consistent or meaningful narrative to align to.
  5. Commit to innovation, measure it, and nurture it on a cultural basis: You either sign up for the notion that an innovation culture can actually be engineered or not. If you sign up for it, pursue cultural change with a clear methodology, a clear framework and clear measures.

In terms of how the pharma industry might be able to measure innovation, Doss advises, “There is a precise and carefully crafted methodology for measuring and nurturing innovation culture in my book.” The most important point to remember, regardless of the industry, is that an organization is made up of individuals. If the individual becomes immersed in the social contract and invested in the narrative of the company, they will be inspired to contribute to a culture of innovation.


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