(Pt.3) Competitiveness and Innovation


January 23, 2023



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Show Notes

This week's episode is part three of our five part series on "What's Driving Demand for Psychological Safety". Tim and Junior discuss why the need for innovation sparking demand for psychological safety and how innovation is just as much cultural as it is technical.

(01:11) How do you win in a competitive landscape? In short, you can win one of two ways differentiation (product, market, model, operations) or you can win on price. Both of these require innovation.

(05:48) Whose job is innovation? There is a myth that innovation lives at the top of the organization with a select few individuals who meet around a big long table and decide the future of the organization. That is an old mindset that is handed down from the industrial revolution. In reality, it's much different than that. Innovation is the responsibility of everyone.

(14:21) Innovation is a cultural competence. Innovation is just as much part of an organization's cultural competence as it is an organization's technical competence. Some may think about innovation and they think about tools, they think about infrastructure, they think about new technology, new software, whereas they don't spend as much time thinking about the culture of the organization and all of the enabling factors that must be in place in order for the organization to accept any deviations from the status quo (innovation).

(26:36) Most innovation comes from creating marginal gains not big breakthroughs. There are fundamental disruptive or major innovations, but most of it's incremental, most of its derivative, we're talking about marginal gains, we're talking about the 1%, we're talking about these little things that we can get better at.

(31:31) Extending challenger safety and the removing personal risk from challenging the status quo can enhance the speed of innovation. Without it you will be defensive and fail to innovate at or above the speed of change in the market.

Important Links
Don't Let Hierarchy Stifle Innovation Podcast
The Intersection Between Diversity, Inclusion, and Innovation
Don't Let Hierarchy Stifle Innovation Article
5 Steps to Create Innovation with Your Team
Stage 4 Challenger Safety Podcast
Stage 4 Challenger Safety Article
Surfing the Boundaries of Chaos and Innovation with Professor James Evans Podcast

Episode Transcript

0:00:01.9 Producer: Welcome back, culture by design listeners, it's Freddie, one of the producers of the podcast. Today is part three in our five-part series on what is driving demand for psychological safety, today's episode focuses on how competitiveness and innovation are driving demand for psychological safety, innovation and improvement are key to any organization survival, and you can't do it well without high levels of psychological safety and the ability to challenge the status quo. As always, you can find important links for this episode in the show notes at leaderfactor.com/podcast. Thanks again for listening. Enjoy today's episode on competitiveness and innovation.

0:00:56.0 Junior: Welcome back, everyone to culture by design. I'm here with Dr. Tim Clark, and today we're going to be discussing the relationship between psychological safety and competitiveness and innovation. Tim, how you doing?

0:01:04.6 Tim: Great, and I love this question in this relationship, this connection that we're gonna talk about, so I'm excited for the conversation.

0:01:11.9 Junior: Me to... Two episodes back, we spoke about a list of drivers for the increased demand for psychological safety, we talked about innovation, Mental Health and Wellness, inclusion, resilience customer experience, and several more in this and several following episodes will be unpacking several of those drivers and diving deeper into each one, and today we're gonna start with innovation, why is the need for innovation sparking demand for psychological safety in short, it's because innovation is just as much cultural as it is technical, perhaps even more so. So Tim, let's set the stage and explain the context or working in in a free market economy of for-profit organization's viability of survival is based on its ability to gain and maintain competitive advantage through innovation, and this is where a lot of my interests lives, is where a lot of my training lives... So I'm really excited to talk about this. If you enter the market, you need to do one of two things, you win on differentiation or you win on price, both of which require innovation.

0:02:16.9 Tim: Well, hang on, Junior, are there other ways to win, but they're three or four or five, or six or seven alternatives, you just mentioned two. So can you clarify that a little bit? That doesn't seem like a lot. Yeah.

0:02:31.1 Junior: The short answer is no, there are no other. The nuanced answer is yes, there are segments inside those two buckets, but those are really the two options you have in front of you when you enter a market, you can do the same thing differently and try and attack price, or you can do something different, and that could be product innovation, it could be operations innovation, it could be supply chain, you have a whole host of variables that you can tweak, but you're doing all of that in the end to create a differentiated product or service experience, or you're competing on price, so that people can get the same thing at parity in quality for cheaper.

0:03:11.7 Tim: So I just wanna come back to it. I know I'm kind of beating this dead horse, but... No, basically what you're saying is, I only have two levers. That's right, I've got one lever in my right hand, I've got another lever in my left hand, and I only have those two levers to work with, One is differentiation and the other is price. That's right, man. Or I guess some combination of the two that you would think that strategy and innovation would be... Okay, easy to do. I've only got two levers... Let's go do it. Yeah, but it's anything but that... Right.

0:03:45.3 Junior: Yeah, it's anything, but it's very nuanced, and again, those are our two buckets, but there is a lot outside inside each of those buckets, so those are the two things you're looking at if you're looking to enter a market, if you're in a market, let's say you're an incumbent, you need to adapt to a changing landscape. Let's say that you have cost advantage or you have some differentiation or maybe you have both... The landscape is changing, and even though you've attained competitive advantage, it's melting, it's eroding and it's going away, there are changes based on customer preferences, competitor behavior, geopolitics cost structure, and a million other variables that can influence your competitiveness, and in the for-profit scenario, like we mentioned you manipulate all of these variables, you pull all of these levers to try and increase profits, however many organizations exist, and many of our listeners work for these organizations not to deliver profits, but to affect governments and communities, other sectors, just because you're not built for profits though doesn't mean you don't need innovation, and that's one of the first things that's important to call out, is that you need innovation just as much as any other organization.

0:04:58.8 Tim: Yeah, so think about our listeners that are coming from different sectors in society, education, health care, non-profit, maybe a voluntary association. Right, that's right. Let alone the for-profit sector government at every level, so anyone that's working in the public sector, so think about all of those different segments of society... Is this relevant to you? I think you're gonna find that it's very relevant to you, innovation is just as relevant to you, even though you may be buffered from the direct forces of the market, there may be some offer there, but eventually, and ultimately, you need to innovate just as much as the other sectors do. Is that a fair statement, Junior?

0:05:48.1 Junior: It's totally fair. And while we're on the topic of dispelling myths, there's another one that I think is important to bring up, which is whose job is it to do innovation? The myth would be that innovation lives at the top of the organization with a select few individuals who meet around a big, long table and decide the future of the organization, strategic planning and that type of strategy, that type of deliberate strategy is important, but in reality, it's much different than that. Innovation is the responsibility of everyone. And so it may be the case that you as a listener have never considered that maybe you think that innovation is someone else's job, but one of the important distinctions we're going to make today is that it is your job, everyone inside the organization affect innovation, because it's largely a cultural phenomenon, and so we're going to unpack that, but that's an important thing to understand at the get-go, is that innovation is part of your job regardless of where you sit in the organization, regardless of your responsibilities or...

0:06:51.7 Tim: I have to add a comment to that, because the fact that we have that mindset that says, innovation belongs to the C-suite or to R and D, that mindset didn't come from nowhere. That mindset was handed down to us, so if you think about the paradigm, the mindset, the point of view that we had traditionally in organizations... And this was something that I experienced when I worked in manufacturing. The old mindset that is handed down from the industrial revolution was that an organization is a pyramid, the top of the pyramid is the thinking part of the organization, the bottom of the pyramid is the doing part of the organization, so where are you... Are you part of the thinking part of the organization or the doing part... You might think about that and think, That's very silly. That's ridiculous. But yet, that is exactly the mindset that we have inherited over time, when I was in manufacturing, I was a plant manager for a union shop, and we had over 10000 standard operating procedures that you would follow to do a job... Well, you didn't do all of them, but whatever your job was, your job was in production or maintenance, you would follow your standard operating procedures and also your safe job procedures to do your job.

0:08:23.3 Tim: Do you think that managers were walking around asking people to participate in the innovation process... No, they were not doing that, they were strictly telling people to participate in the execution process, in the operating process, but not the innovation process, that was just not a mindset, that was not the way that people were socialized in the organization. So I just wanna point out that if you don't view yourself as an innovator or that that's part of your job, that probably would not be surprising in many cases...

0:09:02.8 Junior: Well, I appreciate the call out, and it makes me think of the conversation we had a few weeks ago about Agile and the difference between Agile and what came before it, waterfall. If we look at just product and we look at product innovation, the product innovation did live at the top, that's where a lot of the thinking happened, and then what remained was execution, so we would create a tremendous amount of documentation and instructions, and then we would say Okay, go and execute and come back to us when it's done. And that happened all the time. And if you look in the world of software, that software would live without update for sometimes years with no update, and if you juxtapose that with the way that product teams run today... Innovation happens all the way down the line. And it's amazing to me that we did that for so long because so much local knowledge exists at the front lines of organizations that's relevant to the product inputs and that's relevant to the changes that need to be made in the product. And I've seen this myself, so who's in charge of innovation when it comes to our product team here at leader factor, arguably, everyone, there are so many people that touch a given release, a given product feature.

0:10:19.7 Junior: It's amazing to me. One of the things that I have been astounded by is the amount of innovation that comes from our CS team, imagine you don't have a feedback loop that comes from your client success team back in the product, if that didn't exist, and in many cases, it didn't exist it for a very long time and in some organizations still don't have that, and so I've seen first hand, even if you don't directly touch the technology or the product or the service that you offer, you have relevant information to give about the experience of the customer, about you as an internal user about a whole host of variables that maybe that product team at the top doesn't have access to, and so it's been in my best interest to consult all of those people throughout the entire process because that's where the innovation happens. So I'm really glad that you call that out.

0:11:09.0 Tim: Yeah, that's a good point. You and your traditionally, CS had no avenue. They had no voice, they would have to try to knock on the door and say, Hey, we have a suggestion, or, Hey, this is not working, but it wasn't integrated into the innovation and design process. Good point.

0:11:29.2 Junior: Well, and they would find work arounds at the front lines because he, ethereal, the product just is what it is, and we'll come up with these ways around it to get it to work for the customer, but that feedback never went back up the chain. Yeah.

0:11:42.1 Tim: That's a good point.

0:11:42.9 Junior: So innovation is aimed at improving the experience of several groups, several stakeholders, I don't wanna call this out, I think it's helpful when we're looking at the structure, we have capital market stakeholders, so these are shareholders banks, they're looking for innovation, we have product market stakeholders, these are customers and suppliers, they want our innovation, we have organizational stakeholders, the people that run the business as the employees, and we have community stakeholders, which are communities, government bodies, community activists, so innovation touches all these different stakeholders, and so it's important to call that out because innovation is not just about customers, it's not just about the end person that's using your product or service or the information or whatever it is that your organization offers, we're talking all the way up down the chain and laterally, community suppliers, capital shareholders. And then the next thing that I wanna call out is that the faster and the higher quality of the innovation, the more competitive the organization, and so innovation, this may be obvious, but it's not binary, it's not like you have innovation or you don't have innovation, you could have a very small amount of innovation, you could have a tremendous amount of innovation.

0:12:57.7 Junior: And the more you have, the better assuming that the market appreciates what you're doing, and that's an important thing to understand, you can be too early, and we won't get too into the nuance of this and innovation, but the parent needs to care about what you're doing and I just wanna call that out 'cause we have anybody listening who wants to poke that a little bit, so if innovation Walters, you're on the clock, your organization is staring down the barrel and that demise of the organization can come soon. It can come late, but if that innovation stops were in trouble...

0:13:30.3 Tim: Yeah, when you have some source of competitive advantage Junior, that's fantastic, but it's really impossible to forecast the durability of that competitive advantage. We don't know how long that's going to last. We do know, as you said before, that it is melting, but we don't really know the rate of the melt, sometimes we can see it well, if it's melting fast or very quickly that we can see that, but a lot of times we can't... And we don't understand what competitive forces are going to do, we don't understand how consumer preferences are going to change, we don't understand the big bets that competitors are going to place that's... To evolve, it's incredibly dynamic, and so the durability of your competitive advantage is often just unknown and unknowable.

0:14:21.9 Junior: I appreciate that you said that. All we can really be certain about is that it's going to be uncertain, so... And the pace of change has picked up, and that's something that's not worthy, we've talked about that previously, where the pace of change is just moving up. So innovation, I wanna talk about its definition to get very clear on what innovation is, innovation is a new idea, a new method, a new device, it's... Novelty is the introduction of something new. And so something new means that that thing was not there before, it means that innovation is based on a deviation from the status quo, that's one of the big ideas from this entire conversation that I hope we walk away with, is that innovation is based on a deviation from the status quo, by nature, if there is no deviation, there is no innovation, so it is impossible to stay in the same place and innovate. That's not something that can happen. It's not innovation, and innovation is just as much part of an organization's cultural competence as it is an organization's technical competence, so some may think about innovation and they think about tools, they think about infrastructure, they think about new technology, new software, whereas they don't spend as much time thinking about the culture of the organization and all of the enabling factors that must be in place in order for the organization to accept that deviation from the status quo.

0:16:01.5 Junior: So this is the hinge. If we don't have deviation from the status quo, we don't have innovation, if we do have a deviation from the status quo, the organization now has a decision to make, whether it's going to stifle that deviation from the status quo, whether it's going to smother it and put it out very quickly, or whether it's going to explore, except that's a really big decision, and that's where a lot of this hinges whether or not an organization is going to do well or poorly. So.

0:16:31.9 Tim: I hope, Junior for our listeners, I hope that the connection between culture and innovation is becoming clear as we're talking about this, because what we're saying is that the status quo is not necessarily the enemy, the status quo delivers value today, the status quo is what allows the organization to be what it is, and to create and deliver value the way that it does today, the status quo creates the viability that we have today, the dilemma is that we need to preserve it, but we also need to disturb it. And that creates an inherent tension. And that's what makes innovation so difficult, because we need to preserve it in order to create and deliver value today, in order to be viable, in order to be successful, but we also need to disturb it. How are we going to do both think about the irony, the paradox, the inherent tension that exists between those two things, I'm going to preserve the status quo... No, hang on a second, I need to disturb the status quo, and so if you're my boss Junior, I say, Well, okay, great. Which one would you like me to do? And you're gonna say yes.

0:17:55.7 Tim: Yeah, okay, so that's just kind of framing the nature of innovation in organizations and the connection to the culture, because the culture has to allow you to both preserve and disturb the status quo, that's a cultural capability, and that's what we're going to talk about even more as we get into this conversation.

0:18:21.3 Junior: I really like that you brought that up. It's a helpful piece of the frame, and for anyone wants to look into that even more, just Google creative destruction, there is an entire body of research that has to do with exactly that while you're building your organization and you're executing your simultaneously destroying it. And some of what comes, take code, for example, code had access to digital for a really long time, and they were eventually killed by it, if they released a digital too early and got rid of traditional film, that would eat at their profits immediately, it would eat at the next quarter, they're still crushing it with film, and so there's this disincentive for the organization to adopt the new technology, and then eventually it's too late, and that's true with many organizations, and this is where some of the nuance lies inside innovation, because some might say, Well, just go and innovate. It's all about innovation, but I appreciate that you called out... No, it's about execution to the organization needs to survive today and tomorrow, and so it's this delicate balance, it's a dance between how much innovation we do, how much execution we do, and if we get that ratio wrong, let's say that we innovate too early, either the market is not ready for it, or it eats away at what we're currently doing, or we do it too late, and the customer has already moved on or the stakeholder has already moved on.

0:19:54.3 Junior: It's a very, very delicate balance. So the idea here is that innovation is a cultural question just as much as it is a technical question, and so here's the complication, we've talked about that deviation from the status quo that's innovation, yet many organizations don't have the cultural competence necessary to encourage that deviation and to protect that deviation when it happens. So for those listening, what percent of innovation do you think is technical, and what percent do you think is cultural? Chances are, you see that a large percentage is cultural, yet how do we behave inside our organizations, do we acknowledge inside our institutions that it is a cultural issue, or when we talk about innovation, do we immediately jump to tools, do we immediately look to R and D and the Executive Team?

0:20:52.3 Tim: It's a social technology. Really, innovation is a social technology that goes back to psychological safety as the enabling condition that allows it to happen. I wanna come back to what you said, Junior, about timing, and about empowering the organization to participate in the innovation process, that means that you've gotta put cultural assets in place that allow people to do it.

0:21:19.4 Tim: Think about timing, and you mentioned this, but I'll go into it just a little bit deeper, if the innovation is too early, then you're too original... You're too original. If you're too original, what does the market place say to you... What do customers say to you? They say, No, thanks. I don't need that. You're too soon. You're too original. What if you're too late? You're too obvious. When you're too obvious, that means others have rushed in to provide what you do, what you offer already, and they say again... No, thanks. You're too obvious. So at the front end, you're too original, we don't need it, or you're too obvious. We already have it. So where's the sweet spot? It's between two original and too obvious. Well, can anyone tell you exactly where that is, no, that's why you need the entire organization's adaptive capacity to collect intelligence to monitor consumer preferences and behavior, to do transporting... To identify inflection points. We need everyone participating. So back a generation or two ago, maybe it was possible to preserve competitive advantage and have the top of the hierarchy, the top of the pyramid, do the thinking for the organization, can't do that anymore.

0:23:00.3 Tim: The more dynamic the environment becomes, the more we need to democratize innovation, we need everyone doing it, it needs to be embedded in every job description, so... I just wanted to point that out that this is so difficult. We don't wanna be too original, we don't wanna be too obvious, we wanna be... We wanna have this impeccable timing with our innovations, well, we're not going to do that every time, the reality of innovation is that you try a lot and you try up a little... That's the reality. You try, try, try, try, try. You're gonna try a lot, you're gonna try up a little welcome to the reality of innovation, but do we have everyone enlisted in this process? That's what we're talking about. Do we have the cultural assets, do we have the enabling conditions, do we have the social technology that allow everyone to participate, try try and triumph as good as you go on the wall.

0:24:01.4 Junior: So the way that we've been speaking about innovation for the last couple of minutes, we framed it in a way that we're saying the market is seeing something different from us, and so they might accept it or they might reject it. Now, I wanna spin this for a second and consider that there may be just as much opportunity for innovation in delivering the same value to the customer or to the stakeholder, then by changing up the product... And here's what I mean, let's say that you're a business unit leader and you are very much concerned about your bottom line, you own your P and L, and you think that it's pretty risky to introduce a new offering into the market. It may be a change in the product itself, you may deliver a service and you're considering a new combination of services or a different angle, let's just say for a second that you wanna keep your offering the same, they're still need for innovation on the back end of that product. And so let's say you don't even wanna mess with the way that customers will react, can you deliver the same amount of value with fewer inputs or do it more efficiently, do it faster, all of that lies in the realm of innovation, just as much as talking about product innovation, and perhaps it's even more important, but if you're selling a widget to your customer, can you get that widget to your customer faster, can it be higher quality, can your quality control go up? All of those things require innovation, and all of those things require deviation from the status quo, so it's not necessarily someone in your organization saying, Hey, I think we should make the product differently here, or we need to serve this adjacent market by introducing a new service...

0:25:50.1 Junior: Let's say that you're an execution mode, and frankly, you don't have the time for that, you may or you may not, but it's still important to look at all of the things that are happening behind that product to see if we can tune them, because that is also cost and differentiation strategy, depending on how you attack it, and so I don't mean to belabor the point, but I think it's important distinction to make that we're not always talking about changing up the product as it appears to the stakeholder, we're talking about everything behind it, getting good information, changing our supply chain, changing quality control, if people don't feel like they can raise their hand and say, Hey, I think we can do this differently, then you don't have the cultural competence in place to sustain that type of deviation and you're not gonna get the quantity that you'll need to survive.

0:26:36.8 Tim: Well, Junior, aren't we acknowledging the fact that most innovation really comes down to creating marginal gains... Totally. Isn't that really what this is about?

0:26:47.7 Junior: It's a great way to put it.

0:26:48.8 Tim: There are fundamental disruptive or major innovations, but most of it's incremental, most of its derivative, we're talking about marginal gains, we're talking about the 1%, we're talking about these little things that we can get better at. It makes me think of the British cycling team and David brawls for the coach and trying to get 1% better. Every little thing, the pillows, you sleep on the mattresses, you sleep on the dust on the truck that carries the spare parts are things that you would never think of, but the aggregation of those marginal gains... And we can all do that. We all need to have that mindset. We all need to be doing that, right?

0:27:32.2 Junior: Yeah, so let's dive in for just a moment into what organizations can do... We're not gonna spend a lot of time here. We would refer you to the challenge or safety episode Stage Four, but I do wanna talk about the social exchange inside stage four, which is air cover in exchange for Cantor. Now, this is cultural. What we're saying here is that organizations must do culture by design, not the podcast name, culture by design, not by default, you need to do that culture by design in a way that encourages and protects those genuine... Invaluable deviations from the status quo, so air cover is that protection in exchange for the candor, and that candor is most often the deviation from the status quo. Hey, I saw this thing, I think we can do it better. Hey, I see that our customers are using the product this way and we did not expect it, Hey, I think that we can shave a couple of bucks over here, hey, you know, all of those things that are saying, Hey, I know we've done it this way, in the past, but can we consider this or I suggest this, or here's an observation, What do we do culturally, when those things come up, because that's the pattern that will dictate whether or not we can innovate sustainably if that act of vulnerability...

0:28:54.8 Junior: Someone raising their hand and saying, Hey, I think we could do it differently. If that's met with punishment or dust discouragement or even dismissal, we set ourselves up for failure, if that happens too often, those requests and observations are no longer going to come across our desk, people are going to keep to themselves and act in self-preservation, they're gonna put their heads down, they're gonna do the work and no more... If you protect that, hey, thank you so much for bringing that up. I really appreciate the fact that you did that. I know that that was a little bit risky for you to put on the table, but X, Y and Z, we're going to go do a test, we're going to give it a little bit of time, we're going to consider it at the next meeting, that type of air cover as a pattern, we'll start to show people that it is safe to do that, if that happens at the team level and then spreads to the function, it spreads across the organization, if the top of the organization models that behavior, those will become the types of norms that were after...

0:29:51.6 Junior: So if people consistently get air cover in exchange for their candor, chances are we'll have more innovation as an entity.

0:29:58.6 Tim: Now it's so true Junior. I wanna step back though and give a little perspective, sometimes leaders, those who are in the managerial roles, those who have positional power, they underestimate the social, emotional and intellectual bravery that is required to challenge the status quo. It's not a small thing, because the nature of vulnerability, when you challenge the status quo, we're talking about my personal reputation by standing, even my career, and the way that I look at it is that I am taking a chance in doing violence to the current regime, that's what I... That's what I'm taking into my hands, it's not, Oh, I'm making some suggestion for an alternative course of action, or, Hey, why don't we try this? No, I'm doing violence to the current regime, do you understand the magnitude of the risk that I'm taking personally? That's what we're talking about. And so for you as a leader, we're saying you need to create the conditions that allow me to engage in that kind of behavior, if you don't, then you trigger myself sensor an instinct and I move into a defensive routine. The last thing you want as a leader in the organization is for me to move into a defensive routine, as soon as I move into a defensive routine, I'm not innovating anymore, I'm just protecting myself.

0:31:31.9 Tim: As you said, Junior self-preservation has lost, avoidance is personal risk management, that's the last thing that you want me to do is to move into a defensive routine. Now, there's no guarantee of success when we try to innovate, but what you can do is you can take away the interpersonal social, emotional and political risks, if you can take those risks out of the equation, now I'm much more likely to jump in and challenge the status quo, this is what it comes down to. Do I feel safe to challenge the status quo, do I really feel that I can take a crack at the way things are done? That's what we're talking about. That's what stage four challenger safety is all about. And so hopefully, you can see the very direct connection between psychological safety and innovation, because the psychological safety is what gives the team... It's neuroplasticity. The team is a great brain, but the question is, can we leverage the team's capability, that neuroplasticity, that ingenuity that exists among the members of the team, but innovation is gonna come back to the speed and the flexibility of the connections among the members of that team, that's the neuroplasticity...

0:32:56.1 Tim: How many teams have we seen? Junior filled with very talented people, but they can't get anything done. They can't innovate. They go to logger heads, they're at an impasse. They are stalled. And they can't get anything done.

0:33:08.9 Junior: We've seen that many, many times. Many, you would rather have a team with media Cretan and a really healthy culture, then brilliant people and a toxicity... Take that every time. I love the way that you related to neuroplasticity. It makes a lot of sense to me. So let's re-tread our steps, psychological safety and competitiveness and innovation, all organizations need to be competitive, all need innovation in order to survive, because whatever competitive advantage they enjoy is eroding, so innovation is necessary. I don't know that anyone would say that it's not... So if we all agree that innovation is necessary, then what does innovation require? Innovation is a deviation from the status quo, so we're asking, Will the organization accept deviations from the status quo, then we said that whether or not they do is dependent upon the culture of the organization, not the technical nature of the organization. So innovation is important. Innovation that I will say, necessary. Not even important, innovation is necessary, innovation is a deviation from the status quo, and deviations from the status quo are accepted through culture, and the culture is the psychological safety... Psychological safety lies at the heart, and so you can see the train of logic that needs to be in place in order for all of this to make sense in order for it to work.

0:34:43.7 Junior: And so this is why we as an organization are seeing an increase in demand and psychological safety through the channel of innovation, we get organizations that come to us and say, Hey, our competitive advantage is eroding, let's say that you're a pharmaceutical and you've got a drug that's going generic in two years, what are you gonna do? You're under the gun. You've gotta figure this thing out. Let's say that consumer preferences are shifting and your technology that was the order of the day a few years ago is no longer relevant. What are you going to do? Let's say that from a cost perspective, you're getting clogged because it's new... I don't know, Geopolitical shifts, maybe it's manufacturing changes could be a whole host of things. Regardless of the organization that you're in, you're facing these types of undulating variables are changing, the ground is moving beneath your feet, and you need to respond. We also mention that this is relevant not just at the top of the organization and not just in the function like R and D, but it's relevant to every person inside that organization, innovation can happen at the micro level, and it can happen in very incremental ways, and it's the aggregation of all of those marginal gains that help us move as an organization, so it might be a lengthy summary, but that's where we've been today, and I hope that it's clear for everyone that relationship...

0:36:09.1 Junior: It's become more and more clear to us, especially when juxtaposed with the, I guess, primary motivation, at least early, early on, had to do with the morality of the organization, how to do with some of the social injustice that's happened, it has to do with people in HR and all of those things are still true, but we're seeing demand increased because of this innovation and competitiveness.

0:36:33.0 Tim: Junior, I would just throw out one question for listeners as we kinda wrap it up today, and that question is, look at your organization and ask yourself, Where do we have natural and yet perverse incentives that work against innovation, that work against people challenging... Taking on the status quo, where are those perverse incentives, where are those incentives motivating people to kill the green shoots of innovation that are coming up through the soil, and what are you doing about it to the prevailing conditions allow people to overcome these perverse incentives, or are they squashing the seeds of innovation that you so desperately need, that's a question that you could ponder, because ultimately you'll see that it traces back to, in many cases, to psychological safety and what degree of psychological safety people feel on their teams. So I just wanna mention that.

0:37:39.8 Junior: It's fantastic. Well, thank you everyone, today for your time and attention, we very much appreciate your listenership, we're thankful for all the work that you do wherever you are. And we are here to support you. You can always reach out to us at leader factor dot com, and as always, we appreciate your likes, your reviews, and your share, so if you like today's episode, please share that. That helps us continue what we're doing here at Lear factor, I would also make a plug for the stage four challenger safety podcast that we did a little bit ago, if you're interested in feeling safe to challenge the status quo, and some of this regarding innovation. Okay, without everyone, we will wrap up and see you next time.

0:38:21.0 Producer: Hey culture by design listeners. You made it to the end of today's episode thank you again for listening and for making culture something that you do by design and not by default if you've enjoyed today's episode please be so kind to leave us a review it helps us reach a wider audience and accomplish our mission of influencing the world for good at scale. Today's episode show notes and other relevant resources related to today's topic can be found at leaderfactor.com/resources and with that we'll see you next episode.

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