222019Mar

Structuring for Innovation: Don’t Lose the Schmooze

It’s not often that I have a visceral reaction to something I read in a Harvard Business Review article.  However, Safi Bahcall’s article The Innovation Equation in the March/April 2019 issue got my attention.

The Challenge

Bahcall addresses the problems that start-ups can face as they mature into larger organizations.  As they grow, they often need to put certain, more bureaucratic, structures in place. If they are not careful, they will create structure that make it more likely for people to play it safe – making incremental innovations, rather than take on riskier and potentially more ground-breaking innovations.  He argues that leaders tend to focus on cultural aspects of innovation and could unwittingly derail innovation by putting the wrong structures in place.

I agree that cultural/behavioral factors are necessary, but not sufficient, to engender innovation — that structure (roles, policies, etc.) needs to support the desired environment. However he suggests that certain structures hamper innovation by taking people away from their innovation tasks to connect with others in the organization. His point of view on time spent connecting with other people in the organization, I believe, completely undermines the activity necessary for effective collaboration and for broadening perspective.  He paints a picture of time away from the task at hand as schmoozing dedicated solely to politicking for position, which he argues is driven by hierarchical structure and the associated compensation system.   Schmoozing isn’t just politicking.  Collaboration and perspective are critical for both ideation and implementation of those innovative ideas. Schmoozing enables that.

The Culture/Structure Dynamic

He notes that leaders focus on culture as the key for driving innovation.  While that’s important, he cautions that some of the structures put in place as the business grows could hamper innovation.  Managerial hierarchy and the associated compensation structures may work to create value and rewards for “moving up” in the organization instead of for contributing to business growth.  They can create an internal, self-interested focus (internal politics; vying for position inside the organization) rather than an external, mission focus (customers, markets, etc.). He argues that people will put time and effort into improving their standing in the organization rather than taking risks and innovating to advance the business.

He illustrates this by telling the story of an imaginary designer developing an improved product.  At 4pm, the designer needs to decide how to spend the remaining hour of the workday – “experiment more with your design or network to position yourself well with your boss or other influential managers”.  He creates a binary choice of project work or politics and talks about how management and compensation structures have created this choice.

I don’t disagree when he notes that broader spans of control, focus on results vs. rank in compensating performance, and investment in training to build capability are effective structural factors for facilitating innovation.  However, I don’t agree that the designer should spend that extra hour focused on the project at hand rather than connect with others in the organization.

Making Connections

Too many people in organizations find themselves heads down, doing the work at hand and not making time to connect and develop relationships with others.  In some respects, they are in their comfort zone – doing what they know best and hoping to be recognized for it. 

By not putting effort into developing and maintaining relationships with others, they are likely to remain in their silos and to have difficulty influencing important stakeholders and resolving conflicts.  They won’t be making the connections nor gaining the perspectives found in the “white spaces” of the organization chart. 

The discussions that takes place casually among colleagues in different areas often lead to making discoveries the generate new ideas – critical for generating innovation.  Relationships built across the organization facilitate collaboration and conflict resolution, when there are competing priorities or competing demands on resources — critical for developing and delivering the innovation.

I find, time and again, when working with clients, that I am called upon to teach people how to develop a diverse and effective network and how to build trusting relationships.  This means getting comfortable with a little bit of schmoozing. At some level, people seem to need permission to schmooze, since it doesn’t seem to be real work if the interaction isn’t specific to accomplishing an immediate task. 

It is important to distinguish between self-interested politicking and effective organizational citizenship. Safi Bahcall paints a picture of non-project activity as being purely self-interested.  The problem is that this characterization of non-project specific activity only feeds into people’s perceptions of schmoozing as distasteful, self-interested, politicking.  This is exactly the mindset that they need to overcome for effective relationship development. It’s more than OK to schmooze when it isn’t about grandstanding. Schmoozing is necessary for building personal relationships.

Building Leadership Capability

Businesses need leaders who are comfortable connecting with all kinds of people, leaders who have an enterprise perspective, leaders who can collaborate effectively.  Here I speak of leaders at all levels – including the leader of a project team.  These skills need to be developed and nurtured over time.  So many organizations find that they have leaders who can run their silo, but are limited in their ability to lead the enterprise.  What many organizations say they lack is people who have an enterprise view, who can take broad perspective, who can connect with and inspire others.  Keeping people at their desks, focused solely on the task at hand won’t build these capabilities.

Environments for Innovation

When a company grows and puts some necessary structure into place, it is important to understand the unintended consequences of certain promotion and compensation systems.  If an employee’s value is perceived to be a function of their position in the hierarchy, people will become more concerned with advancing in the organization than with advancing the organization’s value to its constituents. 

Companies that are purposeful in creating environments that foster innovation put structures in place where serendipitous connections are made through schmoozing. They do this through physical spaces (such as the beehive design of Blooomberg’s NYC headquarters) and through policies (e.g., limiting the amount of work time spent remotely or from home). 

I agree that leaders should be careful that hierarchy and compensation structures don’t incent the wrong behaviors.  They should Just be careful not to throw out the schmoozing in the process.

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