In one of our recent articles, ‘Can Audi avoid its Kodak moment?’, we discussed the implications for Hildegard Wortmann’s view that there is only a 50% chance that Audi will still exist in 10 years. We proposed that her view as an Audi AG member of the board of management responsible for Sales & Marketing was likely rooted in the fact that Audi can’t adapt quickly enough to changing customer preferences. Something reinforced by Audi finance and legal boss Arno Antlitz confirming that the brand’s new model development cycles will remain at six-seven years.
We summarised our thoughts on this by outlining our experience that in conditions of uncertainty, a company wins if it learns fast enough. A company learns when its people, and especially its leaders learn and take complete ownership of the desired outcomes they want for the future. The organisations that will survive and prosper in the future are the ones that are now transitioning to become innovation-led learning organisations.
The reality is that this isn’t just an Audi issue. It’s an issue for every large, complex global organisation that has evolved over decades and now finds itself using a system that, at best, isn’t designed to maximise innovation and, at worst, a system that actively blocks innovation. All against a backdrop of the genuine need to remain relevant.
Culture and mindset are not just nice to have
This is a perspective reinforced by Dr Sabine Maassen, Audi AGs member of the board of management responsible for Human Resources and Organization, who believes “Culture and mindset are not just nice to have”. It’s unlikely that many in the HR world would disagree with Dr Maassen’s viewpoint, but the challenge is what culture and mindset Audi need to build an innovation system.
In the same way, as customer-centricity is central to innovation, an organisational culture that allows companies to shape the future must be ‘intentionally designed’, which means putting people at the heart of that design process. Organisations need to be customer-centric (external) and people-centric (internal).
“We must consistently ensure that we take respect for human rights into account in all corporate processes. Ultimately, it’s always a matter of focusing on the human being and respecting their rights.”
The language in this quote from Jasmin Lotze, Compliance Specialist for Business and Human Rights at Audi, is encouraging as it hints at genuinely putting ‘human’ back into HR. Maybe the next step is to put ‘beings’ back in there and stop seeing people as ‘resources’ but as every company’s greatest asset. After all, organisations don’t innovate, ‘Human Beings’ do!
Being intentional about leadership
Being intentional about building that kind of culture means also being intentional about the type of leadership an innovation system requires. Audi’s role in the Volkswagen emissions scandal has demonstrated how the wrong leadership and culture can manifest itself and, more importantly, how it resulted in former Volkswagen officials serving prison terms for defrauding federal officials, with criminal charges being filed against numerous others and how it impacts the bottom line to the tune of $30 billion and counting.
Conversely, the proper leadership framework can be the catalyst for shaping the future. And seemingly, The Audi Board of Management have recognised this as they continue their transformation by placing the topics of integrity and corporate culture on their agenda as a central task.
The six board members have submitted personal declarations of commitment to the Audi Supervisory Board, referred to as the ‘new Audi’ there’s now an increased focus on setting a better example for the future and becoming truly transparent and value-based. With new corporate values that include appreciation, openness, responsibility and integrity, there’s an emerging contrast to the culture that created the emissions scandal on the horizon.
The challenge is actions matching words and how the new values will be brought alive and transformed into observable behaviour. If done right, the evidence of Audi’s shift should be visible and apparent.
Innovation is a system game
Shifting an organisation that has evolved over decades is no mean feat. However, it’s not necessarily difficult; it’s just hard work. And it needs to be intentionally designed. When organisations, specifically leaders, decide to transform an organisation, the first thing to acknowledge is that just as the newly aspirational culture will allow people to shine brighter, the current one also allows certain people to thrive. Breaking that cycle is something many organisations simply don’t factor in well enough, and hence, under-the-surface resistance constantly works to slow down and even derail change.
Innovation needs structure, governance, and accounting, which means it needs to be a crucial part of a strategy. But that strategy isn’t just about the front-end stuff like tools, processes, canvasses, and metrics. It’s also about the strategic approach to building the day-to-day behaviours, beliefs and habits that are also required. Too often, we still see organisations focussing on the shiny bits of innovation, forgetting that it’s not the tools we give people that produce creativity but the people themselves.
A system approach creates a high level of innovation maturity. No point solution will work; there’s no silver bullet, shortcut, or hack. A culture of innovation is an organisation’s consistent, observable patterns of behaviour and actions that produce innovative outcomes. In essence, building a culture of innovation requires a system approach where components like giving permission to challenge assumptions, creating openness to new ideas, giving freedom to explore, experimentation, risk-taking, failure, and learning are all interconnected.
Most organisations are clear on their strategic approaches to ‘where’ they want to play and ‘what’ innovation they wish to pursue, but rarely do we see organisations completing the system by also being clear on the strategy for ‘why’ and ‘how’ so that every employee knows how to contribute to the innovation agenda.
When everyone in an organisation is clear on how they can contribute to the innovation agenda and can do so daily, that’s a system designed to maximise innovation potential. That’s how companies will remain relevant and help shape the future.
This article was previously published on Outcome.