Trust, weak ties and innovation
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The document discusses innovation and trust in organizations. It notes that while innovation is a priority for many companies, they are often bad at it due to leaders not understanding innovation, not measuring it, and limiting innovation unintentionally. It also discusses how innovation requires changing products/services, business models, culture, processes, and behaviors. The document emphasizes that building trust, particularly weak ties with outside organizations, is important for innovation, and outlines factors that build and damage trust between parties. It provides a diagnostic tool for organizations to assess where they stand on different trust dimensions with weak tie partners.
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Trust, weak ties and innovation
- 2. If innovation is the top priority – why are so many companies bad at it? • Most CEOs don’t understand what innovation is • Most organizations don’t measure it • Most leaders don’t realize they limit innovation • Most people don’t comprehend what to change
- 3. Innovation is about changing • Your products, customers and your business models • Your people, distributors and your supply chains • Your culture, attitude to risk and your processes • Your partners and your partner relationships • Your behaviors and your decisions
- 4. Trust, weak ties and innovation Dr. Andrew Maxwell Associate Professor, Entrepreneurial Engineering Director Bergeron Entrepreneurs in Science & Technology Lassonde School of Engineering, York University Chief Innovation Officer, Canadian Innovation Centre
- 5. Changing organizational design necessitates • Changing decision processes that led to prior success Christensen, C.M. (1997) The Innovator’s Dilemma • Sourcing innovation from outside the organization Chesbrough, H. (2003) Open Innovation • Partnering with smaller, less established, organizations Granovetter, M. (1973) The strength of weak ties • Modifying role of leadership to one of catalyzing and coaching Hamel. G. (2002) Leading the revolution • Changing how individuals in organizations behave Kotter, J. (1985) Leading change, why transformation efforts fail
- 6. Characteristics of innovative organizations • Decision processes are faster, and accountability is spread through organization • Organizational culture incents risk taking, experimentation and a portfolio approach • Communication is accurate, timely and frequent • Information flows are two way, rapid and transparent • Reliance on cross functional teams and developing new relations with external partners • Relationships within the organization and with partners embed higher levels of trust
- 7. Relationship Trust: “..willingness to be vulnerable to actions of another party, without direct means of controlling their behaviors” • Reduces concerns about misappropriation or misuse arising from knowledge exchange • Accelerates knowledge sharing/absorption, enabling rapid identification of relevant opportunities • Reduces transaction and verification costs associated with knowledge exchange • Speeds relationship development by facilitating incomplete contracts with multiple partners
- 8. Relationship Trust: “..willingness to be vulnerable to actions of another party, without direct means of controlling their behaviors” • Reduces concerns about misappropriation or misuse arising from knowledge exchange • Accelerates knowledge sharing/absorption, enabling rapid identification of relevant opportunities • Reduces transaction and verification costs associated with knowledge exchange • Speeds relationship development by facilitating incomplete contracts with multiple partners
- 9. Importance of weak ties Increasing evidence that innovative companies are those able to build relationships with companies with weak ties: • Characterized by informality, infrequent communications, and complementary knowledge • Limited track record reduces perceived ‘reliability’ • Difficult to participate in standard agreements • Outcomes from relationship difficult to quantify or predict
- 10. What they don’t teach you in business school • Standard approach is to minimize risk, without asking: • What are risks of delaying, or not making, a decision • What are the costs of managing relationship • Expensive to include all possibilities in contract • Contracts to manage process - timely and expensive • Alternative - use trust… but not a skill we develop: • How do you decide who to trust, and how much? • How do you persuade them to trust you? • Requires understanding of trust development process • Relies on personal development skills
- 11. Trust development process • Trust evolves due to individual behaviors influenced by: - Individual personality; previous relationship experience - Corporate culture, processes and organizational design • Manifestations of specific behaviors influence trust: - One party displays trust behavior, reciprocated by other - Each behavioral manifestation audited by other party - Specific trust behaviors build, damage or violate trust • Achieving specific trust levels enables relationship • Damaged or violated trust can destroy relationship (although damaged trust can be repaired)
- 12. Level of trust changes over time Knowledge based trust Competence based trust Lewicki and Bunker (1995) Identification based trust
- 13. Types of trust behaviors Trustworthy Capable Trusting Communicative
- 14. Types of trust behaviors Consistency Benevolence Alignment Competence Experience Judgment Trustworthy Capable Disclosure Reliance Receptiveness Accuracy Explanation Openness Trusting Communicative
- 15. Behavioral manifestations that build trust Trust Dimensions Trustworthy Consistency Displays of behavior that confirm previous promises Benevolence Exhibits concern about well-being of others Alignment Actions confirms shared values and/or objectives Capability Competence Displays relevant technical and/or business ability Experience Demonstrates relevant work/training experience Judgment Confirms ability to make accurate and objective decisions Trusting Disclosure Shows vulnerability by sharing confidential information Reliance Willingness to be vulnerable through task delegation Receptiveness Demonstrates ‘coachability’ and willingness to change Trust Dimensions Trustworthy Consistency Displays of behavior that confirm previous promises Benevolence Exhibits concern about well-being of others Alignment Actions confirms shared values and/or objectives Capability Competence Displays relevant technical and/or business ability Experience Demonstrates relevant work/training experience Judgment Confirms ability to make accurate and objective decisions Trusting Disclosure Shows vulnerability by sharing confidential information Reliance Willingness to be vulnerable through task delegation Receptiveness Demonstrates ‘coachability’ and willingness to change Communication Accuracy Provides truthful and timely information Explanation Explains details & consequence of information provided Openness Open to new ideas or new ways of doing things
- 16. Organizational Trust Diagnostic Trust Dimension: TRUSTWORTHY Think about the behaviors of those in your organization with whom you have “weak ties”. Place an ‘X’ on the line to represent where you think their behavior falls on each trust dimension. Provide an example. DISPLAYS OF BEHAVIORS THAT BUILD TRUST DISPLAYS OF BEHAVIORS THAT DAMAGE TRUST Confirming previous promises Exhibiting concern about the well-being of others Demonstrating shared values and/or objectives CONSISTENCY Example: BENEVOLENCE Example: ALIGNMENT Showing inconsistencies between words and actions Demonstrating self-interest ahead of others’ well-being Exhibiting behaviours that are inconsistent with declared values Example: Would you be willing to be contacted so that we can do further research on this topic? YES/NO Andrew Maxwell ©
- 17. Organizational Trust Diagnostic Think about the behaviors of those in your organization with whom you have “weak ties”. Place an ‘X’ on the line to represent where you think their behavior falls on each trust dimension. Provide an example. DISPLAYS OF BEHAVIORS THAT BUILD TRUST DISPLAYS OF BEHAVIORS THAT DAMAGE TRUST Displaying relevant ability Providing evidence of relevant experience Demonstrating accurate & well considered decisions COMPETENCE Example: EXPERIENCE Example: JUDGMENT Showing a lack of context-specific ability Relying on inappropriate experience to make decisions Relying inappropriately on third parties or erroneous information Example: Would you be willing to be contacted so that we can do further research on this topic? YES/NO Andrew Maxwell © Trust Dimension: CAPABILITY
- 18. Organizational Trust Diagnostic Think about the behaviors of those in your organization with whom you have “weak ties”. Place an ‘X’ on the line to represent where you think their behavior falls on each trust dimension. Provide an example. DISPLAYS OF BEHAVIORS THAT BUILD TRUST DISPLAYS OF BEHAVIORS THAT DAMAGE TRUST Showing vulnerability by sharing confidential information Showing willingness to be vulnerable through delegating Demonstrating ‘coachability’ and willingness to change DISCLOSURE Example: RELIANCE Example: RECEPTIVENESS Sharing confidential information without thinking of consequences Being reluctant to delegate, or introducing controls on subordinates'’ performance Postponing implementation of new ideas or deflecting Example: Would you be willing to be contacted so that we can do further research on this topic? YES/NO Andrew Maxwell © Trust Dimension: TRUSTING
- 19. Organizational Trust Diagnostic Think about the behaviors of those in your organization with whom you have “weak ties”. Place an ‘X’ on the line to represent where you think their behavior falls on each trust dimension. Provide an example. DISPLAYS OF BEHAVIORS THAT BUILD TRUST DISPLAYS OF BEHAVIORS THAT DAMAGE TRUST Providing truthful and timely information Explaining details and consequence of information provided Being open to new ideas or new ways of doing things ACCURACY Example: EXPLANATION Example: OPENNESS Unintentionally misrepresenting or delaying information transmission Ignoring requests for explanations Not listening or ignoring new ideas Example: Would you be willing to be contacted so that we can do further research on this topic? YES/NO Andrew Maxwell © Trust Dimension: COMMUNICATIVE
- 20. Research Project • Now working with teams in global organizations to: • Identify innovation challenges • Audit trust behaviors • Analyze how trust behaviors damage innovation • Prescribe remedies • Intent is to publish tools, examples and remedies that can be broadly applied andrewmaxwell@lassonde.yorku
- 21. Becoming Innovative One Behavior at a time
Editor's Notes
- 77% of multinationals rank innovation as top 3 priority (24% as number one) – source BCG in customers, technology and global economics Annual change in Fortune 500 rankings is 8% Organizations are perfectly designed to obtain the results they achieve Different outcomes require organizational redesign - change how individuals behave/make decisions Redesigning the organization is hard because it is out of people’s comfort zones: Changing attitudes to risk Faster decisions with more limited information Incentives for showing initiative not for success Strategic partnerships with previously unknown organizations How do we measure innovation: Ask people – BCG survey..identify innovative companies Financial performance - % of revenue from innovations Mine data – number of patents issued Problem is – all of these are outcome measures Doesn’t tell you how to become more innovative Even if they can measure it – how to change their organization to make better results Don’t understand the barriers to innovation.
- the creation of new & better products, processes, services, technologies, or ideas that are accepted by markets, governments, & society the opening of a new market, securing of a new source of supply or the creation of a new organization (Schumpeter, 1936) the creation of a new business model or perceived value Importantly, innovation involves doing something which the organization has not done before, and changing the way people in the organization behave and make decisions Not to be confused with: Invention - the creation of an idea or method Improvement – enhancement of existing products or servicesProduct Innovation Process Innovation Service Innovation Business model Innovation Financial Innovation
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- Companies wanting to innovate must learn how to rely on trust to mitigate risk and address these issues Senior management molded by their environment and experience: where speed/risk taking viewed as negatives Traditional approach to risk mitigation relies on formal processes, established relationships and contractual controls However, unintentionally increases risk of being disrupted: slows down decision making and information flows discourages risk taking and experimentation inhibits new partnership formation and technology sources stifles innovative technology and business opportunities
- Called the universal lubricant
- Called the universal lubricant
- This is another option for an overview using transitions to advance through several slides.
- This is another option for an overview using transitions to advance through several slides.
- Real challenge is ”moving at the speed of trust” persons trust behaviors – a natural skill that allows you to develop personal relationships How to audit trust behaviors How to display trust behaviors How to repair damaged trust
- Is a context dependent staged process over time Initial relationship trust based on proxy (i.e. background) Certain controls enable trust development: while others make it more difficult for trust to develop