A culture that encourages innovation and action is central to an organization's ability to continuously improve. But by their very nature, innovation and creativity are risky. No guarantees exist to ensure that new ways of doing things will be successful. For organizations, this movement toward change often results in the introduction of controls and structures; in other words, some measure of accountability. Accountability is critical to ensure focused effort and results. It serves as a control against imprudent actions and protects the interests of the organization and its stakeholders. The nature of accountability is such, however, that it can easily be misunderstood in a manner that stifles the very behaviour we set out to foster - innovative behaviour. How many people are prepared to risk innovations if they are to be blamed for any negative outcomes? Clearly, we need to balance the risk and share the accountability. In other words, accountability must extend beyond the management level to be understood by all employees as a mutual process of setting, clarifying and reaching agreement on expectations.

Defining Appropriate Risk

Management's ability to distinguish an appropriate from an inappropriate risk is also central to a culture that encourages innovation. Too rigid a definition will stifle a cultural shift before it begins. That is why a climate of innovation and continuous improvement will never result from an "installed" program or unilateral edict. On the other hand, too loose a definition can expose the organization to calamity. Innovations and continuous improvement require careful stage setting and accountability based on results. Management must provide the criteria for every level of decision making.

Management also must recognize and sustain appropriately taken risk and innovation. This is what defuses the fear of approaching "the edge" and builds the self-confidence and trust required for true innovation to take place. It is not enough to hope that innovation will simply occur when needed - it is through a conscious decision and commitment to personally foster innovation that senior management can bring about continuous improvement as an operating philosophy.

Managerial Accountability

Managerial accountability is perhaps the most necessary and yet the most elusive factor in fostering continuous improvement. For a successful implementation of balanced risk and innovation, managerial accountability must be addressed. We have all experienced the outcome when the accountability issue has not been resolved: endless meetings with unclear objectives and no outcomes, overtime budget bombs, new process designs that are two months late, etc. Why is it that in some organizations, the failure of managers to produce results is so prevalent - and what can be done about it?

Managers who prefer technical activities

In some industries, one or more groups of highly educated professionals control the core technology of the organization. Examples include engineers and computer scientists in advanced technology, teachers in education or economists in finance. Such "professional socialization" undermines managerial accountability. It typically places high value on technical outcomes - and little or no value on the managerial context in which these outcomes are obtained.

This value orientation becomes part of the decision-making process of such professionals. Often the most technically proficient professionals are promoted to management. If nothing happens to change their outlook, we wind up with managers who do not value managerial activities. Subsequently, managerial activities are abandoned in favour of technical activities that bring known outcomes and rewards.

The problem is further compounded when professional socialization shapes attitudes and behaviours through the selective application of rewards and sanctions. It's an effective process - if you want to be promoted, to get references, etc., you learn to approach problems from a technical perspective.

The solution, fortunately, is fairly simple: if reward and reprisal are consistently applied, the process can also work in reverse. Articulate clear-cut expectations through orientation, training and most importantly, by example. Provide meaningful rewards to those managers whose performance meets expectations, and meaningful sanctions for those who don't. Their behaviour will become increasingly managerial and accountable over time.

The second part of the solution involves sensitizing managers to the cause-and-effect link between strategic organizational goals and individual contribution. This is not just a one-time event, but a concerted campaign, linked to applied planning and the monitoring of tasks, designed to drive home the connection between the two. When follow-through activities are perceived to have personal and organizational survival value, accountable managerial behaviour will follow.

Communicating Accountability at All Levels

But as we noted earlier, in order to reduce the actual and perceived level of risk of to appropriate and acceptable levels, accountability must extend beyond management. This can be achieved by jointly specifying outcomes, giving and receiving ongoing feedback, and ensuring that the necessary skill sets and supportive management systems are in place. It is up to the management team to help employees put risk into the proper perspective and this is something for which they are themselves fully accountable.

This is not an easy process for some managers because there is real potential for significant loss. Management can effectively set the conditions for prudent risk by first communicating their expectations of change to employees and focusing upon specific outcomes. Concurrently, management should stress the value of employees to the organization and to each other in order to provide the sense of stability and safety required to take risks. Employees must know that their value is enhanced through innovation and that means embracing risk.

The Goal Posts for Risk

Depending on the organizational culture, numerous options are available to help managers develop the goal posts for risk. Choices include, for example, provision of top-down problem-solving, decision-making training and an insistence that action be based upon prudent, data-driven analysis.

In addition, management should consider other means of protecting organizational interests. These include the visibility of quality systems, taking a customer focus on all issues, and providing broader employee access to information concerning their initiatives. Accountability standards must be established within the quality program with the assurance that the organization's interests are paramount.

Setting the parameters

The role of senior management is particularly crucial when setting the conditions within which prudent risks can be taken. This includes reinforcing communications and actively encouraging cross-functional loyalties, trust and teamwork.

Cross Functional Synergy

Organizations that have successfully implemented continuous improvement programs have long recognized the synergy that results when employees take a broader focus - real risk is diminished and successful innovation is more frequent. To achieve cross-departmental cooperation, a key component of continuous improvement, selectively and deliberately assign managers and employees to tasks not necessarily within their normal scope of responsibilities. For example, team members need to be given clear responsibility and authority to move across functional boundaries, even diagonally, to complete a project. Employees are then better able to think beyond the needs of their own department, analysis is more thorough, solutions are more comprehensive and implementation is more effective.

Calmness in the Face of Urgency

During difficult times, management must project an image of confidence and calmness. This is wholly compatible with a need for urgency. Indeed, urgency, communicated within the context of a vision and confidence in the work force, has a tremendous motivational force. Aligning and mobilizing the efforts of employees is the stuff of inspiration and leadership. The lesson is to build the cultural capacity to adjust, to innovate wisely. The ability to draw upon the commitment and creativity of employees is the best source of competitive advantage - especially during critical times.

There is no doubt that building an innovation infrastructure through balanced risk and accountability is worth the effort. The goal is be more proactive and less reactive as we uncover, study and act on customer service problems before the customer identifies the problem.

©Performance House Ltd.

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A version of the article appeared in The Canadian Manager, Journal of The Canadian Institute of Management