Collapsing power distance to support innovation

Nearly 15 years ago, I led a global data management team that was highly credible but had a problem. We and our competitors had data management methodologies and supporting tools. However, our competitors were outspending us which meant that our intellectual property was falling behind. We had to do something different.

The result was a radical open source approach. We assigned a creative commons licence to much of our intellectual property and loaded it into a wiki (allowing anyone to use, edit or add to it). Suddenly we had removed the power of investment from our competitors. We had a method and so did they, but ours was free, was used by literally thousands of our peers independently.

Such an innovative move required a different approach borne of an urgent market need. A time of crisis, such as a market crisis, creates opportunities to break normal rules and try new things. It reduces the power distance in organisations, and everyone is equally able to bring solutions to the table.

Innovation is all about doing things in new ways and requires questioning the status quo, often through the lens of new perspectives. The freshest perspectives are often newer or more junior members of the organisation. However, power distance or experience can cause innovative ideas to die on the vine.

Power distance is a term that has been made famous by Dutch psychologist Geert Hofstede. It is the measure of the relationship between those in charge and their charges. Like all relationships, the greater the distance the less likely information is to flow which is essential for new ideas to flourish.

Today, Haier is a respected global white goods company. But in the 1980s, it was a troubled Chinese domestic manufacturer known for poor quality and rapidly going out of business. Enter Zhang Ruimin who radically transformed the company by forming cross-functional teams and giving each team accountability and power from engineering through to customer service.

The result was that the people hearing of quality issues from customers could work directly with engineers who redesigned the products. Not only did the quality improve, but radical new designs emerged based on real customer needs. There are many famous examples ranging from rodent-proof fridges to washing machines that were robust enough to clean potatoes! The common theme was a shortened power distance between customer service and engineering investment.

Both of these stories are examples where innovation is able to happen because those at the front line of a problem had direct power to influence the approach to solving the problem.

Other great examples of innovative companies include Dyson and Virgin Group. Both have been responsible for hundreds if not thousands of small and large innovations in different fields. Dyson sees its success primarily by empowering engineers to undertake hundreds of prototypes before trying to lock-in an approach. Virgin Group creates or buys new companies which maintain their autonomy and have tremendous creative control. Whether it is through teams working on prototypes or self-contained companies within the group, both have the effect of shrinking the power distance to encourage innovation.

The COVID-19 crisis has shortened the power distance in organisations around the world creating an environment ripe for innovation. Whether it is in the creation of new protective equipment, virtual business models or the rapid delegation of responsibility to make customer service decisions the recipe of success is the same: empowerment. This creative environment is supported by a technology ecosystem which is also innovating faster than ever before in a race to respond to the crisis. Collaboration platforms have had more enhancements and updates in six months than they would normally expect in six years!

The crisis has forced us all to try new things which means that people have confidence to take ideas to management that would normally be no more than coffee chatter. The power distance between those dealing with customers and those with budget authority has been collapsed. I’ve spoken to many leaders who have let their front-line staff make decisions that usually require layers of approval and are delighted with the quality of the result.

The challenge for business today isn’t to make innovation happen, it is happening anyway as a result of the COVID-19 crisis. Rather we need to focus on directing it for long-term success and sustaining it post-crisis. Innovation is the collision of learning and organisational agendas. To make sure these collisions keep happening and align to a longer-term agenda we need to learn from the crisis and have the courage to find ways to deliberately collapse the power distance in our organisations.

This isn’t just the responsibility of leaders. The innovators amongst us have to have the courage to speak-up, try new ideas and, most importantly, spend our days seeking to constantly learn. Gloria Steinem summed it up, saying “Power can be taken, but not given.” It is up to all of us to take power (distance) into our own hands to shape the future of the organisations that sustain us.