Building a Culture of Innovation: An Interview with Norm Augustine: Norm Augustine Talks with Jim Euchner about the Role of Executive Leadership in Creating a Culture in Which Innovation Can Thrive

Innovation is a specific function of executive leadership. It requires the ability to make connections that create business opportunities and the willingness to take risks. But it also requires capabilities not often discussed: the fortitude to break down bureaucracy, the willingness to relinquish some degree of control, and the courage to commit resources in the face of pressures from investors to stick to the core. In this interview, Norm Augustine, former CEO of Lockheed Martin and Under Secretary of the Army, discusses the nature of innovation, how leaders can encourage innovation in their organizations, and how his passion for writing helped him think through and communicate important messages. JAMES EUCHNER [JE]: Your background is broad--in business, government, academia, and civic organizations--but I would like to focus this interview on what it takes for companies to be successful with innovation and growth. What do you think the critical elements for success with innovation are? NORM AUGUSTINE [NA]: There are a large number of factors that make a company good or not good at innovation. The first, of course, is to have very smart, capable people. Without that, there's not much else you can do to become innovative, unless you're awfully lucky. You also need to create an environment where people are permitted to take reasonable risks--perhaps prudent risks is a better term. I don't argue for letting people do foolish, risky things in the hope of innovation, but one does have to take risks that have been carefully considered if one hopes to produce change, which is what innovation is about. Part of creating that culture is a willingness to tolerate occasional failure, perhaps even more than occasional failure. I say that not because I want to encourage failure, but if people are punished for every failure, then you won't have innovation. If you have a baseball manager who wants to get rid of his .300 hitter every time he strikes out, he's not going to have many .300 hitters around. Those are the things that really stand out for me: very competent, smart people and an environment that permits the freedom to take risks, one that understands that when you're trying to innovate, chances are you're going to have more failures than successes. JE: How do you encourage the proper perspective in executives? One of Augustine's Laws is Ninety percent of the time things will turn out worse than you expect. The other 10 percent of the time you had no right to expect so much. (1) Given that reality, what advice do you have for executives who want to encourage innovation? NA: You can help create the right mindset only by example. You can say over and over that innovation is important and that it requires taking risks, and you can even write it in books, but that doesn't have much meaning. People watch how you act, what you do when someone takes a reasonable risk and fails, despite the fact that they did their very best. You have to be understanding of that. Other people watch and see how the management team reacts. Another part of creating the fight environment is to give people a reasonable amount of freedom to pursue opportunities that might have been unexpected. There are many examples, but the one I like best is the discovery of penicillin; its discovery was really an accident, but Fleming had the opportunity to pursue what struck him as kind of an interesting observation, and as a result he discovered penicillin. If he had been constrained to do only the things that his defined projects were calling for, those that were dictated from above, somebody else would've had to find penicillin later on. I think a big part of innovation is to give people the freedom to think out of the box. JE: Do you have any personal examples of an object lesson that helped people act a little differently and assume a little more risk? NA: One example stands out in my mind. …