Case Studies | Culture of Excellence vs Innovation: Whats The Difference? — Kenny Wallace (2024)

Excellence and Innovation are words thrown around a lot in discussions around leadership and culture, usually in an abstract way to get some sense of what they are and are not. However, I’ve rarely experienced anyone provide real-world context to demonstrate what innovation is and how it differs from excellence, especially as they are often used synonymously. Which of the two manifest culturally helps determine whether leadership are taking the organisation, and therefore business, in the right direction or not.

Let’s explore this now.

These four cultures correlate with specific behaviours that can be measured in any individual:

• Best in Class: Purposeful practice that yields measurable incremental gains regardless of size.

• Mindless Repetition: Doing the same thing over and over expecting a different result, insanity.

• Glass Ceiling: Unacknowledged barrier to advance good ideas, technically ill equipped, high failure rate.

• Paradigm Shift: Permanent measurable change that creates a never before market, product or outcome.

Best in class is an interesting topic in business as many organisations claim to be No.1, usually by some arbitrary metric they invented in a competitive field of 1, themselves, or simply sharing a fact free belief statement. When I challenge leaders on their claims they usually spiral quickly downwards from bravado driven assertions to the acceptance of their own fiction. That said I had the privilege of supporting a CFO and their team in a large enterprise on their path to become World Class. World Class in this context was defined with an industry standard of 0.7% turnover, i.e. The measure that demonstrates an efficient financial operations was an annual run rate of 0.7% of the company turnover. So it can be proven and the claim upheld.

Simple examples of Best in Class that spring to mind are Scottish track cyclist and Olympian Chris Hoy who previously held the record for the most olympic medals held of all British Athletes, with a total of 6, until Jason Kenny collected his 7th. A more recent example is Scottish middle and long distance runner Eilish McColgan who took Gold and the games record for the 10km at the 2022 Commonwealth Games. Eilish also holds the British records for 5000m, which previously stood for 17 years, and the Half Marathon. She also holds the European Record for 10 miles.

In both cases these athletes dedicated themselves to the pursuit of excellence in a single activity through measurable continuous incremental improvement. Aspiring to be the best they can be at one thing and one thing only, the very definition of excellence.

By contrast we have Elon Musk. With Tesla he created a paradigm shift in the automotive industry, forcing every car maker to march to the beat of his drum. His Vision for Tesla was simple: Reduce human reliance on fossil fuels. The Mission: Build electric vehicles that exceed the current capabilities of fossil fuelled vehicles to accelerate the transition. In 1954 after Roger Bannister proved it was possible to run a mile in under 4 minutes, with 3:59:40, 24 more people followed suit within the same year. Tesla were founded in 2003, within 20 years the number of electric based vehicles offered in the market from all manufacturers has exploded. Both Musk and Bannister created textbook examples of a Paradigm Shift.

These four states correlate with specific behaviours that can be measured in any individual, team or organisation.

• Anxiety: Missed deadlines, avoidance of interaction, negatively impacts employee sickness absence.

• Apathy: Absence of enthusiasm or presence of indifference, negatively impacts employee retention.

• Comfort: Lack of activity and accountability, negatively impacts employee productivity.

• Flow: Pro-active, self-directed, emphasis on personal responsibility, positively impacts all of the above.

In the context of this article, regardless of whether your chosen path is excellence or innovation, they both require the ability to operate in a state of flow. Your leadership style is key to unlocking the degree to which you and your team access flow. I’m not going into detail on Leadership styles as the focus of this article is excellence and innovation. To learn more about leadership styles and their impact on culture and business outcomes do read: Leadership: Styles, Cause & Effect and Leadership: Sympathy vs Empathy. These case studies will assist you to challenge your own self perceptions, i.e. what type of leader you think you are vs what type of leader you actually are.

Interestingly in our finance example the entire 270+ strong department ping-ponged all over the above matrix as the path to excellence forced everyone to step outside their comfort zone to individually and organisationally acknowledge their competence and incompetence, otherwise they tip into Mindless Repetition. For more insight on this please do read: Leadership: The Side No-One Talks About. To be successful we had to design an organisation and operating model to support the needs associated with the new world vision, which was a considerable feat on this scale. Thats a case study in itself, perhaps several and for another day.

These four organisational states correlate with specific business outcomes that can be measured to determine their level of success

• High Cost/High Yield: Exhausts resources to achieve a great result, expensive and short lived.

• High Cost/Low Yield: Exhausts resources to achieve a poor result, which is just expensive.

• Low Cost/Low Yield: Barely moves the needle, useless if you want progress or change.

• Low Cost/High Yield: Optimises available resources to achieve sustainable results.

Again, regardless of whether your chosen path is excellence or innovation, they both require the ability to operate as often as possible in the top right quadrant. As previously mentioned in the case of our Finance example, Low Cost / High Yield shared its’ definition with Best in Class: 0.7% Turnover.

In terms of Paradigm Shift we can again go to Elon Musk and SpaceX. Low Cost / High Yield in this case came about from the creation of reusable rockets. This was the only was way to make commercial space travel affordable. I use the term affordable loosely at this stage as the market is still very much in its’ infancy and therefore exclusive. Currently Low Cost / High Yield can be measured as $1200 per/lb of payload. Interestingly this is an example of a Paradigm Shift morphing into Best in Class. The shift has taken place following proof of concept. Now the pursuit of excellence is in full swing to refine the new technology for long term space travel, which will further reduce the cost.

Excellence and Innovation, while often used synonymously, are clearly not the same thing. I think the confusion comes as they often intersect, muddying the waters, as demonstrated above with SpaceX. If you are unsure what path you are on or confused about what your are trying to achieve, might it be worth?

• Revisiting and/or redefining your vision and mission for clarity.

• Ask those around you for their take on things

• Take note of what you are doing well.

• Take note of what needs work.

• Set some next steps to up your game accordingly.

If you want to iron out any creases or reset your culture, perhaps after a merger, during or after a transformation, then please do schedule a call with me by putting a 60mins in my diary at a time that suits you. We can discuss your situation and options over an eCoffee.

Best Wishes

Kenny