The Cultural Roots of Innovation: Why Finland blossoms and Japan, well … doesn’t.

By Dean Foster

Recently, Finland (yes, little Finland!) has scored … once again … as one of the world’s top three leading nations in innovation.  Once again, Japan, one of the world’s top five economies, doesn’t even come close.  And the U.S. is, well, somewhere in between.  China, predicted by many to become the number one economy in the world in the next decade, doesn’t even make the list.  The implications of this interesting stat are legion: for one thing, as the U.S. did and China will find out, you can sustain your economy based on size, influence, diversity of industry, political and economic policies, etc., for just so long, but without innovation, the steam, to use a term from a previous age, will eventually run out.  But an even more important implication is that if we explore the reasons for a country’s innovation ranking, we discover that the source of Finland’s innovation (and the comparative lack of such innovation in places like China and Japan) is cultural.  And once we can identify those cultural drivers of innovation (and those that don’t), we have a formula for maximizing the innovative possibilities at home.

I do want to back up for a moment and clarify some things before moving forward: first, let’s not confuse industry and growth with innovation.  China has growth, Japan doesn’t.  Both have plenty of industry.  Neither, at least when compared with Finland, have innovation.  The U.S. has a lot of all of the above, but doesn’t necessarily lead anymore in any one of them.  How come?  The answer lies buried in the cultures of these countries.

The U.S., for example, is culturally a very “individualistic” culture, for example, and in such a culture, individual ideas, and new innovative solutions, can rise to the top quickly because institutional structures reward such behavior.  Finland is culturally a very collaborative and consensus-driven culture, and innovative ideas can emerge in this kind of cultural climate because “the more brains working together (not apart), the better”. In both cases, innovation can thrive, as long as we don’t mix up the values: we will have some problems if, in the U.S., we ask the innovative individual to first consult and conform with the ideas of others; additionally, in Finland, we will run into difficulties if we start rewarding individuals on the consultative team for non-consultative behaviors.  In BOTH countries, innovation results because while one is individualistic and the other consultative, both value flattened, non-hierarchical organizations and relationships.  Finland is a hotbed of innovation precisely because its consultative and consensus-driven values are enhanced by a very flattened, egalitarian set of values, so that individuals–anyone, really–can surface an idea.  It then gets put to the group.  Japan, while highly consultative and consensus-driven, is very hierarchical in its orientation around organizations and relationships, and diametrically opposed to the super-egalitarianism and wildly flattened organizational environment of Finland (with the U.S. not being quite as egalitarian as Finland in its orientation). In both Japan and China, individuals do not surface new, innovative ideas which might not be approved by higher-ups: the Japanese cultural model has consultative teams devising the best ways to deliver on the already predetermined (hence, non-innovative) goals of the hierarchy, and the Chinese model has teams following lockstep the direction of the hierarchy (with even less innovative solutions surfacing).  In both cases, hierarchy stifles innovation (but can enhance “improvement” on already existing, and pre-approved, ideas).  No surprise, then, that in Japan we excel at improving but not innovating; in China, we excel at replicating what already exists in volumes enough to generate growth, in the U.S. we are often innovating, but not necessarily improving.  Finland, with a culture of both extreme egalitarianism and extreme consensus-orientation, excels at innovating AND improving.  (But, you ask, can it do so at the exponential levels of growth required to compete with the larger economic behemoths? Well, that’s a question of growth, not innovation … although growth without innovation, as we said earlier, will eventually run out of steam).

Apparently, therefore, the cultural “formula” for innovation and growth is a hyper-egalitarian, consensus/collaborative oriented environment.  Mix it up with a large enough mass (population, market size, etc.) along with the political and economic policies that emerge from the above cultural formula (i.e., an open economy, as opposed to a closed command-and-control one), and you’ll also have growth.  In order for Finland and Japan to grow, in the absence of such mass, they both need to export, but in order for Japan to innovate, it must foster a more egalitarian environment.  In order for the U.S. to become more innovative, it needs to value collaborative consensus-driven, egalitarian environments, even more than it already does.  And for China to sustain its already vaulted growth (based mainly on the hierarchy energizing mass), it needs to innovate: it cannot remain the world’s factory forever, and in order to do that, it must create a more egalitarian and consensus-oriented culture.  Who’s got the greatest cultural distance to go?  The CultureCompass, an online tool that defines and compares different countries’ cultural qualities, is a first step on the way to answering that question.


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