MIAMI, Fla. – Jamie Notter, author and consultant on culture, took the stage on Friday at the NACS Leadership Forum and stated simply, “We are going to talk about culture and we are going to talk about innovation.” Before he went further, he admitted that part of the challenge in talking about culture and innovation is that they are both classic buzzwords, and yet still hard to define.

Notter believes, however, that you can define innovation and culture each in one sentence.

“Innovation is change that unlocks new value,” he stated to attendees. “Getting at the stuff you can't get at now.” And to build an organization that embraces innovation you have to build it into your culture. Innovation has to be part of what is known in your organization and you need to support it with process and resources.

Notter defined culture as “the collection of words, actions, thoughts and ‘stuff’ that clarify and reinforce what is truly valued in an organization.” He then challenged attendees to describe their company’s culture. “If someone you’re interviewing for a job asks what’s the culture is like at your company, what do you say?” You probably say, we’re awesome, we’re innovative, we’re family—we keep it at that high level, he posited. But that’s not a satisfying answer, he stated. Candidates want you to give them an answer where they can say yes, or no I don't want to be a part of that. Most companies are not detailed enough when they describe their culture.

Often, there’s also a contradiction between the words we use to describe our culture and the actual behaviors. When that happens, he said, “The behaviors always win.”

As senior-level executives, Notter told attendees, your behaviors matter more than anyone else. “Everyone has their eyes up when it comes to culture,” he said. Even if you didn't know you are being looked at, your behavior gets registered, so you need to pay attention. It’s also essential to pay attention to the non-human parts of your culture: the environment in which your employees work, the dress code and so on. All of these things communicate to your employees what’s valued.

While many companies have stated core values—quality, excellence, integrity, honesty, for example—they do not set you apart (like any company is going to value lying or dishonesty!). But these words are not what is valued. When you make it clear what’s valued in your company, your people will use that to guide their behavior.

So, look around your organization to see what’s really valued—if you want a culture of innovation, you need to build a system that drives behaviors to create the innovation you’re looking for. And you should understand your culture at a deeper level to do that; you need to know how your people experience your culture. To measure the experience inside a culture, Notter’s company, Work XO Solutions, defined eight culture markers that identify what human beings care about in the workplace:

1. Agility
2. Transparency
3. Collaboration
4. Growth
5. Inclusion
6. Innovation
7. Solutions
8. Technologies

It’s not all or nothing with these characteristics, stated Notter, but knowing where you are on the continuum of each is key—and the people who work for you want to know that too. And there’s not one model for how to do culture right; there is no right or wrong culture. But there is a right or wrong for you, he advised.

He then led attendees through an exercise that helped them assess how innovative their companies are. Most companies score on the higher side with the concept of innovation, but score less well on the execution of it. While the ideas are present, if you want to embrace innovation you need to address the fact that people in your company are just talking about innovation, and not doing it.

If you believe a culture of innovation will drive your success, Notter advised, then you need to change your culture. And to change your culture, you need to change the way you do things. Consider building a culture playbook. What are some plays you would run to elevate behavior in your organization? And if they don't make a difference, you modify the play.

The playbook includes these aspects of culture:

• Rituals and artifacts: i.e., office space, collaborative space
• Stewardship: how is your culture continuing to be fed and cared for, do you have “culture mentors” to set good examples and serve as resources for others
• Talent/HR: i.e., hiring process, performance reviews
• Process: which of your processes are communicating a culture that you don't want?
• Structure: org chart
• Technology: the way you communicate using technology and how your share info can drive specific aspects of your culture

If you care about innovation, you need to have experiment metrics (in other words, failure metrics and what have we learned). If all experiments succeed, then you’re not doing it right.

Implement internal a system/process for managing ideas for innovation. Consider changing people’s job descriptions to enable more innovation. “You can’t have innovation and lean/pure efficiency,” Notter stated, so you might need to change your model.

In general, “culture management needs to be a thing,” Notter said. “We need to manage our culture like we do financial management. Do you have process, people, analytics in place?”

And it should be a rigorous discipline in your companies. Why? Well, one reason is that millennials care about culture. While millions of millennials are in the workplace now, not even half of that demographic is working yet. They are, and will, continue to change the nature of work.

Culture drives behavior, Notter reinforced, “the organizations that focus on culture will move ahead. It’s optional right now, but it will not be in the future.”

The NACS Leadership Forum took place February 7-9 in Miami. Stay tuned to NACS Magazine for complete coverage and take a look at previous NACS Daily articles highlighting the retailer panel on disruption, featuring Greg Parker, Scott Hartman and Gus Olympidis, and the future of transportation and the shared economy with John Ellis.