But you won’t find numbers in financial statements or year-end departmental reports. Nothing shows up saying "lost productivity due to miserable meetings" or "missed business opportunities through sorry selling skills" or "employee quit because there's no communication around here."

Why? Because most people aren't sure what communication really is.

Consider this: When companies conduct internal needs assessments, communication virtually always surfaces near top of list. But if you ask ten people who put it on list exactly what they meant, you’ll get ten different answers. People often can’t pinpoint problem—they just have a vague feeling communication isn’t happening. Unfortunately, this vagueness relegates communication to bottom of action list.

Truth is, communication isn't some warm and fuzzy "nice to have"— it is nothing less than lifeblood of your organization. If blood doesn’t circulate at just right pressure and speed to all parts and extremities of human body, that body sickens and eventually dies. So, too, does an organization where communication doesn't flow freely.

Communication isn’t limited to vision and mission statements from top; it’s not just news releases publicizing financial results or new product announcements; it’s not just internal or client newsletters, annual reports or videotaped messages to troops. These are all important, but they form just a fraction of communication—and miscommunication—that takes place every day in workplace.

What I call applied communication is written, spoken and non-verbal interaction among people in order to get things done. It takes co-operation to create a product. It takes collaboration to approach a new market. It takes teamwork to implement a strategy. It takes this applied communication to oil and run machinery of business. And if that machinery breaks down—as it often does—a great deal of money is lost. It's in this area, applied communication, that we need to look for financial drain.

Loss of time

What does your time cost company for each hour you are at work? A good rule of thumb in calculating hourly cost is: annual salary divided by 2000 (based on 50 40-hour weeks). When you know this figure for your own time as well as that of your staff, you can begin to calculate cost of applied communication at work.

Meetings Regardless of its purpose, a meeting is an exercise in applied communication: you speak, you listen, you interact. I’ve never met anyone in business who has not complained about meetings: too many, too long, too boring. I would add to that: too expensive.

Consider meetings that are supposed to last an hour but somehow expand to use up most of afternoon. Calculate hourly cost of total participant time and multiply by length of meeting—and keep in mind that higher level participants more expensive time. The result may not sound too alarming, until you consider how many of those meetings take place in your organization every day, every week, every year. Do arithmetic.

While major product or service breakthroughs make headlines, it’s steady incremental innovations made by employees every day that give an organization sustained growth it needs.

Sustained innovation comes from developing a collective sense of purpose; from unleashing creativity of people throughout your organization and from teaching them how to recognize unconventional opportunities.  

As innovative ideas surface, a clear sense of mission empowers front-line employees to act on new ideas that further your company’s purpose. 

It Starts at Top

Leaders create psychological environment that fosters sustained innovation at all levels. The challenge is that as an organization grows, management structures and bureaucracies, designed to channel growth, tend to create barriers to small-scale enhancements. 

While there are exceptions, in larger organizations employees tend to feel removed from function of innovation and are less likely to take independent action or offer revolutionary ideas.

The commitment to establishing right psychological conditions for innovation needs to start at top. This means that, as a leader, you need to consider your own assumptions about innovation and their role in creating and changing your organization’s culture.

You need to appreciate value of incremental as well as major innovations, understand psychology of innovation and take lead in promoting an innovative culture. Otherwise, it’s just not going to happen. While your organization’s innovative capability depends on multiple factors, there are several steps you can take to create psychological conditions that favor inventive thinking, regardless of your industry or size of your organization.

Establish A Clear Sense of Direction

Changing cultures involves changing minds, and that takes time. But as with any initiative, a clear sense of target helps to speed journey.

Your organization’s mission helps to organize and direct creativity of its people. What is purpose of consistent innovation in your enterprise? Is it to add customer value to existing products and services…to speed delivery…to increase on-time arrivals? 

Having a clearly articulated message allows everyone to focus on innovation where it can deliver greatest value. Innovation, as Peter Drucker has defined it, means creating a new dimension of performance. A sense of mission clarifies direction of performance and helps determine which new ideas to focus on.

Open Communication

Open communication between management and employees sets stage for an atmosphere of trust. But if you want to establish a new, more trusting culture, you can’t expect employees to take first step. 

Company leadership initiates process of open communication by sharing information with employees on a regular basis. This includes good news and bad. 

Southwest Airlines policy of sharing information enabled company to weather sudden increase in fuel costs during 1990-91 Gulf War. The company kept everyone informed as fuel prices soared. Southwest’s CEO Herb Kelleher sent a memo to pilots asking for their help. Through inventive thinking, pilots found ways to rapidly drop fuel consumption without compromising safety or service.           

Leaders of organizations that sustain innovation offer multiple opportunities for communication.

While not every company can offer an open-door policy for its senior executives, or even a chance for regular face-to-face contact, every organization can institute programs that enable front-line workers to feel heard. From CEO lunches with cross-sections of employees, to monthly division meetings between employees and general manager, to open intranet forums for idea sharing and feedback, leaders can communicate their openness to hearing innovative ideas from those who are closest to customer.

Reduce bureaucracy