How to Create a Culture of Innovation

Culture: The bedrock of innovation

Many companies, including yours perhaps, manage innovation as they would a project – define, budget, schedule, and delegate to a cross-functional team. The truly world-class innovators at the top 1% consistently do something the others don’t – They see innovation not as a project, but as a life style. It becomes embedded in the way employees interact with each other, make decisions, bounce back from setbacks, and mark accomplishments. Innovation is fueled by a culture. Innovation will never bloom, until your organization develops a nutrient-rich cultural soil that provides it the environment for it to thrive.

Leadership Sets the Tone

The only way cultural change happens is leadership demonstrating the behaviour they expect of others within the company. When you as leader, can embrace the uncertainty of an unknown, when you can ask “I really wonder why?” honestly, or get passionate about an idea that was generated at ground level, you are effectively stating “It is good to be curious around here”. If however you have a system where risk takers are punished and you want absolute certainty prior to taking any action, you are equally communicating that sticking to the norm is the only real way to be seen. Learning leaders who can read widely, reflect on assumptions and seek a point of view that differs from their own, who are willing to admit where they went wrong, are the ones creating the innovative culture. You as leader, aren’t just responsible for providing the space to innovate. You have a responsibility to show others daily that it is okay to step into that space.

Psychological safety isn’t optional

The biggest factor the massive Google study “Project Aristotle” could find of a high-performing team wasn’t the cleverest, brightest, or the ones with the most well-defined goals or the resources. It was the perception of “psychological safety,” meaning that everyone knew they could take risks, make mistakes and admit they were wrong, without any embarrassment or punishment. When it’s not there, individuals are incentivized to remain quiet. We stifle half-formed notions, resist observations about potentially problematic, leadership-favored strategy and resist experiments that are likely to result in spectacular public failure. Without a framework where employees feel safe enough to do all of those things, the engine of innovation splutters, stall and ultimately ceases to produce.

Use Failure as a Learning Instrument

The most innovative organizations on earth (Amazon, Pixar, 3M, IDEO, etc.) actually seem to welcome-or, at the very least, manage-failure and, indeed, sometimes even institutionalize it as a vehicle for innovation. At Amazon, innovation is spurred by the widely publicized tenet that if you are not failing, you are not innovating fast enough. Pixar holds post-mortems of each project, not to find who’s to blame but to harvest learnings. The primary differentiator between a failure culture and an accountability culture is the nature of the questions that are asked following the event; failure culture says, “Who did this? ” Failure culture says, “What did we learn, and how do we accelerate our progress? ” Companies that value the learnings from a failed experiment more than they dread the embarrassment of a failed experiment will remove the fear that squashes the genesis of the next big idea.

Vary the People Room

Homogeneous teams are adept at finding answers to the problems they know how to solve with approaches that are tried-and-true. What they aren’t adept at is finding original solutions because they have the same blind spots, reference points, and snap judgments in response to any challenge. Innovation, however, relies on cognitive friction, the healthy form of resistance that occurs when you assemble people from highly disparate life experiences, disciplines, education, or ways of thinking to tackle a common problem. Historically, major discoveries and insights have originated at the intersection of disciplines that don’t usually communicate. Having a diverse mix of teams throughout an organization, spanning functional areas, seniority levels, genders, ethnicities, education, and mind-sets, broadly increases the possibilities when a particular issue is raised. So beyond being simply right, it’s a sound business move.

Give Time to Think

An organization that schedules workdays, with meetings, reports, signoffs, and proactive communication every hour, can’t provide the type of thoughtful exploration that yields innovative concepts. The capacity for innovation comes not from idleness, but from dedicated time set aside for experimentation, playing and contemplating. Google and 3M, among others, make room for such reflection through set allocations for staff projects that aren’t aligned with any particular department’s immediate tasks; it’s here where such innovations as Google’s Gmail, 3M’s Post-it Notes and a host of other products have been invented. Managers can preserve capacity for creativity with less formal interventions, such as monitoring team activities, curtailing nonessential meetings, and reinforcing the message that reflection and thoughtful work are part of the team’s daily efforts.

Build Systems to Capture and Nurture Ideas

Culture breeds ideas. Ideas create systems. And the companies that invest money and time into creating a innovative culture, without investing in the system to receive, assess and scale ideas, end up with more good intention than real action. The “killer idea” brainstormed at the water cooler and never captured; the suggestion left at a manager’s mailbox and unopened for three months; the promisingly-executed pilot project that, due to lack of further investment and no system for escalating, never moved into a sustainable program. These are all buried in what we call the organizational innovation graveyard. The high performers don’t leave ideas buried – they create paths for them, whether internal innovation portals, cross functional committees, idea innovation sessions and hackathons, quick-access funding for rapid prototyping and development, or even whole innovation teams responsible for turning initial concepts into ready-to-be tested prototypes.

Break Down Barriers

What often most stubbornly blocks innovation in organizations isn’t the individual people but rather the architecture of organizations – the silos of departments, chains of command, and territorial fences that impede information, talent and idea flow within the organization. A marketing department’s lack of communication with its product engineers mean it won’t have access to the customer data that may spark a breakthrough. A regional unit unable to share learning with others might spend many years on problems that have long been solved. Indeed, breaking down silos is one of the hardest of challenges. It may take many things. Team structures, virtual sharing spaces, rotating assignments, jointly-held projects and award structures that recognize working across silos.

What Matters for Innovation

What we measure and most organizations measure the wrong things When it comes to innovation, organizations control what they measure, and most organizations measure the wrong things. The things that organizations have been measuring for decades-revenue, margin, earnings per share for a quarter-are lagging indicators. They are the result of choices made months or even years prior. What we need are leading indicators that suggest the health of our idea pipeline, such as: number of new ideas generated per quarter, the time it takes to get from concept to prototype, revenues generated by products launched within the last three years, and experimentation velocity across the organization. Without metrics that reflect innovative activity, leaders don’t know if the culture that they are building is actually driving performance. It’s also what we communicate, indirectly, to the organization about what the leaders of the company care about. And if people count it, it becomes important to them.

Reward curiosity and not just results

Compensation and recognition practices today are largely anchored in results: a deal closed, a project completed on time and on budget, an annual target met. These programs are indispensable to a company’s success, yet they alone are not enough to support a cycle of innovation-investments in activity with uncertain and sometimes distant returns. To create a creative and innovative culture that stands the test of time, companies must recognize and celebrate curiosity itself: the team that meticulously set up an experiment that didn’t pay off, the engineer who devoted a month to learning a technology somewhat removed from his day-to-day responsibilities, the sales lead who noticed a trend in customer feedback and documented it over several weeks, ultimately influencing a company decision to shift the direction of a product. Making it visible that the organization champions curiosity and intellectual boldness – not only a winning record – sends an important signal that discovery, rather than just an outcome, is valued.

Make Innovation Everyone’s Responsibility

By far the most harmful belief about corporate innovation is that it belongs to some special team – the R&D department, the skunkworks team, the chief innovation officer. On the contrary, the most innovative cultures distribute the work of generating creative insights to each person, each position and each department of an organization. When an employee in a customer-service position begins to identify a recurring pattern in customer requests, he is performing innovation work. Any employee who develops an improvement for a production-process is doing innovation work. When the financial controller discovers a more efficient way to compile quarterly results, this is a manifestation of innovation. When everyone’s work encompasses innovation, the organization’s power for original thought is amplified immensely, enabling creativity to originate where its impacts are felt most acutely – near the customers, the products and operations themselves.

Keeping the Culture Alive Over Time

To do this, an innovation culture has to be nurtured. “It cannot be achieved once, like the development of a new system, then remain static for years”, explain Johnson & Johnson’s vice-president and chief innovation officer, Peter M. Barrett. “It requires a conscious institutional will and consistent reinforcement at the point of hiring, appraisal, and even communication from the executive level and organizational design.” The cultivation of culture is very important. As conditions grow harsh and pressures increase, safe environment may shift subtly towards risk aversive state, where innovation becomes an unknown. Diversity may also cease to exist without the necessary precautions. A public risk will result in the suppression of speech if the high-risk attempt is condemned. The management team should have the insight that the promotion of an innovative culture is a live pledge.