Creating an innovation culture: Where to start and how to achieve it

Innovation is a matter of survival, not a choice, for companies operating in today’s volatile environment, as experts have found a strong correlation between a company’s innovation culture and its growth trajectory. This advantage proved the extent of its resilience during 2020 when the growth gap forged by Innovation Leaders increased by 10%.

“Innovation culture” is critical because the only way to future-proof a company through innovation is to integrate it into its company culture. People find adapting to change difficult for the most incremental of changes. So then, think about the impact of upheaval that comes with large-scale innovation, which often extends beyond the existing revenue base to new products and new services, ecosystems and business models.

Unless the organisation develops consensus across the board that such changes are aligned with its values, goals and norms, innovation projects risk stagnating or being roadblocked by resistance. While 63% of executives believe that a strong innovation culture is critical for their company’s growth, only 20% believe their company culture supports ongoing innovation.

What does it take to create an innovation culture to tackle this disparity?

The 3 layers of an innovation culture

The innovation needs of today have outgrown the R&D departments of the past, with innovation gains often falling flat because they’ve been cordoned off to a siloed department or team. Innovation needs to be broader, deeper, and culturally embedded in the organisation. And this necessitates a company-wide innovation mindset - integrating ongoing innovation into its vision and values and enabling execution and resourcing of the necessary infrastructure.

Innovation is most beneficial when it is fostered across 3 levels: individual, organisational and cross-organisational.

Individual

To produce and embrace genuinely innovative ideas, individual employees need to believe they have the capabilities to innovate and that they are empowered to do so - regardless of their job title or function.

As well as aligning innovation with the goals and structures of the organisation, employees need a working environment that fosters experimentation and curiosity. Employees typically hold back without an openness to new ideas. The consequences? This decreases the value employees add to the business beyond their primary roles, reduces motivation, and inhibits loyalty.

Embedding an innovation culture at the individual level starts from the hiring process and extends to the ongoing people and performance management. This means assessing skills and aptitudes for creativity, curiosity and idea sharing at the outset and then making a concerted effort to cultivate these behaviours and to upskill employees regularly. This places an innovation mindset at the core of the business.

Organisational

The way an organisation operates can either encourage or stunt innovation. Companies that set an example of innovation at the leadership level to promote innovation culture from the top down can create a value-driven innovation pipeline.

There are two key ways to encourage innovation at the organisational level. The first is through leadership teams, the way they behave and their actions, and the second is through business structures, the processes and systems that enable these behaviours and actions.

Top-down behavioural shift

This requires a mindset shift; hierarchies and functional silos should be benched to achieve a thriving innovation culture.

Leaders should challenge their team to think beyond the realistic and about the outrageous. Often this involves training and coaching to realign how leaders and managers respond to feedback and suggestions – focusing on delivering constructive criticism that doesn’t demoralise out-of-the-box thinkers. The greater the number of minds involved in this process, the greater the potential for a significant change – making the impossible possible.

This encouragement can be systemised through rewards programmes for participation in innovation to avoid it becoming a burden.

Structural enablers for innovation

And what does it mean to say innovation needs to be embedded into the structures of the organisation? Although innovative ideas can spawn naturally, especially when employees come together for discussions, idea exchanges should be a part of the organisation’s DNA.  

In other words, operations must reflect the innovation culture so employees can easily contribute to it. For example, through HR processes designed to upskill current employees, digital investments that focus on enabling friction-free collaboration, and governance processes that allow decentralised decision-making.

In whatever form that innovation is enabled, accountability and parameters must be set. This includes clarity on who is involved in the decision-making process, assessing feasibility, and managing risk. Knowing you can share ideas is one part, but seeing how these contribute to business needs and business value motivates employees to actively participate in the innovation process.

Cross-organisational

Innovation cannot happen in a vacuum. Other influences are needed to feed creativity and out-of-the-box thinking.

Essentially, business leaders need to encourage cross-organisation idea pollination. One way to do this is by keeping up-to-date with trends from a macro and micro perspective either from afar or by socialising with other organisations in similar or complementary spaces.

The key to extracting value from this information is to share regular updates with employees – allowing a greater number of minds to watch what is happening across industries to inspire change in the organisation.

For example, employees close to the customer experience are in an ideal position to reflect on how technological developments in different contexts could resolve customer challenges they see daily. Armed with knowledge, they are able to connect dots that would otherwise be missed.

An openness to creative input from an assortment of sources will keep innovation alive long-term.

Finding your starting point

Changing a company culture to introduce ongoing innovation is not an overnight process. By reviewing what is already in place, what would make the biggest difference and what changes the company would be most receptive to, you can create short, medium and long-term plans for implementing an innovation culture.

Enabling innovation on individual, organisational and cross-organisational levels embeds the breadth and depth of innovation culture into the business. Such a boost in innovation should be managed carefully, ensuring the pipeline of new ideas adds direct value to the business, and those generating the ideas are motivated to keep doing so.

With the critical nature of not just innovation but an innovation culture clear, how will you adapt your company culture?