How to Create a Culture of Innovation

Last Updated November 18, 2019

In an age when technological and digital transformation are disrupting entire industries, it’s the “innovators” who are seen as leading the charge, or at least, staying ahead of the next disruptive wave.

Being a company with an innovative function or product is one thing, but to be a true innovator in your respective field or industry, you need to be functioning as an innovative organization.

Why is Innovation Culture Important?

By its very definition, “innovation” is the “introduction of something new; a new idea, method or device.” Innovation is what’s driving the current age of digital transformation, multi-industry disruption and up-ending traditional methods of how we work, shop, dine, communicate and more.

Regardless of your company’s product or industry, adopting a culture of innovation can provide a competitive edge, as innovative companies are more likely to bring new products to market quicker, penetrate new markets faster and continually fuel growth, according to Forbes.

For many organizations, this means adding the role of Chief Innovation Officer, or CIO, to their C-level leadership, entrusting this influential executive with championing innovation at all levels of the organization. While adding a CIO position denotes your organization takes innovation seriously, a true culture of innovation doesn’t just happen via directives from the C-suite.

Is “innovation” a buzzword you love to throw around, or is it a cultural value and responsibility that every employee puts into practice every day? 

To help you answer that question, here are three big questions (plus three smaller ones) to ask of yourself and your organization to determine if you’re a true innovator or an imitator.  

Are You Leading Innovation?

Answering that question can start with recognizing and leveraging your leadership style. While being a multi-faceted leader is important for effectively leading your team or organization, the visionary leadership style is the one most associated with spearheading innovation. The visionary leader sets the tone, expectations and processes that turn vision into innovative outcomes.

In a study on leadership innovation in healthcare, published in the International Journal of Health Policy and Management, researchers Philip Weintraub and Martin McKee found that, “enthusiasm, opinion leadership and vision of the Chief Executive Officer (CEO) are considered critical determinants of an organization’s success at innovating,” as a visionary CEO “creates an organizational culture that encourages open knowledge integration and learning essential for innovation.”

Creating this kind of culture can start with relationship building between organizational leadership and employees. These quality work relationships are based on the two-way relationship between leaders and followers, or what Weintraub and McKee call “Leader–Member Exchange (LMX) theory.” A “high quality LMX relationship, when accompanied by empowerment and leadership support, has been found to be associated with greater effectiveness in all phases of the innovation process,” as multiple studies, rooted in both management and psychology, have shown.

Are you acting in the best interest of your employees or team subordinates? Do you openly advocate for them, signaling team loyalty? Are you supportive of their efforts, thereby encouraging initiative? Like so many relationships, the LMX relationship between leadership and employees is built on trust.

Are You Supporting Innovation?

Supporting innovation in theory and in practice starts with supporting your employees. That means fostering strong Leader–Member Exchange relationships within the individual teams and departments throughout the organization, not just from the c-suite down. Determine where support is needed at the director, manager, team lead and employee levels by asking these questions:

Are Employee Expectations Clear?

Every team member must understand their role in making leadership’s vision a reality. Individual team members will look to their immediate supervisor for clarity on their role, responsibilities and expectations.

In a study of the impact of leadership clarity on team innovation published in Leadership Quarterly, researchers found that “leadership clarity is associated with clear team objectives, high levels of participation, commitment to excellence, and support for innovation,” and that “team processes consistently predicted team innovation.”

Do team and organizational processes facilitate innovation or do innovative ideas die awaiting approval via the “proper” channels? While a lack of clarity and direction can hamper team innovation, an overly structured organization with “clear reporting lines” (that employees feel they shouldn’t cross) “can also be a roadblock when it comes to creating a culture of innovation,” writes Stephen Wunker in Forbes.

A visionary CEO may set the tone, but innovation happens when managers demonstrate “leadership at all levels of the organization,” are empowered to lead and then empower their teams to innovate. Which begs the question…

Are Employees Empowered?

If you want employees and teams to develop and act on innovative ideas, you have to empower them to do so. Is there truly leadership at all levels, or are managers and team leads not empowered to make decisions? Or worse, are they punished for the decisions they make?

When “optimal performance” is valued over the risk-taking and out-of-the-box thinking that can drive innovation, managers “have little desire or capacity to jeopardize core initiatives for unproven innovation efforts,” writes Wunker. After receiving that early “no” from their direct supervisors, employees “return to their day jobs, and put innovation out of their minds.”

This message discourages employees from having a growth mindset (i.e. take risks and learn from the outcomes, even the mistakes) and signals that having a fixed mindset (i.e. maintain consistent performance as a reliable employee) is preferred. This fixed mindset, as Weintraub and McKee write, “has been shown to stifle innovation even where a leader exhibits a leadership style that supports innovation.”  

In other words, you’ll never experience innovation if you are punishing instead of rewarding individuals for risk-taking, and without risks, there can be no innovation. Knowledge is power, and providing employees with the information, tools and skills necessary for improvement and growth empowers them to innovate.

Are Employees Encouraged?

It’s one thing to empower employees to pursue and act on innovation; it’s another to encourage and facilitate employees’ ability to turn “creative ideas into innovative outputs.”

When encouraging innovation, take into account the employee’s place in the organization. For example, a “product-centric focus” (i.e “new products” equal innovation) can leave out “employees with non-customer-facing roles,” who may lack knowledge about customer expectations or how current products are performing in the marketplace, as explained in Forbes. Encouraging employees to consider the four Ps of innovation and apply them within their respective areas can be a great place to start.

Give employees the space to innovate by supporting “team reflectivity,” as Weintraub and McKee call it, in which individual employees or whole teams reflect on experiences and outcomes for continuous learning. There are various methods for reflectivity, and they could be project-based, a weekly team activity or, in the most innovatively attuned cultures, an expectation for every employee.

A constant on the Fortune 500 list for 65 years and counting, 3M Company has over 90,000 employees in 70 countries. For decades, the company has encouraged its employees, regardless of their roles, to follow the 3M 15% Rule, using 15% of their workweek to reflect, brainstorm or pursue independent experimental ideas.

Weintraub and McKee note that the 3M Company and organizations like it “have outperformed their competitors because the innovative ideas generated by all employees are valued, leading to better business outcomes.”

Providing employees with the expectations, resources, and genuine encouragement to experiment creates an innovative culture that leads to success.

Are You Measuring Innovation?

For innovative ideas to be implemented, there needs to be parameters and measurements. For employees, understanding how their innovation will be applied, measured and, ultimately, rewarded can motivate them to continually fuel a culture of innovation. 

When it comes to evaluating the success or effectiveness of innovation, whether it’s the development and launch of a new product or the implementation of a new process, it can be important to be just as innovative in your metrics and performance indicators.

If your new innovation is struggling to perform when based on the same metrics you’ve historically used to evaluate business success, perhaps the problem is your method of measurement. It’s doubtful the new initiatives will compete at the same level, in the same way or in the same space, so why judge them by the same old metrics?

Besides measuring the success or effectiveness of the innovation, it’s also important to consider how you’re “measuring” the people behind the project. While you may be supporting, empowering and encouraging your employees to pursue innovation, are you actually rewarding them for it? Incorporate innovative efforts and successes into employee performance reviews, goal setting and compensation through incentives and bonuses.

Innovation is never the safe path, but in the current disrupted business climate, it’s even more dangerous to play it safe. By leading with an innovative vision and instilling it in every facet of your company culture, your employees will know the rewards of innovation always outweighs the risks.

Are You Prepared to Lead with Agility, Innovation and Vision?