Innovation continues to be a hot topic. The Boston Consulting Group’s 10th annual global survey of the state of innovation shows that 79 percent of respondents ranked it as the company’s top-most priority or a top-three priority—the highest percent since the survey began in 2005. Whether in business, non-profit, sports, or entertainment, most organizations are continuously asking the question, “How can we become more innovative?” Leaders have quickly recognized that their organization’s competitive position largely depends on its capacity for innovation.
The late Peter Drucker asserted innovation’s invaluable role in business stating, “Innovation by nature is risky as is all economic activity. But defending what was done yesterday is far riskier than making tomorrow.” Simply put, firms must innovate to survive. Therefore, creating and sustaining a workplace culture that fosters innovation is imperative to an organization’s success.
Innovation Begins with a Mindset of Possibility
When you think of some of the most innovative companies, what often comes to mind are younger organizations such as Google and Facebook. However, innovation is not limited to any particular profile. This has been proven by the likes of Apple, IBM, Proctor & Gamble, 3M and General Electric—all very different organizations that all have demonstrated an ability to reinvent themselves as time goes by.
Before exploring factors that contribute to an organization’s readiness for innovation from a cultural perspective, let’s start with defining what we mean by innovation. While there are numerous textbook definitions of innovation, a simple one might be expressed as an “if then proposition.” If we are able to explore these markets, change these offerings, build these products, improve these processes, etc., then our efforts will result in measurable gains for the organization.
Scott Noppe-Brandon of the Lincoln Institute positions innovation within the context of the ICI Continuum (Imagination, Creativity and Innovation). The process starts with “imagination,” which is a safe space to explore possibilities. Imagination then sparks creativity, and creativity leads to innovation.
More than an organization’s structure, age, or other characteristics, it is this mindset of possibility that allows the seeds of innovation to take root.
Fostering Innovation in Practice
While the concept of innovation may be simple enough to grasp, the process of driving innovation can be quite complex. Executives struggle every day with the question of how to make their companies more innovative. One of the main factors that contribute to driving innovation is a workplace culture that emotionally connects people to the strategic direction of an organization and encourages a continuous flow of ideas that can support innovation efforts.
At Great Place to Work, we’ve surveyed millions of employees over the past two decades in producing the annual Fortune 100 Best Companies to Work For list. Our data shows that some of the most innovative companies in the world have cultures that uniquely position them to drive creativity. These cultures are built on high levels of trust, as evidenced by the strong connection employees have to their leadership, a strong connection to fellow team members, as well as the ability to operate in an atmosphere that encourages risk taking. Let’s explore several aspects of these great workplaces that help foster innovation.
- A Trust-Based Approach to Idea Exchange
Key to driving innovation is having the right cultural enablers in place that support common practices to explore growth opportunities. A fundamental part of an innovative culture is a strong relationship that employees have with their leaders, which our data shows is best measured through trust. These high-trust relationships create opportunities for the sharing of ideas that help fuel innovation.
Leaders must intentionally develop a systematic, continuous and effective way of capturing employee ideas. To this end, embracing the right technological platforms for ideation can be an important part of an overall innovation strategy. However, demonstrating the right leadership behaviors that encourage idea exchange can have an even greater impact. Driving innovation requires leaders to adopt the stance that within their employee population exists an unlimited reservoir of creativity, and one of the most important responsibilities a leader has is to actively tap into this reservoir.
This is a demonstrated strength found in Fortune 100 Best Companies. When asked if “management genuinely seeks and responds to ideas”, 82 percent of employees respond that this is always or often the case. Creating as many touch points as possible for idea exchange not only fosters greater meaning making between leadership and employees, but it also reinforces the organizational strategy and how individuals can contribute ideas that will support innovation efforts.
- Teamwork and Social Collaboration
Speed and agility also play an important part in driving innovation. Organizations cannot afford overly-long development times or slow decision making if it is to outpace the competition. A company’s culture must enable strong cross-functional collaboration and minimize delays caused by traditional functional handoffs. Innovative cultures are based on having a highly integrated organization that accelerates decision making and encourages strong collaboration.
In evaluating cultures based on the degree of teamwork that employees experience, Great Place to Work research shows that within great cultures, the connection that people have to their colleagues and the sense of oneness is a key difference maker. Eighty-seven percent of employees at the Best Companies respond that across the company, they can always or often can count on people to cooperate.
- Appetite for Risk
Finally, with an emphasis on speed, another essential cultural enabler for innovation is having a greater appetite for risk. Not only is risk-taking tolerated in high-trust cultures, but it’s often celebrated. Having an innovative culture will require adopting a more experimental approach to work. Within exploring ideas, prototyping and testing, there is an inherent higher failure rate. When asked whether management “recognizes honest mistakes as a part of doing business,” 85 percent of employees at Fortune 100 Best Companies respond that this is often or almost always true.
Companies interested in positioning themselves for greater innovation can start by examining these three simple but vitally important areas: how engaged are leaders in seeking and responding to ideas, what’s the degree that teamwork and social collaboration being fostered and is there an appetite for risk. By focusing on these aspects of your culture, driving innovation can become one of your company’s competitive advantages.
How does your organization foster innovation? What suggestions can you share to help organizations drive innovation? I invite your comments below.