It used to be that innovation was the province of start-ups – small, usually tech-focused companies, in markets defined by rapid change.

No more. Rapid change is the norm across industries. And maintaining the status quo is no longer sufficient to effectively compete. Neither is it enough to simply develop new products – true innovation is systemic, creates value for customers and for the organization, and can take place on any dimension of the business system, from process innovations to identifying and targeting underserved customer segments.

But as companies try to move the innovation needle forward, they’re hitting a few roadblocks.

A 2013 study by Accenture  found that although 93% of CEO’s said the long-term success of their business strategy relied on innovation, only 18% felt their investments in innovation were paying off – and 46% had become more risk-averse when considering new ideas.

The problem? According to the study, either most innovations were low-risk (expanding product suites of their current offerings), or they were not seeing higher-risk R&D innovations pay off fast enough.

The larger problem, from our perspective? Not stepping outside R&D and understanding how to create and foster a true culture of innovation organization-wide.

According to innovation-driven technology company SAP , innovation is not exclusive to one person, one team or even one department – every employee has ideas that can lead to innovations.


 

What is a culture of innovation?

The most important driver of corporate innovation  is the internal corporate culture. A culture of innovation is one which actively encourages and supports creative, even unorthodox, thinking from their people, and allows innovation to flow through it.

Many of the natural byproducts of corporate success – traditional hierarchies, static roles, standardized processes and risk aversion – can stifle innovative thinking. Predictability and control used to be valuable, but the new economy is neither predictable nor controllable. Organizations that want to stay relevant must keep up – and to keep up, they must foster and maintain a culture of innovation.

But what does an innovation culture actually look like? Here are 4 traits you’ll see in companies who are making innovation the norm.

 

They prioritize – and reward – collaboration

Companies that foster a culture of innovation believe that innovation can come from anyone in the organization – not just from the top down. Work becomes a collaboration between the organization and its employees, based on trust, transparency, inclusiveness and communication.

There are no strict departmental or information silos in an innovation culture. Employees are encouraged to take part in meetings and activities outside of their usual role, so they learn other aspects of the company and are free to contribute ideas. And they have access to the information they need in order to make bold decisions. They also have open lines of communication to the C-Suite and other decision makers. Digital  platforms, like SAP Innovation Management , offer an easy way for managers to create and manage “Idea Campaigns”, and for employees to participate by voting on, contributing to and sharing their ideas.

Effective innovation cultures reinforce collaboration by rewarding it. For a long time, 3M had a rule that only one scientist’s name could be listed on a patent – which led to their employees not sharing information or working together on new ideas. When they changed that rule to allow all contributors’ names on a patent, employees began working together.

 

They focus on – and communicate –  the big picture

Often, companies focus on incremental improvements. Why? Because they’re less risky. There is an established process in place to work through small steps. But by focusing on small steps, we encourage small thinking. In order to foster a culture of innovation, companies need to first focus on the big picture.

People need to be able to connect with their work, with their organization, on a human level. They need a sense of purpose. When they are entrusted with the overall goals and purpose of their organization, they can make decisions and generate ideas that fit those goals. They are engaged. They take ownership. Google is famous for their “20% time”, in which employees were encouraged to use 20% of their workweek to focus on pet projects they thought would be of most benefit to Google (which resulted in some of their most successful products, like Gmail and AdSense).

Companies with a strong innovation culture have clearly defined where they want to be, and devote time and resources to brainstorming what has to happen in order to get them there. They expand beyond their usual processes and open up to a larger field of possible routes to get there – and remain open to that route diverging, twisting and evolving along the way. Google eventually reworked their 20% time as they grew, in order to adapt to and effectively innovate toward new big picture goals.

 

They embrace risk – and failure

No-one likes failure. We try to avoid it as much as possible. But without it, we get nowhere.

We’ve all heard the quote from Thomas Edison: “I haven’t failed. I’ve just found 10,000 ways that won’t work”. But we don’t stop and think about what that really means if we want to innovate. It means we need to accept failure as part of the process – and make it ok for our people to fail, not punish them when they do. We have to get comfortable with risk, and understand failure for what it is – discovery and feedback that helps us find out what DOES work, and moves us ever closer to success.

In an innovation culture, employees are not afraid to try a new approach and fail –  it won’t be thrown in their face at their review. When failure happens, they focus on what was learned from it, and how to overcome it going forward.

Bill Gates, who has been responsible for several “expensive failures”, once said:  “In the corporate world, when someone makes a mistake, everyone runs for cover. At Microsoft, I try to put an end to that kind of thinking. It’s fine to celebrate success, but it’s more important to heed the lessons of failure. How a company deals with mistakes suggests how well it will bring out the best ideas and talents of its people, and how effectively it will respond to change.”

 

They invest in learning

According to a report from the World Economic Forum, over one-third of skills that are considered important in today’s workplace will have changed by 2020 – and the future workforce must align its skills to keep pace.

In an innovation culture, ongoing learning and skills development are core aspects of the working experience. They provide learning platforms for employees to continually refine and develop their skills. And not just technology training – innovative companies invest in so-called “soft” skills development as well, like people management and complex problem solving.

SAP places a lot of focus on employee development, including vocational programs. In 2015 they launched their first Intrapreneurship Boot Camp , where employees were given the opportunity to “work like start-ups” and create new business opportunities.

Deloitte considers their investment in employee training to be critical to their future success. Deloitte University  Managing Principal Dana O’Brien says  that in addition to technical skills, “We place a very heavy emphasis on nurturing future leaders. We are challenging today’s leaders with powerful conversations around strategic choices, collaborative decision-making exercises, and fresh thinking about the disciplines we practice and the markets in which we compete. Some examples include a class called “The Art of Inquiry,” which focuses on exploring and practicing effective questioning and listening techniques that lead to insightful conversations with C-suite executives.”


To truly drive innovation, companies must foster and maintain a true innovation culture.

One in which the traditional top-down structure is replaced with a culture of collaboration, where risk and failure are embraced rather than avoided, where employees are given the opportunity to learn, contribute and grow beyond their job descriptions, and where everyone, from the CEO to the most junior staffer, is an active contributor to the company’s success.

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