Cultures and strategies that favour innovation
Why culture is the internal factor here
- Innovation is not bought; it is produced by people, so the question the standard asks is what management does to make it more likely.
- An innovative culture is one where employees expect to try things, expect some of them to fail, and expect that not to be held against them.
- This is where 91379's word interact shows up: innovation depends on management decisions and on people, and it is undermined by the same forces that create resistance to change.
What an innovative culture looks like
- Failure is tolerated. This is the load-bearing one. If a failed project damages a person's career, nobody proposes a risky project, and only safe ideas survive — which are the ideas competitors have already had.
- Ideas can come from anywhere. The people closest to the work see the problems first. A culture that only accepts ideas from managers or from a research department throws away most of its ideas.
- Time is allocated to it. Staff who are fully loaded with production work do not innovate in their own time. Businesses that innovate deliberately protect time for it.
- Cross-functional contact. Innovations often come from combining knowledge from different parts of the business — a production insight meeting a marketing insight.
- Decisions are made quickly. An idea that waits six months for approval is usually dead, and the person who raised it has learned not to bother.
- Ideas are visibly used. The clearest signal of an innovative culture is staff seeing their own suggestions in production.
- Customer contact is wide. Businesses whose staff talk to customers hear about problems earlier.
Strategies management can use
- Research and development spending — a budget dedicated to developing new products or processes rather than running existing ones.
- Recruiting for it — hiring people with different backgrounds, and rewarding curiosity in performance reviews.
- Reward and recognition — bonuses, prizes, or simply naming the person whose idea was adopted.
- Innovation teams or labs — a group given time and budget to work on new ideas away from daily deadlines.
- Partnership — working with universities, Crown research institutes, suppliers or customers to develop ideas the business could not develop alone.
- Protecting the result — patents, trade marks and design rights, so the business captures the value of what it develops (covered in the intellectual property section).
- Staged funding — committing small amounts to many ideas, then more to the ones that survive, rather than betting everything on one.
What kills innovation
- Blame. One public punishment for a failed project is enough to end risk-taking for years.
- Short-term financial targets. If managers are judged only on this quarter, they will not spend on something that pays back in three years.
- Hierarchy. Ideas that have to pass through several layers arrive weakened, late, or attributed to someone else.
- Overload. A workforce running at full capacity has no slack in which to think.
- Success. Businesses that are doing well have the most to lose and the least urgency, which is why market leaders are often overtaken.