Co.Design

6 Ways To Create A Culture Of Innovation

Reward employees with time to think, while providing them with the structure they need.

Every organization is designed to get the results it gets. Poor performance comes from a poorly designed organization. Superior results emerge when strategies, business models, structure, processes, technologies, tools, and reward systems fire on all cylinders in symphonic unison.

Savvy leaders shape the culture of their company to drive innovation. They know that it’s culture--the values, norms, unconscious messages, and subtle behaviors of leaders and employees--that often limits performance. These invisible forces are responsible for the fact that 70% of all organizational change efforts fail. The trick? Design the interplay between the company’s explicit strategies with the ways people actually relate to one another and to the organization.

Here’s how to influence the soft stuff.

1. Be intentional with your innovation intent

Most corporate visions and missions sound alarmingly alike: Become the #1 provider of blah, blah, blah. These generic, broad-based goals might rev up sales teams, but they do little to spark ingenuity. Perhaps the worst thing a company can do is give “innovation marching orders” without any guide posts. That’s when the focus gets lost and teams spin their wheels.

The goal: Frame the way you want to change the world, and make it about the customer. For example, the software company Intuit--the developer of Quicken, Quick Books, and TurboTax--makes its mission abundantly clear: "To improve our customers’ financial lives so profoundly they can’t imagine going back to the old way."

2. Create a structure for unstructured time

Innovation needs time to develop. No one ever feels like they have time to spare. People get so consumed with putting out fires and chasing short-term targets that most can’t even think about the future.

Giving up control when the pressure is greatest is the ultimate innovation paradox. That’s why iconic brands like 3M and Google give their employees about 10% “free time” to experiment with new ideas. The software company Atlassian encourages employees to take “FedEx Days”--paid days off to work on any problem they want. But there’s a catch: Just like FedEx, they must deliver something of value 24 hours later.

Companies such as Intuit use time as a reward because they believe it’s the biggest motivator of corporate intrapreneurs. Intuit gives its best business innovators three months of “unstructured” time that can be used in one big chunk or spread out over six months for part-time exploration of new opportunities. So using time wisely creates a major incentive to get more time to play with (hopefully wisely).

3. Step in, then step back

Providing “free” time for employees to experiment with new technologies, products, or processes can catalyze the next big thing. But too many companies--and the consultants they hire--attempt to over-engineer the innovation process. A better option: Give just enough structure and support to help people navigate uncertainty and tap into the creative process without stifling it.

There are some pretty good off-the-shelf tools that can help build employee skill sets. Some of the best are freely available, such as the Stanford Design School’s Boot Camp Bootleg. Intuit applied the design thinking underlying Stanford’s model to create its Catalyst Toolkit, a guide that was made available to all employees and the public and which includes self-serve ingredients for cooking up innovation.

People as diverse as software engineers to human-resources managers have used the toolkit to innovate internal work processes or create new products, including SnapTax, which lets customers file their taxes in less than 15 minutes on their mobile phones. Promoting these types of toolkits help convince employees that leaders care about their development while they also promote best practices that can be adapted to the needs of the individual or team.

4. Measure what’s meaningful

Management guru Peter Drucker once said, “What’s measured improves.” Said another way, You get what you measure. For many companies, coming up with ideas often isn’t the problem. The challenge is turning them into something real that delivers an impact. So what metrics should you use?

First, you have to figure out what to measure. In its early days, Facebook measured how often its users returned to its site. Everything they did focused on blowing out this single metric. OpenTable, the restaurant reservation service, focused on two metrics that allowed it to become the dominant player: growing the numbers of restaurants in its network and increasing the number of consumers making reservations.

Customer-oriented numbers are clearly essential. But other indicators can drive internal innovation, too. After Proctor & Gamble realized the importance of outside partnerships in driving market breakthroughs, the company decided to measure (and increase) the percentage of new products that used breakthrough technologies from partners. Externally driven innovation jumped from 10% to more than 50% and resulted in new products, including Mr. Clean Magic Erasers and Tide Pods.

Other metrics that promote organizational innovation include:

  • Percent of revenue from products or services introduced within a given period of time (say, the last fiscal year).
  • A pipeline of new ideas that includes a set ratio of short-term products or services and longer-term game changers (say, 75%-25%).
  • Percent of employees who have been trained and given tools for innovation.
  • Percent of time dedicated to discovering, prototyping, and testing revenue-generating new products, services, or business models (say, 10-20%).

5. Give "worthless" rewards

Recognizing success is critical, but most companies stop there. An annual innovation award is just not enough to catalyze a culture of innovation. Sure, formal rewards are good for the short term--but they don’t keep people truly engaged.

The most powerful and robust type of recognition--the kind that shapes organizational values--often occurs more informally. Several members of Colgate-Palmolive’s Global R&D group initiated a “recognition economy” by distributing symbolic wooden nickels to colleagues who had made noteworthy contributions to their projects. The fortunate recipients didn’t hoard their winnings. They passed them on to others who had chipped in on projects that they themselves had led.

Nickels are now distributed in meetings, but it’s not uncommon for employees to return from lunch and find a few nickels anonymously placed on their desks. It’s a fun and validating idea; such informal acknowledgments encourage a collective spirit and help promote the free flow of ideas.

6. Get symbolic

Symbols represent the underlying values of an organization, and they come in many forms--values statements, awards, success stories, posters in the hallways, catch phrases, acronyms, and, yes, those wooden nickels. Those who intentionally curate the innovation symbols of their companies essentially curate their innovation cultures.

Intuit installed the kitchen table where Scott Cook dreamed up the company with his wife in its innovation center--and employees are encouraged to sit around it for idea jams. Netflix names its corporate conference rooms after blockbuster movies (for one, King Kong) as a reminder of the continuous breakthroughs its employees are creating and promoting.

But symbols can be more than just physical objects. Poignant experiences, for example, live on as stories and folklore--and shape the mindsets and behaviors of new and existing employees. At Google, the story of the time Sheryl Sandberg made a bad decision that cost the company millions lives on--not because of the error itself but because of co-founder Larry Page’s response: “I’m so glad you made this mistake,” he said, “Because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk.”

Rather than let stories naturally unfold from leaders’ unconscious behavior--which may or may not support innovation--some companies explicitly shape stories to convey key values. The trendy fast-food chain Noodles & Company created a kind of corporate folklore when it invited local marching bands to show up and spontaneously play at nearly 100 locations around the country. Finding differentiation in the fiercely competitive fast-food field is a tough and ongoing effort, and the story remains a constant reminder that everyone needs to consistently “march to the beat of a different drummer.”

No Rubber Stamps

Every company’s culture is inherently different. So when you’re cultivating innovation, you’re cultivating a unique system. Which means you have to be thoughtful about your approach. Whatever you do, it should align with the values of the company and with the company’s goals. And in each case, you have to make it easy and rewarding for the people whose roles and dynamics influence the very innovation culture you’re trying to cultivate.

[Image: Scribbles via Shutterstock]

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32 Comments

  • Joshua Nash

    WOW! I would argue this is one of the most stimulating, thought provoking and well written articles I have ever read. Thank you Mr. Kaplan for taking the time to write this well thought out and thoroughly researched article. Saving this one to my top 10s.

  • Muthanna S K Sanvanda

    Is there any company/organisation in the western world which has defined the corporate goals ,say, 150 years into the future? Like the Japanese co Matsushita has: buying all the patents in the world and release them for free use by the people in the world? When the West does this, world order changes. Sadly it ( USA) will never allow it to happen, for it will lose its control over the world.

  • Prakash Beth

    It is time to stop thinking, then only creativity & innovation can be accessed. I was listening to audio book of "The power of Now", by Echart Tolle... Mind is essentially a survival machine. It is good at gathering, storing and analyzing informations. but it is not creative. All true artists, create from a place of no mind, inner stillness. Great scientists have reported creative breakthroughs came at a time of mental quietude. A nation wide inquiry among America's most eminent mathematicians, including Eistein, to find out their working methods, was that thinking "plays only a subordination part in the brief, decisive phase of the creative act itself". So, majority of scientists are not creative is not because they don't know how to think but because they don't know how to stop thinking.

  • Adolfo Arcagni

    Unfortunately our mind to pop-up ideas and innovate, needs a collection of previous information. Nothing can be born from emptiness. I'm not arguing with Echart Tolle, he has a great gaze of reality. Humans will be more crative when they learn how to think, including traditional cartesian method and trusting in intuition, a no-thinking outcome.

  • Jason Thibeault

    So this is a great article that attempts to provide options for how organizations can approach innovation. But where the article fails is in discussing (or even uncovering) the root of the innovation problem: creativity is not rational. Unstructured time and space are important but only if employees are empowered with the skills to foster creativity. 99% aren't and it's hugely difficult to embody those skills (an irrational way of thinking) when there are limitations put on the creative process (i.e., come back in 24 hours with something meaningful, show us the fruit of your labors every time you are creative). As soon as an organization puts boundaries on the creative process, it becomes a rational process not an irrational one, and hence, by the very nature of being rational, not creative. In order for an organization to truly adopt an innovative culture, it must let its employees "run wild" at certain times understanding that not all such "wild times" will produce anything of value...or anything at all. Of course, this is counter-intuitive to the modern business culture in which so much emphasis is placed on productivity that they even attempt to measure creativity.

  • Mark Simchock

    Oops? Looks like you missed *the key* way...

    0) Remember that culture starts at the front door. You can not hire drones, then wave a magic wand, sprinkle some pixie dust and suddenly expect them to morph into innovative (dare I say) outside the box thinkers. It doesn't work that way, does it?

    Speaking directly to leadership and upper management: Perhaps the problem isn't them, perhaps it's you (and your want for vanilla hiring because you fear anything more complex.)

  • Enrico

    I'm convinced that 50% free time will improve the performances, avoiding building useless project and focusing only on important goals

  • Shep Hyken

    A culture that promotes innovation based on the six tactics
    outlined in this article is a culture that fosters empowerment and better
    customer relations.  Innovation potentially impacts a company internally
    with better systems, products, etc., while it also impacts the customer with a
    better experience.  Companies that have a formal program that encourages
    their employees to come up with ideas to improve are typically better places to
    work – and better places to do business. 

     

  • Mohammadnaeem

    Nice Soren. For me a key reminder is to always try multiple innovations that line up to objectives for the business. A substantive mission statement helps as you have observed. Once you are measuring multiple ideas, it is easy to compare and decide which might warrant scaled investment. I would enjoy discussing how to make this a mantra in an organization as I believe this is a key organizational skill for the future.

  • George Masters

    Lack of unstructured reflective time is important to recharging one's batteries and creating the next invention or product. Its value was better recognized in pre-indusrial age societies. Religious groups call this time by a variety of names such as meditation, prayer, spiritual renewal, or just reflection.

    Whatever you choose to call it, our amped up, we need it yesterday information age society has denigrated the need for reflective creative time resulting in increased job dissatisfaction, and in extreme cases anger and hostility. I tend to agree with the author of this article since this creativity defies business metrics and analysis. While these are important, we have become slaves to over-analysis and metrics and missed the bigger picture.

    People do need to be recognized. Recognition doesn't have to be expensive, but management needs to recognize the strengths of every contributor in the organization. It's important to play to the strengths of the people in your company. Metrics don't create innovation. People do. Give them the reflective time they need. Allow for learning new things and creating new things and ideas. By doing so, we may find the next innovation and new killer product, app or service.

  • Peterchildress

    I think that Barry X. Lynn (
    http://barrylynn.sys-con.com/ ), exemplar entrepreneur and Wells Fargo's
    first CIO, had the right idea with his credo of "Fall forward", which propelled Wells Fargo into the forefront of internet banking very early in the game. What Barry meant by "Fall  Forward", was to think your innovative idea through, give it a try, and if you failed at it, learn from your mistakes and try again.

    This attitude fostered a culture of creative thinking by taking away both the carrot *and* the stick, and encouraging his IT organization to innovate processes and make the bank more competitive, all for the simple reward of knowing that you truly owned your own job and had skin in the game.

    Belief that we could affect the bank on the enterprise level took our mindsets out of the worker bee cubicle and into the boardroom, with intangible but very real rewards for the work we were doing. The bottom-liners in today's small or massive companies would do well to adopt Barry's strategy in order to keep ahead of the competition.

  • Jnarang

    So true,

    If the employees are always thinking they need to have their desks clean, not to forget to drink on the desk, hide wires then they would not have time to think about innovation but just complete whims and whimsical of their boss.

  • Cafeprojections

    For Intuit: "CODL - Cost Of Daily Living" an app that provides tracking of daily expenses, exposing waste and also useful in year end taxes. 

    cafeprojections .com

  • Brad Szollose

    This article is Liquid Leadership APPROVED Soren. For innovation to thrive and survive the environment must be SUPPORTIVE to such activities.

    Many people "think" this is common sense, but all too often, many executives and managers in the corporate world do NOT see it that way. Driven by fear, or driven by trust? Time to let people go and do what they do best: create.

    Great job,

    Brad Szollose
    21st Century Change Agent
    Award-winning author of Liquid Leadership: From Woodstock to Wikipedia

  • DirtyDazz

    Great read, it's common sense really, to allow your "employees" to input their ideas. We don't all think alike and sometimes a solution needs a fresh mind or a different thought process to take it outside of the square.

  • DrRay

    Thank you for the good article. It came right in time before I will start my new job with a focus on innovation. Your view will keep me in a better prosition when thinking about creative motivation tactics.

  • $56633281

    This is an extremely timely article. I couldn't agree more and find myself in the throes of trying to revolutionize a client that's set in its ways. The "old guard" doesn't want to let go of control. Thanks for sharing these insights!