A true innovation culture is one in which everyone participates in finding and pursuing opportunities to innovate – employees, customers, leaders, and suppliers. Driving innovation is as much a mindset as it is a behavior.
Peter Drucker said, “Innovation by nature is risky, as is all economic activity. But defending what was done yesterday is far riskier than making tomorrow.” The importance of making innovation part of the corporate DNA was most recently demonstrated during the COVID-19 crisis. Without the ability to quickly innovate products and services, businesses struggled or failed, or they were not prepared for the post-pandemic environment. The pandemic and other crises, such as the supply chain backlogs and government upheaval, will have an enduring impact on the what, where, why and how of doing business. The corporations that made innovation a part of their DNA pre-pandemic recognized growth opportunities, even during a crisis. They could pivot to new ways to serve clients and maintain productive supply chains, with some developing new products and services during the crisis, by recognizing trends here to stay.
INNOVATION IN ITS MANY FORMS
“Making innovation part of the corporate DNA” is not a set of buzzwords. It refers to a culture of innovation in which management, employees, and suppliers support innovation. Innovation can support new customer needs, new opportunities for business growth, new utilization of resources, new responses, new customer experiences, and new sales models. It is not enough to just invest in a startup and call it a done deal. For example, to drive innovation managers must be willing to support the entrepreneur’s needs in terms of knowledge and resources. Some companies rely on their R&D function to do all the innovating, while it is their suppliers who are closest to the market and market trends. Employees have good ideas for product redesigns, but it is difficult to communicate the ideas, so they never get attention.
Innovation is a mindset, meaning the organization is always ready to encourage and support change. A Great Place to Work says it has surveyed millions of employees over the years to identify the best Fortune 100 companies to work for, and the most innovative have fostered a corporate culture that positions the company to drive creativity. The surveys led to the conclusion that the main factor driving innovation is “a workplace culture that emotionally connects people to the strategic direction of an organization and encourages a continuous flow of ideas.” There is a strong trust-based employer-employee relationship, teamwork and social collaboration, and a willingness to accept more risks and mistakes as part of doing business.
MAKING INNOVATION A CORPORATE VALUE
Companies have adopted different strategies to make innovation a value. Google is undoubtedly a leader in innovation and has implemented a variety of approaches. The company says its “10x thinking” that guides engineers is the heart of the company’s innovation. The principle says that innovation happens when something is improved by 10 times as opposed to 10 percent. This thinking took the self-driving car project from “making it safer for people to get around” to a prototype vehicle that requires no driving – only the push of a button. Encouraging collaboration is another Google strategy, in which management holds weekly TGIF meetings that are globally accessible to all employees via livestream. Engineers present upcoming products, company founders talk about industry and company news, leaders across the company discuss various topics. Google also hires people who love challenges, using a rigorous screening process, and an interview panel that assesses the knowledge, cognitive ability, leadership, and personality of job candidates. A hiring committee makes the final decision. Also, innovation is crowdsourced, and the focus is on users.
Tesla is also recognized as one of the country’s most innovative companies. The workforce is empowered to constantly seek out new ideas that will maintain the company as a leader in the creative technological era. Employees are rewarded for constant innovation, and each employee is encouraged to think as if they own the company. Employees feel valued despite the demanding workplace culture. The company encourages customers to participate in product development and testing, and it has built a large enthusiastic fan base without marketing. There is an open communication policy, in which anyone can talk or email anyone else to solve problems fast. Founder Elon Musk has a global vision that incorporates sustainable transportation, renewable energy, climate change mitigation, and autonomous technology, demonstrating that innovators should think about solutions to larger problems.
The Procter & Gamble Company has innovated products for over 184 years. Innovation is deeply embedded in the company, and the mindset is focused on constructive disruption in its industry. For example, the company is transforming its supply chain by creating a synchronized network based on real-time demand signals to better serve customers and consumers. A lean innovation model called GrowthWorks combines the strength of being one of the largest consumer goods manufacturers with the agility of a startup, and is running almost 200 experiments. LifeLab brings consumers into its innovation process by giving them an immersive look at category-changing innovations. Employees are encouraged to look at challenges with fresh eyes to generate innovation.
COMMON TRAITS OF CULTURE OF INNOVATION
It is not just large corporations that innovate. The Fast Company names the 10 most innovative small and mighty companies each year, and in 2021 the organizations selected have fewer than 50 employees. One company is Harbinger Ventures, which focuses on female entrepreneurs and early-stage consumer brands in underserved niches. Harbinger innovated in 2020 by giving some equity in the total fund to each founder it works with. This creates an incentive for collaboration. For example, Usual Wines partnered with Vinebox for a holiday package that sold out.
There are some basic principles to creating an innovation culture. The corporate examples all have one thing in common: Innovating permeates the organization internally and externally. All stakeholders are embraced. To achieve this level, key steps need to be taken. The need to share ideas is communicated to all employees at all levels of the organization, and people at all levels are heard. There should be a focus on creating connections so people collaborate, and new perspectives and diverse thinking are encouraged. The companies find ways to bring suppliers, diverse thinkers, customers, clients, and business partners into the innovation process.
Innovation is not always intentional, as a lab would produce innovation. Sometimes it is accidental. Employees should know they can look for unexpected opportunities to innovate in their everyday work efforts. Innovative companies are restless, in the sense that they believe in the flow of innovation and maintaining the status quo for too long means innovations are being overlooked and risks are not being taken. What drives a culture of innovation comes down to people, no matter where they participate in the business model.