How to develop a culture of innovation

Develop a culture of innovation

We are not certain that we all understand the same when hearing that a company has or wishes to develop a “culture of innovation”. There seems to be a consensus about the fact that innovation should not be assigned to an “innovation department”. It is rather a capacity related to a company’s culture as a whole. Culture is intangible, hard to measure or change but still important. What must a company do in order to develop such a “culture of innovation” which is so necessary in our times?

For innovation to come about, it is vital for all the phases of its cycle to be completed. If one fails, innovation does not take place.

• Phase 1: Generation of new ideas.
• Phase 2: Conversion of these ideas into reality, through sponsoring, financing and Project Portfolio Management.
• Phase 3: Adoption of new processes, products or services, internally through change management or externally through their commercialization.

When we come across innovative companies it becomes obvious that they share certain characteristics that other businesses lack. These characteristics allow them to excel in all three phases of the cycle. They can be divided into three groups:

a) Aspects related to culture

One cannot learn how to perform a new activity or do a new sport without taking certain risks and contemplating possible failure. The important thing is for these failures to remain under control so that loss is limited. Let’s take skiing. If after a day of skiing I have not even fallen once, it means I haven’t taken any risks, which means I haven’t improved my level. It means I have made myself comfortable and haven’t tried any new movements in order to ski better.

The same applies to companies. If we don’t fail on a certain number of occasions it indicates we are not taking enough risks. The company must have a culture that allows employees to take risks and that rewards them for it. Even if the company assigns resources to risk-taking, it is not the financial losses that are worrying but the damage to its pride, status and prestige. This is an aspect related to our Latin culture where failure is considered bad as opposed to the Anglo-Saxon world, where it is an additional value. It is necessary to develop and implement a culture in which failure is celebrated, provided the management has been appropriate. Attempts should be counted and a reasonable number should be considered acceptable in order to keep learning. Success requires attempting. Attempts must, however, be quick and cheap.

Psychologists say that in order to modify a certain behaviour pattern, a reward or punishment must be used and that normally the former works better than the latter. If employees are supposed to innovate and take risks, the company must reward this attitude. And it needn’t be with money. In fact, recognition of one’s efforts is more effective. For ideas to become reality hard work is required. It means leaving your comfort zone and for this to be repeated, it must be rewarded. Therefore, risk-taking must be recognised and failures celebrated.

b) Aspects related to talent management

Both those who generate ideas and the leaders who support and finance them belong to a special group that must be developed by the company. Talent management must take innovation competence into consideration by:

• Identifying those people from within the company and assigning them to posts of importance.
• Making sure that they are not only skilled in control and management but also visionary and willing to take risks and change the way things are done.
• Including these competences in the qualifications required in selection processes.

It is therefore necessary for a considerable number of persons, including managers, to possess capacities like:

• Creativity
• Team-spirit
• Other qualities like being non-conformist to a certain degree, questioning the way things are done, raising difficult questions and feeling comfortable in ambiguous situations without needing to provide an exact description of one’s post.

c) Aspects related to the organisational structure

Innovation requires team-work, especially in the second phase mentioned above, where ideas are turned into reality. But working in a team is not always easy, especially for people who are independent and creative. So as to make ideas a reality, organizational capacities need to be developed that are related to the capacity of working in a team. What must be done?

Develop and strengthen the team’s connections, within and outside the organization, in order to receive the best information to accomplish the objectives. As the project proceeds, positive feedback from the board of direction and all those involved becomes necessary, thus maximizing the team’s energy and unity. It is also important to select members with strong social connections within and outside the company.

• Construct very diverse teams, which combine different types of competences – visionaries, problem-solvers, technologists, entrepreneurs, craftsmen etc. – so that they can complement each other.
• Define the rules of the game as soon as possible, identifying the mission, the goals and the degree of liberty in terms of decision-making. It is vital to be aware of the risks the company is not willing to take and even more important that the team does not surpass the limits.
• Lastly, foster cooperation within the team. A team must share the same goals, and therefore share the incentives and rewards in case of success according to the joint effort and not to individual work.

To sum up, innovation is more than generating ideas. It is necessary to make these ideas a reality and foster the adoption and commercialization of the results in order for them to materialize.

Furthermore, and so as to complete the innovation cycle, strong cultural competences, as well as talent and organizational management must be developed. Otherwise, even if idea generation is promoted, no results will be produced and the flame of innovation will soon go out.