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What you thought you knew about innovation is wrong. Here’s what’s true according to science

I looked at every research study I could find that showed a statistically significant correlation between culture and higher levels of innovative activity. The findings were surprising . . . there are only four cultural values that have proven to drive higher levels of innovation.

What you thought you knew about innovation is wrong. Here’s what’s true according to science
[Photo: jacoblund/iStock]

Every leader wants—no needs—to attract and retain innovative talent, and maybe even make it onto Fast Company’s Best Workplaces for Innovators list. And who doesn’t want to work in a culture that encourages creativity and innovation? But shaping company culture often looks daunting because “culture” often seems like an abstract, touchy-feely concept that exists beyond the reach of business operations. However, cultural behaviors can be measured scientifically and changed through a specific set of drivers.

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The first step in creating an innovative culture is to know what kinds of cultural norms you want to develop. I looked at every research study I could find that showed a statistically significant correlation between culture and higher levels of innovative activity. I then studied 367 companies that have appeared on “most innovative” lists.

The findings were surprising, showing that much of what we think to be true about innovation is false—it’s not about youthful new hires or bustling office happy hours. In reality, there are only four cultural values that have proven to drive higher levels of innovation. They are:

  • Innovative thinking
  • Autonomy and proactivity
  • Market awareness
  • Risk

If you want to elevate innovation into your organization, focus on these four areas. If you are deciding on your next job, look for these essential elements.

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Celebrate innovative thinking

Many of the strategic leaders and internal innovators I interviewed agree that cultural change needs to start at the top. While you might not have the formal power to change leadership behaviors, you can look for leaders and organizations who encourage innovative thinking. For example, Macmillan Publishers recently held an Innovation Tournament to promote and celebrate existing internal innovations. The company invited innovation speakers and held innovation office hours for employees to develop their submissions. Unlike most innovation competitions, they didn’t ask people to come up with new ideas. Instead, they asked cross-functional groups to share ideas they introduced that were already creating value. The winners received company-wide recognition and a financial award. The event was a great success, with over 25% of employees submitting entries and 50% attending the finals.

Your people are already innovators. They may not need training in creativity techniques. They may simply need to see that their innovativeness is appreciated and recognized. To find out if your organization has the right mindset toward creative thinking, ask the following questions:

  • How does your organization reward employees for pursuing uncommon solutions?
  • What practices (formal or informal) does your organization have to recognize and celebrate new ideas?

Empower people to proactively act with autonomy

Leadership expert, Liz Wiseman, conducted a two-year study on what behaviors the most impactful professionals perform to get things done in their organizations. Through her research, she found that people want to be more than jobholders. “They want to be difference-makers and want to play big,” she says. “I just can’t find the people who want to come to work and collect a paycheck and go home.” The most innovative organizations give employees room and power to make decisions, propel ideas, and handle challenges without going through a long, formal approval process. To evaluate your organization’s level of proactivity and autonomy, ask:

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  • In your organization, where is the bureaucratic red tape that might prevent employees from taking action to move ideas forward?
  • Do your people have the time, resources, and permission to act on creative decisions with speed and agility? What resources would make them more proactive?

Encourage market awareness by bringing in insights about customers, competition, and competitive dynamics

According to customer behavior analyst and Wharton Marketing professor, Pete Fader, innovation should start at the customer level. Traditionally, organizations begin on the product side, with research and development teams coming up with new ideas and marketing professionals deciding to whom they will sell. To be successful, Fader advises, companies should start by focusing on customers with the highest customer lifetime value (CLV). Find out what they want and need, then ask the R&D team to create it.

The most innovative companies empower employees to understand their market. Zappos customer success can be attributed to all of its employees spending two weeks training in the customer call center. During Amazon’s PillPack empathy training, new hires wear gloves and distorting glasses to experience what it’s like for the elderly to juggle multiple pill bottles. I recently spoke with the CEO of a leading wholesale distributor that encourages its executives to sit on boards of companies outside of their industry to widen their perspectives. To inspire insights into your marketplace, ask:

  • What routines and training exercises enable employees to deeply understand the customer experience? Do training exercises reflect the unique perspectives of your most valued customers?
  • Where does innovation start in your organization—does it begin on the product side or the customer side? To what extent does leadership interact with and hear input from customer-facing employees?

Encourage calculated risk-taking

We may assume that the best intrapreneurs are those who take the biggest risks. But internal innovators are actually very calculated in the risks they choose to take. They know they are not betting their money, but the company’s money, so they seek to engineer situations in which the payoff is high while the downside is low.

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To improve your organization’s comfort with risk-taking, it helps to build in risk awareness practices. In a discussion with a strategy officer of a leading healthcare company, I asked what her leadership does to encourage risk-taking. The team conducts scenario planning exercises by imagining two best-case scenarios and two worst-case scenarios that could potentially happen. The team will imagine a case, for example, “If Competitor A were to open an office down the street and began picking off our best customers, what would we need to do to survive?” After brainstorming, they then ask, “What can we start doing today to build the capabilities we would need in that situation?” Communicating potential threats brings risk front and center. The more your organization confronts the idea of risk and failure, the better prepared it will be to face real obstacles in the future. To evaluate your organization’s attitude toward risk, ask:

  • How does your organization communicate and take on real or potential risks
  • What capabilities could you begin building to prepare you for a risk scenario?
  • What incentives might you develop (or punishments could you remove) to change the organization’s mindset around failure?

As employees return to the office or permanently transition to remote and hybrid models, today’s companies are presented with a unique opportunity to reimagine their culture. How can you tell if your company culture is ripe for reassessment?

According to Johnny C. Taylor, president, and CEO of the Society for Human Resource Management (SHRM), every company needs a reset of its culture after the pandemic. “It’s not hyperbole. It changed everything,” he says. If you want to build an innovative culture that delivers results, focus on innovative thinking, proactivity, market awareness, and calculated risk. These four drivers will ensure a cultural reinvention that prioritizes innovation.

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About the author

Author of Outthink the Competition business strategy keynote speaker and CEO of Outthinker, a strategic innovation firm, Kaihan Krippendorff teaches executives, managers and business owners how to seize opportunities others ignore, unlock innovation, and build strategic thinking skills. Companies such as Microsoft, Citigroup, and Johnson & Johnson have successfully implemented Kaihan’s approach because their executive leadership sees the value of his innovative technique. Kaihan has delivered business strategy keynote speeches for organizations such as Motorola, Schering‐Plough, Colgate‐Palmolive, Fortune Magazine, Harvard Business Review, the Society of Human Resource Managers, the Entrepreneurs Organization, and The Asia Society

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