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Science shines a light on the factors that drive an innovative company culture

Posted by Neha De

December 15, 2021    |     5-minute read (863 words)

The success of any organization depends, in large part, on its ability to innovate. Innovation pushes companies to continually push for advancements and always look for new opportunities. And in order to create an innovative culture, companies must know what kinds of cultural norms they want to develop. 

In light of this, Kaihan Krippendorff, author of “Outthink the Competition,” business strategy keynote speaker and CEO of Outthinker, looked at every research study he could get his hands on that showed a statistically significant correlation between culture and higher levels of innovative activity. He found that if businesses are looking at building an innovative culture that delivers results, they need to focus on “innovative thinking, proactivity, market awareness and calculated risk,” according to his article on Fast Company. These four drivers will help establish a cultural reinvention that focuses on innovation. 

Let’s take a look at these essential elements:

  1. Celebrate innovative thinking – Kaihan writes, “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.” 

  2. To find out if your organization has the right mindset toward creative thinking, Kaihan recommends asking yourself 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?
    Cultural change must start at the top. To that effect, Kaihan suggests looking at “leaders and organizations who encourage innovative thinking.” He shares the example of Macmillan Publishers, which hosted an Innovation Tournament to promote and celebrate existing internal innovations. They invited innovation speakers and held innovation office hours for staff members to develop their submissions. Instead of asking employees to come up with new ideas, they asked cross-functional groups to share ideas they introduced that were already creating value. The winners received recognition as well as a financial award. 
  1. Empower people to proactively act with autonomy – Kaihan explains, “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.” 

  2. He cites leadership expert Liz Wiseman’s two-year study on the behaviors the most impactful professionals perform to get things done in their companies. Through her research, Wiseman found that employees want to be more than just jobholders. 

    Hence, in order to assess your company’s level of proactivity and autonomy, Kaihan recommends asking these questions:

    • 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?
  1. Encourage market awareness by bringing in insights about customers, competition and competitive dynamics – Kaihan brings to light customer behavior analyst and Wharton Marketing professor Pete Fader’s thoughts on innovation. According to Fader, innovation should start at the customer level. Traditionally, businesses start on the product side, with research and development teams coming up with new ideas and marketing professionals deciding to whom they will sell. However, in order to be successful, Fader advises, organizations should start by focusing on customers with the highest customer lifetime value, by finding out what they want and need, then ask the R&D team to create it.

  2. Kaihan writes, “The most innovative companies empower employees to understand their market.” He shares the example of Amazon’s PillPack empathy training, as part of which new hires are required to wear gloves and distorting glasses so they can experience what it is like for the elderly to juggle multiple pill bottles. 

    Therefore, to inspire insights into your marketplace, Kaihan suggests asking these two questions: 

    • 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?
  1. Encourage calculated risk-taking – Many people assume that the best intrapreneurs (employees who are entrusted with developing innovative ideas or projects within an organization) are those who take the biggest risks. However, in reality, internal innovators are 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,” explains Kaihan.

  2. Therefore, if you want to improve your company’s comfort with risk-taking, you need to build in risk awareness practices. According to Kaihan, “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.” Hence, to assess your organization’s attitude toward risk, ask these questions:

    • 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?

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