A Leader’s Guide to Creating a Culture of Innovation
January 13, 2022
by ExperiencePoint

We really need a culture of innovation…” –and so begins the familiar boardroom conversation that has engulfed businesses around the world. The reasons for cultivating innovation-capability within and throughout an organization are obvious; innovative thinking renders industry-changing products, services and processes. But why is ‘culture’ so crucial for innovation in the workplace?

According to a 2018 study done by McKinsey & Company of over 1,000 organizations that encompassed more than three million individuals, an innovative culture matters because:

  1. Innovative culture corresponds with better performance:
    A strong workplace culture is synonymous with a high-performing company. Statistics show that organizations that invest in workplace culture reduce production costs, see a 4x increase in revenue growth, 200% larger returns for shareholders and a reduced time to market by a factor of 4.

  2. Innovative culture offers a competitive advantage: 
    In an era defined by rapid change, the ultimate competitive advantage in business is a healthy, innovative culture that adapts quickly. An innovative culture is a sustainable competitive advantage, unlike products, prices or delivery systems. A healthy, innovative culture also provides an environment that supports more robust recruiting and loyalty from customers. Conversely, cultures that lack innovation do not respond well to change and often fail at business transformations. In fact, research shows that 70 percent of modern digital transformations fail because of workplace culture issues.

Culture is defined by the actions and behaviors of an organization and represents a company’s capability to solve problems or create new opportunities. When a business fosters a culture of innovation, workers use newly learned design mindsets and skills to propel their organization forward, sustain momentum and achieve business outcomes.

How Do Organizations Build Cultures of Innovation?

A culture of innovation empowers businesses to deeply understand customers, creatively explore new possibilities, iterate and improve their ideas based on feedback.  It's a culture where people are expected to bring their ‘whole brains’ to work through rich collaboration and communication.  Innovative cultures describe the future of work for many organizations: collaborative, creative, filled with good problem solvers and strong communicators.

The best approach to building an innovative culture is embedding innovation capability within your organization’s DNA. For an organization to be innovation-capable, it's not enough for people to have the knowledge and skills required for a particular task.  Innovation requires intensive collaboration and the broad adoption of specific behaviors that counter traditional problem-solving approaches. For example, brainstorming is a team sport that works best if people adopt behaviors such as deferring judgment or producing quantity over quality;  This requires practice in context (as a team) to develop proficiency. People can read a book or engage in an online course with knowledge of brainstorming and best practices, but they won't have done it and assessed their skills and behaviors.

To be innovation-capable, workers must be able to:

  • Solve problems in customer-centered ways that result in better solutions and new sources of value.

  • Lower the risk and costs of new ideas

  • Move quicker and respond to changes and challenges with greater confidence.

How Do Organizations Embed and Scale Innovation Capability?

To embed, scale and sustain innovation capability, organizations must foster the right mindsets and environment for innovation to thrive. ExperiencePoint’s innovation capability-building framework equips companies with the right skills and conditions to be fluent in human-centered approaches to innovation that attain better business outcomes.

 training method starts by implementing the practices of human-centered design (HCD), a creative problem-solving approach that begins with people and ends with solutions that truly meet customer needs. When taught through role-specific learning journeys, HCD equips workers with the daily skills to better understand customers and generate, prototype, iterate and test new ideas that reach unprecedented results.

Our framework then establishes the right environmental conditions for an innovative culture by aligning people, processes, and systems to support new behaviors. Lastly, we help organizations achieve business outcomes by teaching them to measure and share the benefits of HCD in daily work. Sharing results encourages organizational commitment and momentum needed to continue the transformation journey.

  • Build the right skills 
Develop organization-wide proficiency in design thinking and human-centered design, with role-specific learning journeys that enable people and teams to be influential innovators.

  • Create the right conditions
Align people, processes, and systems to support new innovation behaviors.  Build and nurture a community of practice so that innovation is sustained.

  • Achieve business outcomes
Measure the broad-scale daily benefits of using innovation skills and behaviors and share these success stories to build organizational commitment and greater momentum.

If an innovative digital culture is built solely upon skills but not the right environmental conditions or vice versa, it will fail to achieve business outcomes. Only a framework that considers both the necessary skills and conditions can successfully sustain an innovative culture.

New Ways of Working Require New Mindsets and Skills

From the outside looking in, culture can be considered people’s professional outlook in action. How people see the world is at the core of behaving and acting. As a result, introducing a new mindset requires the learning and practice of new skills, which takes time.

In her book
Mindset: The New Psychology Of Success, Professor of Psychology at Stanford University Carol Dweck says, “Mindset change is not about picking up a few pointers here and there. It's about seeing things in a new way. When people adapt to a different mindset, they change from a judge-and-be-judged framework to a learn-and-help-learn framework. Their commitment is to growth, and growth takes plenty of time, effort, and mutual support”.

2022 innovative business examples Benefits of innovation in business Importance of innovation in entrepreneurship Reasons why innovation is important Impact of innovation on business Need for and impact of innovation examples Innovation in business management Innovation skills in the workplace

For change to occur and be sustained, workers must be presented with an alternative way of working, an alternative set of skills that they can master with practice and then embed into their everyday workflows. The structured principles of HCD and design thinking lend themselves to demystifying innovation and turning it into a repeatable process.

As a result, ExperiencePoint’s innovation capability-building system ensures that the essentials of HCD are acquired through applied learning. The system uses role-specific learning journeys to support the unique needs of leaders, practitioners, and contributors. It also facilitates team-based learning to establish a shared language amongst the shared culture.

New Ways of Working Require New Conditions

Much like planting a tree in a desert, introducing innovative mindsets in an environment hostile to growth is a futile effort. As a result, it’s essential to create the right conditions—including the right systems, structures and people—to encourage and support the new behaviors.

The most effective environments combine traditional extrinsic forms of motivation, like incentives, rewards and recognition, with powerful intrinsic levers, like purpose, autonomy and mastery. New supportive environmental conditions help create a culture of authentic and lasting innovation.

2022 innovative business examples Benefits of innovation in business Importance of innovation in entrepreneurship Reasons why innovation is important Impact of innovation on business Need for and impact of innovation examples Innovation in business management Innovation skills in the workplace

ExperiencePoint’s innovation capability-building framework helps organizations build the right environment for innovation by ensuring that executive alignment and commitment are gained through a participative sprint-based process. Once the proper environment is established, our framework uses a community of practice that teaches HCD and supports quick problem-solving. Any obstacles to adoption are assessed and overcome by the community of practice using HCD methods. Once you have the mindsets, skills and conditions in place, the next question to address is how to make a culture of innovation take root and flourish. 

Committing to a Culture of Innovation

You’ve heeded the rallying cry to create new cultures of innovation. You’ve established the foundation for this new culture by cultivating new mindsets and creating the conditions to support the new behaviors. So why haven’t those new behaviors and actions become part of the organization’s DNA? They require dedicated commitment.

New mindsets and methods can always be encouraged, but organizations can’t force people to adopt them. While some people may publicly comply and try new methods for a short period of time, compliance doesn’t work when trying to inspire new mindsets. Embracing a new way of looking at the world takes personal commitment. The traditional approach to embedding new mindsets and methods is compliance-based, typically starting with training. However, if the mindsets and methods are new and unproven in the organization, participants in the training program will likely view the process with skepticism. They’re looking for management to convince them why they should adopt these new ways of working. As a result, people often leave training with varying levels of commitment and capability while burdened with the added personal responsibility to demonstrate results.

2022 innovative business examples Benefits of innovation in business Importance of innovation in entrepreneurship Reasons why innovation is important Impact of innovation on business Need for and impact of innovation examples Innovation in business management Innovation skills in the workplace

An alternative is an impact-first approach. The goal of impact-first is to demonstrate results as early as possible. It starts smaller, with several project teams learning innovation mindsets and methods and applying them to real projects in a highly structured and supported way. As these initial project teams work through the innovation process, they uncover organizational barriers, adapt the approach to their existing culture and generate pockets of excitement and excellence. When that happens, success stories follow, creating commitment, momentum and demand to pull these new ways into the organization. That’s how you develop a community of change agents that accelerate adoption.

What’s exciting is that it doesn’t necessarily take a substantial financial investment or undertaking to make the kind of impact that cascades to broader application and commitment. We’ve seen countless examples of projects of varying sizes and scope that have become beacons for others to follow, generating organic growth from all sides. One such story is Australia’s Neighbourhood Justice Centre (NJC).

Stay Tuned: Innovation Case Study

In next week’s blog, we take a close look at how the NJC underwent an innovation journey to improve its overall customer experience and, in turn, sparked a culture of intuitive innovation. Stay tuned to learn how the organization used a human-centered design approach to solve their problems and better serve customers.