Creating an Innovation Culture in Your Company

What is an innovation culture?

The psychologist Edgar Schein, a leading authority on the subject, describes the culture of an organization on three levels: what can be seen (spaces, the work environment, rituals, the way meetings are run), what is declared (the values the organization claims) and what is taken for granted (the deep beliefs that guide decisions). An innovation culture really exists when the three levels match: boldness is declared, it shows in the rituals, and nobody is actually afraid of being punished for an idea that did not work.

You can recognise an innovative organization, and an innovative environment, by a few signs:

• employees propose improvements on their own, without waiting to be asked;
• departments cooperate easily and solve problems together;
• failure is analysed rather than punished;
• curiosity is encouraged: staff look at what others do, in other industries and around the world;
• managers make room to listen to the suggestions of a diverse staff and to push them forward in line with the strategy.

Why foster a culture of innovation?

Fostering an innovation culture is not a matter of image. It is a management decision with concrete effects on growth, on the ability to adapt and on the commitment of employees.

Markets move faster than plans, and competitors do not wait. The businesses that win, in most markets, are not the ones with the best research department, but the ones whose employees spot weak signals early, in products as in service, and dare to report them. An innovative mindset also improves engagement and employee retention: employees whose suggestions are taken seriously stay longer and work with more energy. Finally, it makes digital transformation easier, because that transformation requires constantly trying new ways of working.

There is also a question of organizational health, and of the mental health of employees: a work environment where nobody dares to speak up is a source of stress. Businesses with a healthy innovation culture tend to adapt better to shocks and to changes in their market; those where everyone keeps their head down accumulate problems that nobody dares to name until it is too late. Culture is not a soft topic: it is one of the conditions of sustainable growth.

How to create an innovation culture: six levers

1. Leadership by example

Culture is read in the actions of leaders far more than in their speeches. An executive committee that asks questions before judging, admits its own mistakes and funds a few risky bets sends a signal that every employee understands.

2. The right to fail

Failure is only useful if it is analysed. Some executives hold reviews where stopped projects and the lessons they taught are presented. This practice turns disappointment into learning and reduces the fear of proposing. It is the difference between organizations where failure is a stigma and organizations where it is a source of learning.

3. Room to explore

Insights rarely appear in an overloaded diary or a noisy work environment. Time set aside for exploration and personal projects, a dedicated space or short challenges give creativity a concrete frame.

4. Participative innovation

Participative innovation gives every employee, whatever their position, the chance to propose and to see their suggestions reach the market. The tools are well known: suggestion schemes, a digital platform, an internal challenge on a set theme, themed days. Their success depends less on the tool than on feedback: every idea must receive an answer, and the best ones must become visible results. The most effective schemes rely on a clear selection process.

5. Collaborative innovation

Collaborative innovation relies on collective intelligence: people from different trades, customer service staff, customers and sometimes suppliers work together. Its most common forms are creative sessions, structured brainstorming and cross-functional project teams. They require open communication, genuine collaboration and a facilitator able to bring out everyone's contribution in a safe environment. Diverse groups produce more varied solutions, in businesses of every size, as long as that diversity is actually heard.

6. Recognition

Recognising those who propose does not have to mean a bonus. Presenting their project at an all-staff meeting, entrusting them with its management or giving them the means to test it is often more motivating. Recognition is also about success stories told in public, so that others see that the innovative mindset is valued.

The role of the manager and leadership behaviour

The climate of an organization is experienced first in the working relationship between a manager and their team. Amy Edmondson, a researcher at Harvard Business School, has shown the importance of psychological safety: the shared belief within a team that it is safe to speak up, ask a question or admit a mistake. Without it, no new proposal makes its way up, and collaboration weakens.

That is why leadership behaviour makes the difference: listening before answering, separating the moment for proposals from the moment for evaluation, protecting fragile initiatives, accepting calculated risk. These behaviours can be learned. We work on them in coaching and in our innovation course for managers.

Google's Project Aristotle, a large internal study of what makes a team effective, reached the same conclusion: psychological safety came first, ahead of the individual talent of its members. A safe environment is not a comfortable one where nobody disagrees; it is one where disagreement can be voiced without fear.

Diversity and purpose: two drivers of an innovation culture

Diverse teams, in background, experience, national cultures and way of thinking, are a key driver of innovation: they look at a problem from more angles and find more original solutions. Customer-driven solutions also come more easily when the team resembles the customers it serves. But diversity alone is not enough: diverse teams also generate more friction, and they only turn it into creativity if the climate allows open debate.

Purpose plays a similar role, and purpose-driven businesses often have a head start, because a clear purpose guides the efforts of everyone. Employees who understand why their employer exists and what it brings to its customers find it easier to propose solutions that serve it. A clear mission gives direction to creativity; without it, proposals scatter. Patagonia is a frequently cited example of a purpose-driven company whose mission drives product innovation, from recycled materials to repair services.

Intrapreneurship as one lever among others

Some companies go further and offer employees the chance to run a project as real entrepreneurs, with protected hours, a budget and support. These intrapreneurship programmes give visible results when the company is already innovative; imposed on a structure that punishes failure, they disappoint those who take part. It is better to start with everyday levers before launching an ambitious programme.

Examples of companies with an innovation culture

A few innovative companies are often cited, and their examples show that there is no single model of innovation culture.

• 3M. Since 1948, the 15 % rule has allowed employees to spend part of their working hours on projects of their own choosing. The Post-it note came out of that innovative culture, which 3M still presents as a pillar of its organization.
• W. L. Gore. The maker of Gore-Tex works without a classic hierarchy: small units, leaders chosen by those who follow them, and employees free to join the projects that interest them. This organizational choice keeps the business close to an entrepreneurial culture.
• Pixar. Its Braintrust brings film directors together to give each other candid feedback on films in progress, with one rule: the director stays free to accept or reject the advice. It is a model of fostering creativity through honest feedback rather than authority.
• Toyota. The kaizen approach invites every employee to propose small improvements, and Toyota handles a very large number of employee suggestions each year. Continuous learning is part of daily work.

These cultures are very different, and they took years to build, yet they share a few traits: shared values, managers who protect initiative and a real tolerance of risk. None of them can be copied as such; organizations have to build their own innovation culture from their history and their own organizational habits.

Common obstacles to an innovation culture

Most organizations do not lack goodwill. What holds them back is usually one of these obstacles, which the most innovative organizations have learned to overcome:

• Risk aversion. When every mistake is recorded and every risk must be justified in advance, people stop taking risks, even small risks. A framework that says which risks are acceptable frees initiative far more than a slogan.
• Short-term pressure. Quarterly targets absorb all the efforts of staff, and time for exploration disappears first. Without protected hours, innovation becomes a topic for later.
• Silos. Departments that do not talk to each other cannot combine their knowledge. Fostering cross-functional collaboration across diverse departments is essential, and it supports innovation-driven growth.
• Innovation theatre. Hackathons with no follow-up, idea boxes nobody reads, labs disconnected from operations: these efforts give the illusion of an innovative company and in fact discourage employees.
• Not invented here. Rejecting proposals that come from outside, from the market or from other companies, deprives organizations of key sources of learning.

Recognising which obstacle dominates is the key first step of any change.

How to measure an innovation culture

An innovation culture can be measured, at least in part, as many businesses already do with their engagement surveys. A few simple indicators give a reliable picture:

• the share of employees who proposed at least one idea during the year;
• the average delay in answering suggestions;
• the number of achievements that grew out of ideas from the field;
• the results of an internal survey on trust, initiative, the right to fail and how safe people feel to speak up.

These measures only make sense if they are shared with employees and followed by action. They fit naturally into the company's strategic choices for innovation. Repeated every year, they work as a regular health check and give management an essential guide.

Our approach to creating an innovation culture

We help chief executives and HR directors transform practices and build an innovation culture that lasts: diagnosis through interviews and questionnaires, working sessions with senior leaders, coaching of managers on leadership behaviour, facilitation of creative sessions, brainstorming and collective intelligence workshops. Our approach, focused on developing individuals and their creativity, draws on the experience of a former international business leader and on the practice of ICF certified coaching. We work in Paris, Lyon, Geneva, across Europe and in our clients' subsidiaries abroad, with businesses of every size that want to become more innovative and to grow.

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This article was written by Marc Prager.