It’s no secret that in today’s dynamic business landscape, for some, innovation is still just a buzzword – but for others, it’s the lifeblood of their organisation and an antidote to remaining relevant. At the helm of this radical evolution stand leaders who are pioneers, visionaries, and, most importantly, adept at catalysing novel ideas into reality. However, for every Steve Jobs or Elon Musk who has famously steered their companies through the maelstrom of change, countless unsung leaders, often within the more traditional corporate structures, want to cultivate the culture that innovation requires within their organisation. It’s for those that I write this article!

Undoubtedly, transformation in pursuit of innovation within established corporations is a significant challenge. In this article, I’ll draw upon two decades of hard-earned experience in pioneering the development of innovation-focused cultures in organisations worldwide to share proven principles, strategies, and techniques.

I’ll unpack the core principles of ‘Leading FOR Innovation’ and share approaches to help overcome the organisational antibodies that often stifle innovation, empowering teams to unleash bold ideas that can reshape your industry’s future. I say ‘Leading FOR Innovation’ instead of the usual narrative of ‘Innovation Leadership’ because it’s not about making leaders themselves ‘innovative’ but about leaders being able to build and lead an organisation where genuine innovation (not innovation theatre!) is an outcome. More on that later!

For leaders, I offer this first piece of advice: Leading FOR Innovation starts with self and an awareness that in most organisations, the challenges and barriers that stand in the way of driving innovation-led growth are put there by ourselves. They are not always intentional or by design. Still, nevertheless, they exist because we either perpetuate or don’t see them. So, be vigilant, be self-aware, pause for self-reflection, and maintain a broad perspective. Compassionately challenge counterproductive behaviours while acknowledging your complicity. Commit to genuine transformational leadership development and focus on shedding outdated beliefs and behaviours that impede innovation. Above all, fostering the culture that innovation requires is an arduous undertaking, potentially the most demanding a leader may face. Yet, in today’s rapidly evolving marketplace, driving change, value, and growth throughout one’s career is crucial for staying ahead, relevant, and future-focused. Developing the capability to Lead FOR Innovation should thus be a priority for all executives. Still, it requires a distinct set of principles, mindsets, best practices and a specific divergence from traditional 20th-century management approaches.

The first step…

Re-valuing innovation

Innovation is about more than groundbreaking technological leaps or introducing a never-before-seen product. I firmly believe that we should look at ‘innovation’ more in terms of an outcome than a tangible ‘thing’ we have or do. Corporates and consultants alike (I can’t say that I haven’t been guilty of this myself) have bastardised and devalued the word innovation for a decade now, to the point where many don’t know what it means. Thus, everything is too easily labelled an innovation, and every organisation too easily self-proclaims its innovativeness.

One of the things I’ve pioneered over the last decade is the measurement of corporate innovation maturity. Now facilitated through a sophisticated online corporate assessment called AIM (Assessment for Innovation Maturity), it has revolutionised how clients see their progress towards building the right capability and culture for innovation inside their organisations. Find out more about how we deploy AIM at OUTCOME here: https://the-aim.co/

It crucially removes subjectivity from senior team conversations about why innovation isn’t part of organisational culture. It also facilitates data-driven decisions on where to focus efforts to remove the most crucial blockers. And despite innovation supposedly being a mature topic inside organisations worldwide, all the data on corporate innovation maturity we’ve gathered at OUTCOME shows the number one global blocker to innovation culture is the lack of consistent definitions of innovation inside organisations! It’s no wonder then that one of the main requests we get from clients around the world is to help build cohesive and pragmatic strategies for innovation-led growth, starting with a clear definition of what innovation is and what it means to their organisations.

To that end, if we switch our perspective to one where we view innovation as an outcome of multiple ingredients and also a result of impact, i.e. have we created a solution that demonstrably removes the pain a customer was suffering or have we more ingeniously solved an internal issue more measurably or cost-effectively than we previously thought possible. Suppose we focus on the impact we’re looking to create by pursuing measurably different solutions (purposely not using the word innovation!). Does it matter if no one labels them innovative? Does it matter if our customers don’t use the word innovative but are completely bowled over by the solutions we create for them? If customer retention increases, if average basket spend increases, if complaints reduce, if their lifetime value increases, etc. If we increase employee engagement, increase retention, are able to recruit the best next generation of talent, etc. The point of ‘innovation’ is to deliver all that and more, not to focus on innovation itself. Hence why we called our advisory firm OUTCOME!

Think about this: what if the measure of your success was being labelled innovative, but the innovation badge could only be bestowed upon you by your customers? How would you pursue things then?

Suppose we switch our focus and understand the value of building the capability and culture to deliver genuinely innovative solutions. In that case, we shift to a focus on fostering a culture where the seeds of originality are sown in every department, ranging from product development to HR, finance, and sales. As leaders, this means being bold and asking the tough questions: ‘Why do we do it this way? Is there a better way?’ so we can uproot age-old practices and nurture conditions for fresh organisation-wide insights to take hold.

Leaders who champion innovation understand its role in driving competitive advantage, increasing market share, and, often, creating entirely new markets. They are catalysts that transform their organisations from passive respondents to economic shifts to proactive shapers of the future.

Several core principles…

There’s a whole host of ingredients that contribute to Leading FOR Innovation but here are some of the core ones that if you want to shape the future you’ll need to embrace, master and bring alive in your organisations.

Embracing the reality of continuous volatility

Remaining relevant means staying vigilant to the constant changes initiated by customers, markets, regulators, employees, etc. and using these insights to continuously revamp products, services, and business models or create entirely new products, services, and business models. The ultimate manifestation of this is to figure out how to disrupt yourself inside the safety of an innovation process before a competitor (existing or new) does it for you. Leaders who drive this proactive approach help avoid the stagnation of current offerings. But, navigating this kind of complexity and uncertainty requires leaders to actively engage in sense-making to lead effective transformation with clarity and creativity.

The three horizons

Multi-horizon thinking requires leaders to extend their strategic vision beyond the usual quarterly reports and look towards the future across three essential timelines or ‘horizons’: short-term (1-2 years), mid-term (3-5 years), and long-term (5-10 years). By framing the narrative to highlight the necessity of innovation, leaders can guide stakeholders to appreciate the investments needed for immediate gains and sustainable transformation. Comprehensively addressing problems over these horizons fosters ideas that synergise to drive business evolution, underlining the critical balance of optimising current operations while laying the groundwork for future success. This thinking regarding time frame also aligns with how organisations should look at balancing their innovation portfolio. The most famous approach is the 70-20-10 rule, aligned to the three horizons for several reasons:

• Resource allocation: The 70-20-10 rule provides a guideline for allocating resources (financial, human, and time) across different types of innovation. By dedicating 70% of resources to core innovation (Horizon 1) (aka continuous improvement, aka incremental innovation), 20% to adjacent innovation (Horizon 2) (aka differentiated innovation), and 10% to transformational innovation (Horizon 3) (aka disruptive or radical innovation), organisations can ensure a balanced portfolio approach.
• Risk management: Each horizon represents a different level of risk and uncertainty. Horizon 1 activity has lower risk but also lower return. Horizon 2 has medium risk but significant returns (in our experience, activity here is what shifts the needle and shifts culture), while Horizon 3 activity has higher risk but potentially huge returns. By spreading investments across the three horizons, organisations can manage their overall risk exposure and mitigate the impact of failures in any one area.
• Long-term sustainability: While Horizon 1 activity is crucial for maintaining current operations and cash flow, activity across Horizon 2 and 3 is essential for long-term growth and sustainability. By dedicating resources to these horizons, organisations can future-proof their businesses and stay ahead of industry disruptions.
• Exploitation and exploration: The 70-20-10 rule allows organisations to strike a balance between ‘Exploiting’ their current capabilities (Horizon 1) and ‘Exploring’ new opportunities (Horizons 2 and 3). This balance is essential for organisations to remain competitive and adapt to changing market conditions.
• Continuous innovation pipeline: By consistently investing in all three horizons, organisations can maintain a constant pipeline of innovation at various stages of development. This ensures a steady stream of new products, services, and business models, which can be essential for sustaining growth and competitiveness.
• Talent development: Working on different types of innovation across the three horizons can provide valuable learning opportunities for employees, helping them develop diverse skills and mindsets necessary for building the right culture for innovation.

While the specific percentages (70-20-10) may vary depending on the organisation’s strategy and industry, maintaining a balanced innovation portfolio remains crucial for long-term success and adaptability in today’s rapidly changing business environment.

Challenging assumptions to shape the future

Can the pursuit of innovation thrive in an environment where sacred cows remain unchallenged? To pave the way for substantial change, it is crucial to tackle organisational and industry assumptions that may appear safe but are often limiting. Leaders must give teams secure space within the safety of an innovation program to question and overturn these assumptions before the competition inevitably does so. Yet, this critical activity shouldn’t disrupt those tasked with maintaining the efficiency and predictability of the current business model. It’s imperative to discern which underlying assumptions still hold true and which are ripe for disruption. Not everything established requires upheaval—at least not immediately.

The balance between continuity and change

In short, how do you strike the optimal balance between fostering a culture for pursuing innovation and maintaining business continuity? Innovation demands that we test the waters of what’s possible, using our expertise to identify and test ideas in a controlled, risk-managed environment. It requires looking beyond the horizon to what could be while keeping one foot grounded in the reality of what still works. As a leader, ask yourself if your strategic investment efforts reflect a commitment to innovation that is both ambitious and prudent. If so, you are on the path to reshaping your industry.

Unlocking innovation through deeper customer understanding

In the pursuit of innovation, an acute understanding of customer needs stands as the fundamental catalyst for breakthroughs. Organisations that excel at driving genuine innovation don’t just rely on existing market intelligence like focus groups, trend reports or big data. The real game-changer is actively pursuing insight, problems, and opportunities and unearthing unmet needs. This ignites pioneering ideas and potentially billion-dollar ventures. So, are you listening deeply to your customers and frontline staff? Their direct feedback often sheds light on unresolved issues and escalating pains that could, if addressed, yield immense value. It’s not about reinforcing what you already believe; it’s about challenging your biases and assumptions and uncovering the emerging needs, attitudes, and behaviours that could spark new ideas and business concepts.

How can you step into your customers’ shoes effectively? Tools like ethnography, human-centred design, and empathy mapping aren’t mere buzzwords—they are vital methodologies that enable businesses to craft customer value propositions that resonate deeply with their target audience. By employing these strategies, organisations can discern and design the solutions that will shape the future marketplace as the path to profound innovation is paved with the bricks of customer insights.

Encouraging a culture of experimentation

Executive suites of companies perceived as ‘innovative’ are often filled with the spirit of the scientist. They view each new project not just as a means to an end but as an experiment where failure isn’t an afterthought but a potential outcome that is just as valuable as success. This approach is about breaking away from the rigid mindsets and structures that tend to stifle creativity. It involves giving teams time, resources, and – crucially – permission to explore ideas, even if they don’t immediately seem profitable. 

Take the Double Diamond of Design Thinking for example. A tool that underscores a pivotal approach to innovation. Why is this methodology critical? Because it ensures that ingenuity, spearheaded by divergent thinking, takes precedence before we refine our ideas using convergent thinking. This sequence is paramount: diverge, then converge. Without it, you risk merely fine-tuning solutions without addressing the more substantial, underlying problems at hand. More on the Double Diamond here: https://www.designcouncil.org.uk/our-resources/the-double-diamond/

But how does rapid prototyping fit into this equation? It’s the quintessence of the Double Diamond model—embrace experimentation and rapid prototyping to accelerate the developmental stages from derivation to refinement. This is not merely about testing ideas but also about fostering learning. With each iteration, we glean invaluable insights which inform the idea in question.

Why settle for gradual, incremental improvements when a structured yet flexible approach can lead to groundbreaking change? We elevate the problem-solving process by integrating critical assumption testing and proactive validation. Design Thinking isn’t just a methodology; it’s a philosophy that cultivates progressive improvements across the board. Remember, it’s through rigorous testing and unwavering curiosity that the most effective solutions come to light, and a well-orchestrated balance between divergent and convergent thinking, experimentation, and assumption validation ensures the right problem is being solved. If you’ve heard the phrase ‘fail-fast-fail-cheap’, this is how you do it!

An inspiring illustration comes from the pharmaceutical industry, where companies like Pfizer have famously invested in human-centred design thinking workshops to inject an innovative edge into critical areas like drug development. By bringing a design thinking approach to a traditionally scientific field, they’ve significantly shortened the time to market for new medications.

Embracing failure as a learning opportunity

The pursuit of innovation is inherently risky, and the possibility of failure comes with risk. Leaders committed to fostering innovation don’t punish failure; they celebrate it as a sign that their organisation is pushing boundaries. When managed constructively, failure is rich with learning that can fuel the next breakthrough idea. This principle requires a symbiotic relationship between the boardroom and innovation teams. The former grants the latter the autonomy to explore, and the latter reports back by reframing failures from idea development and experimentation as insights and learning.

Risk is a constant companion in the pursuit of innovation, and its dance partner is often a failure. Astute leaders spearheading the charge toward the future understand that punishing failure is counterintuitive to building a culture for innovation. Instead, they salute and celebrate it as a sign that their organisation is pushing boundaries. Why? Because managed constructively, each misstep is an opportunity to learn, and each lesson paves the way to the next breakthrough idea.

But how does a company cultivate an environment where risk and failure are not just tolerated but embraced as essential ingredients in the recipe for innovation? It begins with a cultural shift—a transformation in thought—and progresses through deliberate practices that reward innovation-focused behaviour, even when it falters. Ask yourself when was the last time your organisation celebrated a bold attempt, regardless of its outcome?

A great example comes from Tata. Their ‘Best Failed Idea Award’ is a hugely effective tool that has helped shape their innovation-focused culture. The award was created by Ratan Tata, the CEO of the Tata Group who said: “Failure is a gold mine for a great company.”

Cultivating an environment that encourages but thrives on innovation requires a radical shift from traditional performance frameworks to an innovation-centric approach. Building innovation capability is less about ticking boxes and more about nurturing the right culture—one that is adaptive, creative, and forward-thinking. When aligning performance management with innovation-focused behaviour, it’s pivotal to craft frameworks that resonate with the nuances of innovation rather than adhering to the usual Business-As-Usual parameters. Why reward only the outcomes when the process is a treasure trove of insights and learning? Recognise and reward the bravery of trailblazers – their fail-forward learning, resilience, and audacity to challenge norms, which add genuine value over the long term.

Innovation should not just be the poster child of success but the nurtured seedling of continuous effort and exploration. Hence, the rewards systems must be recalibrated. It isn’t always just about the billion-dollar product launch but also about the smaller victories. Remember, this is about building a balanced innovation portfolio; therefore, contributing to each part must be deemed equally important. How can we celebrate the curiosity that fuels breakthroughs? A genuine acknowledgement of the efforts and risks taken by innovation teams and collaborators validates the creative process and can potentiate far-reaching breakthroughs. Consider Google’s strategic ‘20% time’ policy—a beacon of innovation-led culture. Allowing employees to dedicate 20% of their time to personal projects cultivated a hotbed for creativity. It resulted in the growth of numerous flagship services, like Gmail, Google News and Google Maps, painting a clear picture; innovation blooms in a culture that supports and invests in its creative capital.

In summary, fostering a climate ripe for innovation doesn’t hinge solely on traditional markers of success. Instead, it leans on the robust support of a mindful, innovation-driven performance management system. It’s about shifting focus from the immediate profits to the more extended horizon of possibilities, and this shift begins internally—with the mindset of each team member and the collective rhythm of the company culture.

The importance of fostering psychological safety and trust

In the dynamic terrain of innovation-led change, the underpinnings of genuine progress are not merely technical expertise or creative brilliance—they’re the foundational elements of psychological safety and trust. The courage required to create, share and voice revolutionary ideas and to surrender the comfort of the familiar is monumental. But what is the key to nurturing this kind of audacity within teams?

It’s becoming increasingly clear that in high-performance environments, where efficiency reigns supreme, moments of vulnerability are fraught with the risk of evoking past embarrassments. If the culture isn’t right, the echoes of schoolyard humiliations can silence the most inventive minds. How, then, do leaders transcend these barriers?

For a deeper dive on creating psychological safety across your organisation, check out my article “Attention All Leaders – You Need To Create Psychological Safety If You Want Your People To Innovate” here: https://weareoutcome.co/blog/attention-all-leaders-you-need-to-create-psychological-safety-if-you-want-your-people-to-innovate/

Traditional Management vs. Creative Collaboration

Old-school management techniques may be the arch enemy of innovation. If creativity is the goal, collaboration and trust must be the pathways. Consider this: should embedding a culture of emotional safety and trust be an afterthought or a strategic investment in your innovation agenda? Leaders must recognise this imperative and place trust-building and emotional safety for teams at the forefront of their strategies. Driving innovation means more than just ideating; it demands the creation of a secure space where rigorous creativity can thrive—at the cost of challenging traditional paradigms.

The essence of innovation lies not just in the ingenuity of ideas but in the subtle art of fostering the right environment. By cultivating a culture where psychological safety and trust are paramount, we not only empower individuals to contribute fearlessly but also pave the way for transformational change. As leaders, it’s time to ask ourselves: Are we willing to take the necessary steps to evolve beyond traditional norms and enter a new era of creative collaboration?

The benefits of Leading FOR Innovation

Organisations where leaders successfully adopt the principles of ‘Leading FOR Innovation’ enjoy many advantages. They are more adaptive and resilient in the face of change, viewing market disruptions not as threats but as opportunities to pivot and grow. They view innovation as a repeatable outcome, not just a one-off event; it’s a mindset that confers a permanent competitive edge. A reputation for being forward-thinking and consumer-centric also enhances an organisation’s brand. It makes it an employer of choice for top talent. In the age of millennials and Generation Z, employees want to work for companies that are not relics of the past but purveyors of the future.

Conclusion

The call for genuine innovation is not merely a theoretical abstraction but a pressing imperative in the business world. Leaders who have internalised these principles are the trailblazers, guiding their companies through the tumultuous waters of change.

To leaders still navigating their paths, the message is clear: the principles of Leading FOR Innovation are not merely options – they are necessities in the modern business world. By cultivating a culture of experimentation, learning from failure, empowerment, trust, and collaboration, leaders stand to unlock their organisation’s full potential. The landscape may be challenging, but the significant outcomes, labelled innovation or not, await leaders bold enough to explore it.

So, now I’ve got you thinking…

If you want to explore how me and the OUTCOME team can support you and your organisation on your innovation journey, whether that’s embedding the right approach to Leading FOR Innovation, helping you build the right culture, or design the right innovation-led strategy and process, get in touch and let’s chat.

cris@weareoutcome.co