The Critical Role of Culture for Innovation

The Critical Role of Culture for Innovation

The Critical Role of Culture for Innovation

  • Posted by Cris Beswick
  • On 20/06/2023

Organisational culture plays an essential role in fostering successful innovation, yet it is often overlooked or discounted by those responsible for driving that growth, i.e. the executive team. But to drive tangible change and propel a business forward, there needs to be a conscious effort put into curating the leadership style of each internal group – from executive teams down to individual staff members. After all, cultivating an environment where ideas can flow freely with trust at its backbone allows companies to remain competitive in today’s rapidly-evolving operating environment.

In this article, I’ll delve deeper into the critical role of culture within innovation-led organisations and provide practical tips on how executives can create a climate conducive to generating new ideas with more success. So let’s begin!

What is culture, and how does it relate to innovation

Culture can be defined as the beliefs, customs, and practices of a particular group or society. Concerning innovation, culture plays a significant role in determining the success or failure of new ideas and endeavours. Innovative ideas may be readily accepted or resisted based on cultural norms and values. A culture that values change, experimentation, and risk-taking is more likely to foster innovation than one that is resistant to change and prefers to maintain the status quo.

One of the things we teach every leadership team we work with is what we call the Innovation System [1], i.e. the interconnected and interdependent nature of the core components required for building high-performing innovation capability.

My partner and OUTCOME co-founder Dan Toma describes this as the difference between a moonshot and a space program. [2] Or, in other words, is innovation a repeatable and sustainable activity in your company, or is it just done ad-hoc in ‘one-offs’? Is your company geared to see a constant stream of results from innovation?

For a company to launch a moonshot initiative, the only things needed are a great idea and undivided board-level support. However, for a ‘space program,’ organisations need way more. To build repeatable capability, organisations need an innovation system made up of innovation strategy, innovation processes, innovation governance, innovation culture and leadership for innovation. Furthermore, all the elements of the innovation system need to be interconnected and equally mature. In their absence, innovation won’t be a repeatable and sustainable growth capability. 

Imagine, for a second, a company with only an innovation strategy but no one putting it into practice. This company won’t see any results from innovation. Conversely, a company that only has a very mature innovation practice and no strategy will see investments in innovation happening at random and having no connection with what the company wants to achieve through innovation. And a company with traditional leadership and no cultural components required for innovation will not be able to deliver against the strategy. Not in a high-performing way, at least. 

Therefore, organisations and leaders need to understand how their cultural values and beliefs may influence their attitude towards innovation and how culture plays its part as a core component of the innovation system.

How a robust organisational culture can support innovation

A strong organisational culture is an essential factor in supporting innovation. When employees feel encouraged to take risks and think outside the box, they become more creative and willing to experiment and explore different solutions. A healthy environment that fosters collaboration and communication can help to generate new ideas and turn them into successful products or services. Additionally, a clear set of values and goals can help ensure people are aligned with the company’s vision, further boosting the motivation to contribute to the innovation agenda. By fostering a strong and supportive organisational culture, leaders can create an environment that promotes creativity and innovation-led growth.

Examples of companies that have used culture to foster innovation

In the fast-paced world of business, innovation is king. Companies that can innovate are more likely to succeed in their industries and even cross into different sectors, and one way that many organisations foster innovation is through company culture. By creating a culture that encourages creativity, risk-taking, and experimentation, businesses can reap the rewards of groundbreaking ideas and new approaches to problem-solving.

Some notable companies, including Google, Pixar, and Amazon, have successfully utilised culture to drive innovation. Google famously offers its employees unlimited snacks, nap rooms, and many extracurricular activities to help spark creativity. On the other hand, Pixar uses a “Braintrust” model, in which a group of trusted colleagues provides feedback on each other’s work to ensure that everyone pushes themselves to create the best possible content. And Amazon’s “Day One” mentality encourages employees to approach every day as if it were the company’s first day in business, fostering a culture of continuous innovation and invention.

Ultimately, by prioritising culture as a critical driver of innovation, these companies and others like them have set themselves apart on the global stage. They’ve become pioneers of the new and valuable and vanguards of innovation-led success.

Benefits of Creating an innovative culture

Fostering an innovative culture can exponentially increase a company’s chances of long-term success. By encouraging employees to approach problems and opportunities with different perspectives, human-centred methodologies, empathy, et al., organisations can identify and create unique solutions that set them apart from competitors.

Not only can an innovative culture differentiate a company, but it can also lead to increased efficiency, improved productivity, a more engaged workforce, increased retention and an antidote to the global challenge of new talent recruitment. Through support for experimentation and risk-taking, companies can provide employees with the freedom and resources needed to pursue new ideas and drive growth. Ultimately, creating an innovative culture is an investment in a company’s future and a catalyst for continued success.

Tips for Developing a Culture of Innovation in the Workplace

To foster a culture of innovation in the workplace, companies need to create an environment that encourages experimentation, risk-taking, creative problem-solving and design thinking.

In the same way, as customer-centricity is central to innovation, an organisational culture that allows companies to shape the future must be ‘intentionally designed’, which means putting people at the heart of that design process. Organisations need to be customer-centric (external) and people-centric (internal). 

“We must consistently ensure that we take respect for human rights into account in all corporate processes. Ultimately, it’s always a matter of focusing on the human being and respecting their rights.”

This quote from Jasmin Lotze, Compliance Specialist for Business and Human Rights at Audi, is encouraging as it hints at genuinely putting ‘human’ back into HR. [3] Another important tip for developing the right culture is to promote diverse perspectives and encourage collaboration across different departments and teams. This can help to spark new ideas and approaches that may not have been considered otherwise. Additionally, leaders should provide the necessary resources and support, such as time and funding, to pursue innovative projects and initiatives.

Celebrating and recognising successes while learning from failures and adjusting is also essential. By following these tips and fostering a culture of innovation, companies can stay ahead of the curve and drive long-term growth and sustainability.

Finally, the critical role of culture for innovation is a perspective reinforced by Dr Sabine Maassen, Audi AGs member of the board of management responsible for Human Resources and Organization, who believes “Culture and mindset are not just nice to have ”. [3] Maybe the first step is to put ‘beings’ back into HR so organisations stop seeing people as ‘resources’ but as every company’s greatest asset. After all, organisations don’t innovate, ‘Human Beings’ do!