Culture of innovation: How to build a thriving workplace

November 21, 2024

Businesses that don’t innovate rarely stick around for long. Fresh, new ideas are essential for any strong business model. Therefore, finding ways to inspire innovation is crucial. Every company seeks this secret ingredient. Yet, some companies are far more innovative than others.

Netflix, for example, found only moderate success in delivering DVDs to customers’ homes. So what did they do? They innovated, leaving physical media behind to become one of the first platforms to stream blockbuster movies for a flat fee.

While price hikes followed this switch to online-only media (losing them an eye-popping 800,000 subscribers overnight), it’s hard to argue that their innovation ultimately changed the movie industry as we know it.

No single Netflix employee is credited with the switch to online-only media. Instead, it was a team effort made possible by an environment that offered incentives for brave new ideas.

This is what it means to build a culture of innovation.

Innovative companies constantly outperform their competitors, growing their revenues by 11% more than their industry peers. This should surprise no one—every company hopes for a goose that lays golden eggs.

So, what does it take to create a workplace that rewards risk-taking and lets new ideas flourish? That’s what we’re talking about in this blog.

What makes people innovate?

Most people think of innovation as creating the next iPhone or discovering a cure for cancer, but it’s not always so grandiose. Many impactful innovations come from regular people working at a company’s front lines.

Richard Montañez, for example, was a janitor at Frito-Lay when he noticed a lack of spicy snack options and (allegedly) suggested the idea for Flamin’ Hot Cheetos. In hindsight, a spicy chip would succeed, but it took someone who saw the vending machine daily to notice.

Big ideas can come from anywhere in an organization, so why do so few organizations encourage creative thinking outside the C-suite?

Getting cozy with failure

Anything worthwhile takes time. And what do you need all that time for? To fail. A lot.

Remember Amazon’s Fire Phone? Neither do we. It was a colossal failure that lost the company $170 million, but you wouldn’t know it from reading former CEO Jeff Bezos’ response. With almost giddy optimism, he gave this masterclass in cultivating an innovative mindset:

“The size of your mistakes needs to grow along with [the company]…If it doesn’t, you won’t be inventing at a scale that can actually move the needle…When you take this approach, a small number of winners pay for dozens, hundreds of failures.”

It’s telling that all remembrances of the failed Fire Phone are now hosted on the biggest web servers in the world, invented by Amazon in the time since.

Real risks are associated with significant strategic failures but pale compared to never innovating. Nokia is another forgotten cell phone icon whose fear of failure may have cost them their spot in the future.

Unlike Amazon, Nokia had a notoriously rigid hierarchy where failure was punished, leading to stagnant innovation and, ultimately, Microsoft’s acquisition for $7.2 billion—a fraction of its former value.

More than a well-furnished campus

Psychological safety is the key to idea generation. While companies like Microsoft and Google boast elaborate workspaces with ping-pong tables and gourmet cafeterias, their real crux is a work environment that supports imaginative thinking.

A 2023 study by Deloitte found that organizations outperform their peers when they focus on employee engagement and creative solutions rather than expensive office perks alone. Company cultures that can foster innovation see a 76% increase in engagement and a 27% reduction in turnover.

To summarize, try to make people feel equally safe to share bad and good ideas.

Developing a culture of innovation strategy

So, what does it take to get people thinking creatively? A lot, it turns out. Creating a culture of innovation is as strategically demanding as any other outcome, requiring purpose and reflection to improve.

Here are five ways to get your organization to a more innovative culture.

1. Create spaces for experimentation

Invite employees to brainstorm new ideas, even for a short time. As a startup, Google had a “20% time” policy that asked employees to spend one day a week on side projects. That policy has since led to the development of products like Gmail and Google News.

Your organization may be unable to offer 20% of the team’s time. That’s okay. Even a little time spent innovating can have significant results.

Some tips for creating a safe place to try new ideas might be:

Schedule regular time to focus solely on new ideas
Create dedicated innovation spaces, such as a specific table or room during innovation hours
Budget money for experimenting with new concepts
Implement a “no-judgment” rule during brainstorming sessions

Making creativity a regular part of work, you help establish habits that solidify creative thinking. The more familiar your teams are with it, the easier it is for them to develop powerful new ideas.

2. Break down silos

Get people to brainstorm with other departments. Aligning everyone’s schedules may take more maneuvering. However, amazing things happen when different departments and perspectives come together.

You can facilitate collaboration across departments by:

Scheduling cross-functional meetings
Creating project teams from multiple departments
Setting shared goals across departments
Developing mentor programs between different divisions

Again, bringing people together like this takes coordination and repetition, but building that habit can take innovation to new heights.

3. Get metrics

Most people see brainstorming as one of two things: 1) directionless pondering or 2) the pursuit of a specific answer. What they don’t usually imagine is using your imagination to get better at ideas. Metrics can help with this.

Boost your teams’ innovative thinking by tracking metrics like:

Number of new ideas submitted
Number of new ideas that get implemented
Revenue generated by new products
Total employee participation in innovation
Time from idea to implementation
Customer satisfaction with new solutions
Return on innovation investment (ROII)

It’s easy to dismiss these metrics as valueless or irrelevant. However, they can be crucial in cultivating a more imaginative workforce. This, in turn, leads to more valuable ideas, generating more revenue.

4. Develop clear recognition systems

Making people feel appreciated pays dividends. When people know their employer values their contributions, they are incentivized to make more of them. You can help drive innovative ideas by rewarding them when they happen (and even when they don’t).

If a good idea comes along, ensure the person who had it gets credit and recognition.

5. Continuous improvement

Stay on track by periodically checking in with your innovation goals. Remember that slow, incremental improvement is crucial to developing more significant, groundbreaking ideas—the journey of a thousand miles begins with a single step.

Continuous improvement is one philosophy that can make innovation more of a habit. Key practices can include:

Regular reviews to see how well innovation processes are working
Employee feedback systems, both in-person and anonymous
Rapid prototyping and testing
Open, ongoing conversations with customers
Innovation coaching and mentoring

When it comes to a culture of innovation, the only failure is not trying. Keep at it, and you’ll see results.

What your organization should look like

Imagine working in a place where ideas flow effortlessly. Team members meet up for short, targeted brainstorming sessions. Whiteboards are covered with ideas for solving customer challenges. Managers actively seek input from their teams, and employees at every level are eager to question the status quo.

When a company embraces a culture of innovation:

Failure is seen as a stepping stone rather than a stumbling block
Decision-making is collaborative, not top-down
Innovation efforts are celebrated regardless of the outcome
Learning is continuous and encouraged
Diverse perspectives are actively sought and valued
Competitive advantages earned through adaptability and a growth mindset

Roadblocks to innovation

If innovation were accessible, more companies would adopt it. However, one major obstacle, fear of change, can prevent this.

People don’t always agree about how to “do” innovation. Younger generations who have witnessed countless businesses’ rapid rise and fall have a more fluid impression of how to disrupt the status quo.

Meanwhile, older generations who have seen businesses endure for decades tend to feel more attached to staying the course. Both perspectives are valid so that they can cause such deadlocked disagreements.

C-suite executives and partners may have concerns about:

Disrupting established processes
Integrating new ideas into old systems
Changes to contracts and liability
Affecting short-term financial prospects
Pressure to meet current targets

Meanwhile, front-line employees and customers might be more worried about:

Changes to familiar products and services
Disruptions to existing workflows
Insufficient training or support
Fears about long-term stability

Change is inevitable; resisting it is usually more damaging than imperfectly adapting. The “this is how we’ve always done it” mentality is not only a major innovation killer but potentially a company killer.

One example is Blockbuster’s infamous decision to stick with its traditional business model as streaming services started to take off.

Their insistence on staying the course as Netflix revolutionized the industry led to Blockbuster’s filing for bankruptcy in 2010. Meanwhile, Netflix’s market value is now well over $200 billion.

Let all stakeholders know that navigating change is critical to doing business.

Conclusion

Ask yourself: Will your company do exactly what it does now in 20 years? Probably not, and since technology can change society overnight, learning to innovate is more than just a crucial skill—it’s a necessity.

Adapting takes imagination, and imagination works best in a relaxed, low-pressure setting. Create an environment where creativity and strategic thinking can flourish, from leadership down to front-line employees. Give everyone a chance to ask, “What if we tried something different?” and then provide the support necessary to find out.

More resources:
Positive workplace culture: The key to happy, productive employees
Understanding organizational culture, and why it’s important
Workplace etiquette: The ultimate guide to professionalism