The concept of Innovation Culture (IC) has gained popularity in recent years, causing many leaders of industry incumbents to deliberate on why and how they should cultivate this culture.

A company with an established IC encourages its employees to experiment and test ideas. It subscribes to the idea that innovation does not occur solely in the upper echelons of the business; but can stem from anywhere, from anyone, at any grade. And it does not meet failure with admonishment or dismissal. Instead, it seeks to learn, test, and learn more. It seeks to explore and test hypotheses to uncover deployable new business models, value propositions and processes. A company with a culture that organisationally supports and encourages innovation can realise new sources of competitive advantage, become, or remain industry leaders, and make leaps towards achieving their broader social purpose.

Facilitating an IC provides the critical foundation for innovation to flourish. Without the right organisational structure and support, guidelines, and funding, innovative outputs are less likely to be generated. But why is this important now? After all, this concept has existed for some time. In building back better post-pandemic, businesses have an opportunity to rediscover their corporate purpose – their reason for existence that seeks to maximise value for all stakeholders. A culture of innovation, or more aptly, a culture of social innovation, can help to tackle the enormous grand challenges facing the planet; all the while producing enhanced profitability – a worthy and justified reward.

Where do you start in establishing an IC?

There are five critical things that a business should do to establish and maintain a strong culture of innovation[1]:

  • Create innovation guidelines: Define the boundaries – although not too strictly. This is to ensure that potential innovations fit strategically with the business and its purpose. Guidelines can also be created with input from HR and BAU (Business as Usual) leaders to ensure sufficient time can be allocated to innovators as and when they come forward with their ideas.
  • Define funding guidelines: This should specify how much is allocated, at what time, and when funding should end.
  • Communicate and empower employees : It is important to regularly communicate to all employees. Once the guidelines have been defined and funding for innovation projects has been ringfenced, employees should be encouraged to bring their ideas forward and to test them. Employees should feel empowered to run with their ideas without fear of reprimand if the idea busts.
  • Institute an innovation committee: To oversee the innovation budget, define and update guidelines and provides general governance and transparency. They are the body from whom innovation teams request funding and to whom the innovation teams must pitch their ideas.
  • Reward innovators: It’s a no brainer. Ensure that credit is given where credit is due. Innovators should be rewarded appropriately and be given the opportunity to ‘own’ their innovation should it make its way into the company’s portfolio.

[1] Inspired by Alexander Osterwalder et al’s “The Invincible Company”

At Wavestone, we are passionate about helping our clients to uncover new, modern ways to operate and innovate in this everchanging world by leveraging our extensive experience in Operating Model design and Change Management.