Your Guide To Create Organizations That Constantly Innovate

August 15, 2022


In 2007, the world gasped when Apple CEO Steve Jobs introduced the first touchscreen device that played music, made calls and accessed the internet — the iPhone. Since then, it has been the benchmark for how smartphones should look, operate, and could and should do.

And it has inspired a generation of companies that are constantly looking for their iPhone moments. One approach seeks a technically brilliant, charismatic, market-savvy leader, following Apple’s success formula. “It seems like everybody these days is looking for an early version of Steve Jobs,” Greg Satell, author of “Cascades: How to Create a Movement that Drives Transformational Change,” wrote in Harvard Business Review in 2018.

However, the business landscape has changed dramatically, becoming increasingly connected, complicated and digital. Today, organizations need to rethink how they innovate. “The problems we face … are far too complex to be solved by a lone genius working in isolation,” said Satell. “That’s why the best innovators tend to be knowledge brokers, who embed themselves into networks so they can access that one elusive piece of insight that can crack a tough problem.”

That requires creating a culture of innovation across the entire organization, not just with creative teams. Executives must rethink the meaning of innovation and how to manage employees to keep them invested in a company’s vision.

Understanding innovation

Natalie Nixon, creativity strategist and resident of Figure 8 Thinking, defines innovation as an “invention converted into scalable values [including] social, financial, cultural, where the conversion factor is creativity.”

Having a “culture of innovation” requires employees with “different skill sets, backgrounds, levels of tenure and experience to be part of the process,” she explained at a January webinar organized by innov8rs, a digital platform for thought leaders to share ideas.

The approach to building an innovative organization differs from one company to the next, said Martin Reeves, chairman of BCG Henderson Institute, a think tank. “When it comes to innovation and, more specifically, innovation culture, each of us talks differently about how it can help us get from A to B,” he said during the innov8rs webinar. “It’s [therefore] crucial to start from a shared understanding [of] what innovation culture actually is and is not.”

He outlined “critical” attitudes within an organization to be creative. The most important is for employees to be humble, accept that their ideas may not be the best, and adopt an “empirical culture [where] one tests ideas and rejects ones that don’t work,” said Reeves.

He also stressed that top executives and managers must create an innovation-conducive environment within the company. Most importantly, it must encourage employees to look at what the rest of the market is doing and use that as a starting point. The next step is to ensure those ideas spread throughout the organization. That results in feedback, which requires an effective system to assess new inputs and integrate them into the original idea. Then organizations need to have the right mechanisms and procedures to “industrialize the ideas … and not be stuck in execution,” said Reeves.

Olivia Law, commercial director at Pollen8, stressed during the innov8trs webinar that “there is no culture of innovation when innovation is seen as a secondary activity, as an intangible process. Oftentimes … innovation is the byproduct of striking a balance between structure and direction, between creativity and inspiration.”

In the long term, to ensure that innovation is permanently front-and-center, organizations need to focus on “creating a feeling of innovation rather than prioritizing its enablers,” said Law. “This can lead to an innovation theater.”

Building blocks

The cornerstone of any innovative organization is a talented pool of employees. According to a 2017 McKinsey article, employing gifted employees who can innovate could boost productivity by 800% in “highly complex occupations.”

Since the pandemic upended lives across the globe, many are searching for fresh opportunities that give them better-balanced lives. Anthony Klotz, a University College London’s School of Management professor, coined the phrase “The Great Resignation” in May 2021 to describe the phenomenon.

That puts more pressure on employers to find and retain strong talent. “Its scarcity and high value make it a frequent cause for concern for leaders all over the world,” Diana Porumboiu, marketing manager at the business consultancy Viima, wrote in a June blog post. “Only 25% of managers and senior leaders believe they have good methods in place to acquire and retain the best talent.”

Companies should look for hidden talent within their ranks. Porumboiu stressed that organizations must include existing employees who might never have shared innovative ideas. “Even though not everyone has the curiosity and openness to explore new opportunities and ways of improving their work, they should still be encouraged and incentivized to be more innovative,” she noted. “The bottom line here is that you can achieve a lot more innovation if you give everyone an opportunity to contribute.”

When assembling the building blocks of an innovative team, diversity is vital. “Many managers hire with a specific type in mind, usually people who seem most [like] themselves,” said Satell, the Harvard Business Review contributor. “This may be great for creating camaraderie and comfort, but it’s not the best environment for solving problems.”

In 2015, Vivian Hunt, a senior partner at McKinsey’s London office, found that “companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry median. Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.”

Satell stressed the importance of hiring those interested in solving the company’s challenges instead of candidates most qualified to find a solution. “Researchers have long established that intrinsic motivation is a major component of making people creative. To build an innovative team … hire people interested in the problems you need to solve.”

The innovators

Top executives have a critical role in keeping their diverse existing and new team members invested in the company’s vision, which ultimately fuels the organization’s transformation into an innovative company. “Innovation stems from a mix of creativity and action,” said Porumboiu, noting that top executives and managers “often overrate” creativity compared to execution.

Another factor in ensuring innovative employees continue to churn out new ideas is having resilient team members. “Innovation work will almost certainly mean that you will fail at some point, or your assumption will prove false,” she says. “Those with a ‘growth mindset’ are resilient, curious and eager to learn, so such failures won’t hold them back.”

Those with a “fixed mindset” could give up or feel disheartened. However, managers and top executives could help those individuals evolve. “There is a common misconception that a fixed mindset can’t be transformed … even at a more mature age,” noted Porumboiu. Soft skills training, including critical thinking and good communication, would help in that transformation.

In a 2002 paper, Harvard Professor Amy Edmondson documented the importance of “psychological safety” in various contexts, including hospital teams and office furniture manufacturers. “Creating a climate of psychological safety that allows people to feel safe taking risks,” she said, “while also setting high standards that require enormous effort and preclude settling into a comfort zone” will foster long-term innovation.

To prevent innovative team members from withdrawing from the company’s strategy to become creative, managers need to be aware of their “psychological safety.” Google’s 2012 Project Aristotle, a multiyear initiative to define the characteristics of an ideal team in the workplace, concluded that regardless of a team’s composition or dynamic, “psychological safety” is the most critical factor for sustaining innovative employees.

Integrating innovators

One of the toughest challenges facing any executive or manager is where to place innovative employees, particularly new hires. For one, results from Project Aristotle couldn’t find a consistent list of characteristics that differentiated high versus low-performing teams. “Some groups said teammates interrupted one another constantly and that team leaders reinforced that behavior by interrupting others themselves,” the research noted. Others “enforced conversational order.”

Project Aristotle also found some high and low-performing teams socialized with other members and peers before discussing work. Others “got right to business,” Google’s project noted. “There were teams that contained outsize personalities who hewed to their group’s sedate norms, and others in which introverts came out of their shells as soon as meetings began.”

However, a 2008 report from Carnegie Mellon, MIT and Union College concluded that team dynamics trump the skills and knowledge of its individual members. “Some teams had a bunch of smart people who figured out how to break up work evenly,” report author Anita Woolley told The New York Times in 2016. “Other groups had pretty average members, but they came up with ways to take advantage of everyone’s relative strengths.”

Hierarchical structure within teams also wasn’t decisive in determining a team’s overall performance. “Some groups had one strong leader. Others were more fluid, and everyone took a leadership role,” noted Woolley.

One main factor differentiating successful from ineffective teams was their members’ emotional intelligence levels. The report determined that teams fail to innovate because one person or a small group spoke all the time. Woolley explained that successful teams “seemed to know when someone was feeling upset or left out” and brought them back into the conversation. “People in ineffective teams … as a group [had] less sensitivity toward their colleagues.”

A factor leading to ineffective teams is weak political will to drive innovation beyond the inception stage. “Innovation should be approached top-down and bottom-up,” said Porumboiu of Viima. “But unless it starts from the top with great leaders who set the tone and support innovation, the chances of success are slim.”

Frontline and middle managers also are vital in any organization’s innovation ecosystem. For one, they must take every suggestion to improve the business as seriously as plans to overhaul the business model. “Most ideas, especially those that lead to incremental innovation, come from frontline employees, as they are the ones in close contact with … customers, products and services,” explained Porumboiu. “Even though most won’t necessarily change the trajectory of your business, when you put them together, they can make a huge difference in … performance.”

Perpetual innovation

Finding innovative, scalable and permanent solutions to problems within a company doesn’t end the challenges facing managers and executives. “Each one comes with its own problems to solve,” noted Satell, the Harvard Review contributor. “Each of those problems represents new business opportunities. In some cases, entirely new industries will be created.”

Combine that with industry-wide advancements in technology and business models, and it becomes exceedingly complex for top executives to forecast what happens next. “Technology today moves so fast — and in so many directions — that anyone who thinks they can truly see the future is just fooling themselves,” said Satell.

He stressed the importance of shifting from “strategic planning,” where managers gather information about markets and competitors to identify trends, to “innovation planning.” That is because today’s “technology cycles move faster than planning cycles ever could,” noted Satell. “Instead of trying to get every move right — which is impossible in today’s environment — we need to try to become less wrong over time.”

Top executives must start planning “based on things we need to learn to solve, new and important problems, [instead of] planning based on things we [already] know,” he said.