How To Create A Culture Of Innovation: 8 Fundamental Steps

Every company wants an innovative culture. 

But beyond the title what does an innovative culture actually look like in real life? To answer that, we need to look at what company culture really means.

“Company culture” has become a pretty abstract term, even though lots of business leaders swear by it.

But it’s really important for leaders to recognise that company culture isn’t just a nice family-like feeling or a heartfelt value statement. 

It’s not open working spaces or pool tables in the middle of the kitchen (although that would be nice). And it’s not all about ‘beer Fridays’ or ‘social Tuesdays’ either.

Company culture is a very real representation of what actually happens inside a business. Essentially, it’s who employees are when nobody’s looking.

There are some companies that have created brilliant innovative cultures. Airbnb CEO Brian Chesky is a great example. In an article published on Medium, he said: “The stronger the culture, the less corporate process a company needs”—and it’s true. 

Building an innovative culture is about sharing passion in the things you do collectively. Here’s how to build that into your organisation:

1. Analyse the ins and outs of your current cultural system

The first thing you need to go is to go back to basics. Take a deep look into the current cultural system and try to find patterns that reveal why it is the way that it is.

Identify the strong aspects of the company culture, and then take a deeper look into what’s holding it back. What has shaped the company’s makeup? 

Is the current state of the culture a result of outdated values or new ones? Is it shaped by values or employees? 

The first step in building an innovative company culture is by analysing the current one and finding ways to make it better.

2. Be intentional with your innovation plans

If your plan is to be “the number 1 provider of XYZ”, you might be falling into the generic corporate vision trap.

Every company wants to be the number 1 of this or that but the truth is, other than drum up sales for a while, broad and generic goals don’t do much for creativity or innovation in the long-run.

Decide how you want to change the world, and then make it completely customer-focused. For example, the automotive company Tesla makes its mission statement wonderfully clear: “To accelerate the world’s transition to sustainable energy.”

3. Create free time, don’t wait for it

The biggest complaint from business owners when it comes to innovation is that there simply isn’t enough time. 

Nobody ever feels like they have free time. We get so busy in the day-to-day responsibilities of our jobs that it feels almost impossible to think about business plans for the future.

That’s why it’s essential that you make time and give it to your employees.

For example, Google gives employees 20% ‘free time’ in order to use a portion of their paid time  “working on what they think will most benefit Google.”

Find ways to give employees time to work on creative tasks, and encourage them to take it. It’s much more intentional than vague messages about how important it is to allow time for innovation. 

4. Give rewards—informally and often

Every leader knows its important to recognise success. 

They hold annual recognition awards or give bonuses for deserving employees. The problem is that most businesses stop there. 

Formal recognition is certainly important in a business and can help boost morale but if you’re thinking about the long-term, it doesn’t create any lasting effects.

So what can leaders do instead, if they want to build an innovative company culture? 

Create a culture of recognition first.

The most powerful form of recognition in business is usually the more informal kind—and it’s something you have to practice every day until it becomes natural throughout the entire company.

It’s no secret that people tend to repeat behaviour that they get recognition for, so aim to create incentives to acknowledge achievements on a regular basis. 

By doing this, you create a performance-based culture. At the Colgate-Palmolive R&D Group, for example, they have a wooden nickel that they pass around to colleagues who have done something noteworthy. It’s a small and fun way of showing appreciation that goes a long way. 

5. Do not micromanage 

If you provide employees with “free time” to explore new ideas as Google does, be careful to not over-manage the situation.

As a leader chasing innovation, you should provide the support, structure and encouragement to help colleagues dive in on their own, without micro-managing or breathing down anyone’s neck.

6. Make sure leadership teams are fully on board 

Change needs to start from the top.

A full 360-degree turn to create an innovative culture is a huge job and it needs full commitment from those in senior roles.

It’s crucial that leadership teams set an example and really become role models for the rest of the company, demonstrating what’s expected from everyone. That means committing to all the practical changes required to transform the culture.

7. Refresh your hiring process

As the late Steve Jobs said, “it doesn’t make sense to hire smart people and tell them what to do. We hire smart people so they can tell us what to do.”

Take a look at your hiring process. Everyone knows that innovation is about having the right people, so if there’s any chance you’re deterring quality applicants with an outdated hiring process, it’s time to make that right.

While your employee selection process should be rigorous and focused on selecting the best, there’s an extremely fine line between thorough and tedious. And there are definitely a few hiring mistakes you should avoid if you genuinely want to attract great applicants.

Hire smart people, then empower them to teach you.

8. Introduce ideas software to colleagues

We can’t talk about innovation without talking about idea software. Building a culture of innovation within your business is more than inspiring mission statements and giving employees free time to pursue creative ideas.

You need a simple system to bring those things together, hold people accountable and encourage creative thinking on a regular basis. That’s exactly what idea management software does and why you need it.

By collecting new and developing ideas from colleagues on a regular basis, you help to instil innovation as a regular part of the working day. It sends the message that innovation is a group responsibility that everyone is a part of, and not just something that gets decided in the CEO’s office. 

Creating a culture of innovation 

Innovation culture is first and foremost a great company culture that values and supports innovation from within.

Because while there are many companies with a fantastic company culture that don’t focus on innovation, it’s almost impossible to find an innovative culture without a strong company culture.

But building a company of innovation takes time. New businesses, of course, have the luxury of a clean slate and can start shaping the innovative culture they want from the start.

But for larger and existing businesses, transforming the company culture into a decisively innovative one demands time, effort and conscious action—and these eight tips will help you get there.

Find out more about introducing ideas software to your business and how it can help you create a culture that’s innovative and creative every single day.