Some companies have innovation hardwired into their system. They have a constant stream of new products, unprecedented brand concepts, and a certain creative magic. Their innovations dominate the market while their competitors can only hope to make it big one day, too. 

But how do these companies come up with their products and services in the first place? How do they maintain an innovative company culture over the long term? And how can HR leaders create a culture of innovation in their company as well?

The Culture of Innovation: What It Is and Why Does It Matter?

Innovation is a key indicator of an organization's ability to achieve sustainable success, because it drives companies to continuously improve and always seek new opportunities. And in today's complex global business environment, the ability to achieve sustainable success gives companies a competitive advantage and is becoming increasingly important. But what exactly is a culture of innovation? 

A culture of innovation definition could be "an environment that supports creative thinking and promotes efforts to transform knowledge into economic and social benefits that lead to new or improved products, services or processes.” In an innovative culture, companies break away from traditional methods and encourage creative thinking, which ultimately leads to better performance in all areas.

What Makes an Organizational Culture Innovative

Wondering what kind of organizational culture supports innovation? Let's outline some of the characteristics of a culture of innovation, then:

Imaginatively Combine Ideas in New Ways

Organizational cultures become creative and innovative when they encourage employees to combine and play with ideas imaginatively in new ways. In most organizations, however, imagination and play are not valued; getting the job done on time and staying within budget are. These traditional cultural norms and values also hinder the development of innovation because creative employees, who normally value imagination and play and are highly motivated by intrinsic rewards, are not seen.

The Cultivation of Diversity of Thought

Although many companies pay lip service to the need to diversify their workforce, the focus is usually on diversity of observable demographic characteristics rather than diversity of thought. With a highly diverse workforce, misunderstandings are likely, conflicts are common, and productivity may decline. None of these outcomes is a pleasant experience, and they do not automatically lead to innovation. But when diversity of thought is welcome, creativity and innovation are more likely to emerge as well.

The Value of Weak Ties

Strong ties are relationships we have with family members and old friends – long-lasting and characterized by trust and reciprocity. However, creative people tend to also have numerous "weak ties" with people they know but with whom they have no deep relationship. One can therefore assume that organizational cultures that promote flexible working conditions and external networking increase the likelihood of innovation.

The Ability To Look Long Term

Another aspect of an innovative organizational culture is the ability to think long-term. Many companies are very short-term oriented. They are preoccupied with developing existing markets and do not have the time, resources or capacity to enter new markets. However, an organizational culture that allows the company to both develop and explore markets gives leaders the opportunity to get creative.

Collaboration Within and Across Teams

Most innovation comes from collaboration within and between teams, not from the genius or perseverance of a single individual. Innovative units function more like focused communities than a collection of renowned scientists. Make sure you encourage your employees to collaborate with others if you want to create and sustain a culture of innovation.

Examples of Innovative Company Cultures

Let's take a look at some companies with innovation cultures and see what we can learn about building our own innovation culture:

Tesla and the Importance of Rewarding Innovative Thinking

Tesla prides itself on being a pioneer in its industry. Employees cite innovation as the most positively discussed value at the company, which fosters creativity and curiosity at every turn. Tesla's culture is based on the recognition that innovation must be fostered, encouraged and rewarded. Incentives don't have to be financial, but a system that encourages employees to share their ideas and rewards them for doing so will go a long way toward creating an innovative corporate culture.

A high-performing, innovation-driven culture relies on employees' ability to respond quickly to trends and changes in the marketplace. The company empowers its employees to constantly seek out new ideas that will enable them to claim their rightful place in the era of creative technological innovation. Tesla rewards constant innovation and motivates every employee to take responsibility and accountability for their work and the overall performance of the company.

Apple and the Continuous Improvement Method

Apple's success is largely due to its approach to innovation. The company continually improves its existing products, which eventually leads to breakthrough innovations and pays off in brand success and customer loyalty. In fact, Apple has maintained this approach by anticipating its customers' needs and improving its existing products to meet them. This has resulted in customer-centric products and high brand loyalty.

Jobs empowered his employees to improve and streamline their workflows and recognized the importance of collaboration between departments to create a seamless supply chain. This effortless collaboration and streamlining of internal processes enabled an innovative culture. Allowing employees to continuously improve their processes also led to increased employee satisfaction, cost reductions and efficiency.

Pixar and the Importance of Honesty and Openness

Pixar Animation Studios is a well-known name in the creative industry. The company places great importance on the overall well-being of its employees, which is reflected not only in its culture, but also in its films. The level of motivation, freedom and psychological security they offer their employees is highly reflected in the company's financial performance. 

Feedback is taken into account to keep the quality of the films at the highest level, and mistakes are regularly pointed out to eradicate mediocrity. This level of honesty and openness is what makes the Pixar team so solid. Everyone is willing to listen and accept feedback, knowing that this level of trust from both employees and management is essential to a company's culture of innovation.

Salesforce and Putting the Customer Needs First

Salesforce's innovation strategy has contributed significantly to the company's success. Rather than constantly developing new tech, Salesforce actively seeks out new technologies and startups that it can combine with its existing offerings. This is not a cheap strategy, but it is efficient and requires fewer resources. Salesforce is widely regarded as the best CRM on the market, offering a full suite of enterprise applications.

Salesforce's culture of innovation revolves around understanding customer needs and meeting them through innovation. Putting the customer at the center of all decisions is one of the most important things any company that wants to innovate should do. When you truly understand your customers, you are in a fantastic position to seek out new technologies and services that give you an edge over your competitors.

Dell and Learning That Great Innovation Culture Is Customer-Centered

Dell believes that the best customer experience is the key to market leadership, that creating optimal solutions for people is better than focusing on the best technologies, and that engaging all stakeholders is critical to innovative thinking. The company strives to find out what factors are important to better serve the customer, which contributes to rapid decision making. This leads to a faster response to customer needs.

To create optimal solutions, the company has opted for product integration rather than continuous technology development. This means that it cascades technology costs, integrates them into its computers, and offers them at a customer-friendly price. Finally, the company solicits innovative ideas from all stakeholders. Different perspectives are considered and seen as an opportunity to learn and understand how to approach problems and opportunities holistically.

The Role of HR in Organizational Innovation

Most innovative discoveries occur when diverse employees, teams, and departments are brought together, and HR plays a fundamental role in creating a diverse culture that fosters innovation. In addition, HR can lead the way in eliminating or changing organizational practices that hinder or prevent it. Therefore, organizations need HR to create leadership capacity, diverse teams, and new organizational practices.

A key focus of HR 's role in developing innovative organizations is building leadership for innovation. Innovation leaders do not necessarily generate the innovative ideas themselves. Instead, they recognize innovation when they see it and help teams find innovative solutions to complex problems. HR must recruit individuals who are naturally capable of being innovation leaders, nurture them, and develop that capability.

Another area is ensuring that diverse teams can work together to combine their perspectives in unexpected ways. HR plays a fundamental role in maximizing integration and cross-functional collaboration. For example, HR needs to ensure that different teams come together and collaborate on innovations to drive them across the organization 

And then there is the issue of change management processes to implement innovative ideas. Employees need to believe that their efforts are meaningful, which is why implementing their ideas reinforces a culture that fosters innovation. HR should therefore ensure that innovation leaders use best practices for change management so that employees quickly adopt new solutions, which become the new "business as usual”.

Finally, HR must develop organizational practices that encourage, not discourage, innovation. HR can examine whether job descriptions unintentionally suggest that employees won’t be working in diverse teams, or whether the budgeting process allows innovative ideas to be implemented only at the beginning of a budget cycle (as this limits employees' willingness to work on innovative solutions throughout the year).

How HR Leaders Can Build a More Innovative Culture within Their Organization

Here are 6 ideas on how to create an innovative culture in your organization:

Encourage Employees to Think Outside the Box

New ideas are essential for a company to continue to grow. Innovation is therefore essential to business development. However, the responsibility for developing new ideas does not lie with just one person. Ultimately, building a culture of innovation is a team effort. By encouraging your employees to think outside the box, you can build a strong think tank that helps companies achieve their objectives.

However, if employees have become indifferent, their willingness to participate and innovate will be very low. In this case, you need to give them reasons to engage, such as incentives, bonuses, promotions, and feedback on successful work. When employees feel they are seen and valued, they are more likely to participate, share and collaborate. Recognise and praise their efforts!

Give Autonomy 

Allow staff to develop new existing ideas and concepts without too much supervision. Although some parameters are required to properly manage time and money, micromanagement can significantly reduce motivation. If you assign competent people to a project and give them some freedom and decision-making, they will stay motivated and take responsibility. 

Encourage them to think outside the box when setting personal or professional goals, too. An open-door policy encourages employees to develop new, creative and innovative concepts. Evaluate the legitimacy of their efforts and give them positive feedback when they do.

Ensure Open Communication Channels

One of the main reasons employees hesitate to say something is because they feel it is useless. If their concerns are rarely taken seriously or their ideas are barely considered, it is important to show them that it makes sense to speak up. Listen more and use that information and insight. That way, employees will speak up, be productive and engage more easily in the workplace 

You should also strive to provide a variety of opportunities for sharing. If a team member only has one way to say something, such as in an in-depth brainstorming session, they may be more hesitant to share their thoughts. Your job as a leader is to provide multiple opportunities to share ideas so that everyone, from the big guys to the little guys, can hear everyone's opinion.

Establish Innovation Metrics

Input and output metrics are two ways to measure innovation. Input metrics measure the amount of innovation factors your company invests in, e.g., the amount of time employees spend on training. Output metrics measure whether your innovation investments are having the desired effect, e.g., the number of new products introduced last year or the revenue they generate.

While tracking input metrics is useful, input metrics don't give you the whole story of a company's overall innovation performance. To get a more complete picture, it's best to use a mix of input and output metrics. Instead of measuring only R&D spending (an input metric), compare that spending with revenue generated by recently launched products. This combined approach helps tell both sides of the story: the investments a company makes in innovation and the results of those investments over time.

Be Comfortable with Failure

If you value continuous learning, you must accept mistakes as a source of learning and invention. Perhaps the most famous story of a great invention that came from an accident or mistake is the discovery of penicillin by Alexander Fleming. Now imagine if Mr. Fleming had worked in a large company where mistakes were not tolerated! Perhaps he would not have realized the enormous implications of his discovery.

There is no doubt that mistakes are a proven learning tool. So much so that managers should sometimes encourage mistakes, especially in the initial learning stages of new employees. When projects go wrong and teams mess up, those mistakes should not be swept under the rug and forgotten. Rather, they should be shared so that not only the people who made the mistakes but also others can learn from them.

Motivate with Generous Rewards and Recognition

A company that implements an in-house reward system is one that recognizes teamwork, collaboration, and a culture of innovativeness and innovative ideas. The reward system can be monetary or emotional, but it effectively motivates employees to come up with new, exciting ideas. It shows that the company values the work of its employees, lowers turnover rates and boosts morale.

And when employees know that innovation is expected of them, that their ideas are in demand, and that management is open and responsive to their feedback, they're more likely to contribute their ideas, which will reduce the company's costs and lead to new products, services, and other growth opportunities. They're excited and interested in contributing to the project, and their motivation increases dramatically.

That's how you create a culture of innovation, and that's what we support here at Yarooms. What about your company? Do you believe that HR plays a fundamental role in the development of innovative organizations, and if so, what are you doing to support this process? We look forward to learning more about you too!