Innovation is no longer just “nice to have” in a business. It is becoming mandatory, due to technological advances and raised expectations from consumers and clients.

Today’s businesses are increasingly powered by innovation.

Innovation doesn’t always mean coming up with the next iPhone. It can apply to products, certainly, but innovation may also apply to processes and to business models. The world of business is only going to become more competitive, and without innovation, competing will be harder.

There is no question that innovation and business growth are linked. Persistent innovators consistently and significantly outgrow less-innovative counterparts in terms of sales, value-added, profit growth, and employment. And with small and medium enterprises, the effect of innovation on growth is even more pronounced. But innovation cannot become embedded in corporate culture without strong leadership.

The Whole Leadership Team Must Be on Board

For innovation to become woven into the fabric of an organization, leaders must assimilate and demonstrate innovation beliefs, behaviors, and expectations. Unfortunately, some of the artifacts of traditional leadership are at odds with an innovation culture, artifacts like silos and unnecessary hierarchies that were better suited to pre-Industry 4.0 cultures.

Collaboration is so essential to innovation that even a single leader who is not on board with innovation can hamstring the whole company. Leaders who view their teams as their own, walled-off fiefdoms, unwilling to share the talent that could help bring innovations to life not only slow down (or stop) innovation, they squash the morale of those who truly want to innovate.

What Leaders in an Innovation Culture Must Do

Leaders must practice the most fundamental leadership concepts of strong communication, collaboration, empowerment, and trust to promote innovation. Team members must know about innovation initiatives, and they must be able to contribute with their time and talent. Leaders must trust their teams to come up with great ideas, and they must empower them to develop their ideas, bringing innovations from the concept stage to everyday practice.

The old approach of requiring a business case, complete with a PowerPoint presentation and five years of revenue projections may work for building out core business processes, but it is far from ideal when it comes to innovation.

Some rituals of traditional company operations may have to be modified to accommodate an innovation culture.

Key Elements of an Innovation Culture

Gary Pisano’s much-referenced article for the Harvard Business Review about innovation cultures does a great job of laying out the forces and counterbalances necessary for innovation to thrive. Here’s a summary table of those innovation attitudes and counterbalances:

Necessary Attitude Necessary Counterbalance
Tolerance for failure No tolerance for incompetence
Willingness to experiment Discipline
Psychological safety Honesty and candor
Collaboration Individual accountability
Flat hierarchy Strong leadership

No way can an organization strike that careful balance without committed and talented leadership. In fact, when leadership distances itself from operational details of innovation projects, the chances of failure are significant.

Lack of innovation in business is rarely due to a lack of great ideas. Front-line employees can be some of the best sources of great ideas, because they see products and processes in action every day. Lack of innovation is more often the result of failure to take ideas seriously, failure to prioritize ideas, failure to develop, prototype, and pilot test them, and failure to put winning ideas into everyday production. When employees realize that nobody will take their ideas seriously and that the company never develops innovations fully, they don’t bother to come up with any more ideas. Everybody loses (except perhaps the competition).

Leadership coaching and executive coaching have a place in businesses that are committed to building an innovation culture. Trust, communication, honesty, and transparency – the most essential leadership characteristics – are absolutely necessary for development of a truly innovative culture. The leader who refuses to empower team members to solve problems cuts innovation off at the knees. The leader who doesn’t communicate innovation opportunities loses out on the great ideas team members have.

Leadership, culture, and innovation are all intricately intertwined. Innovation affects products, processes, and business models, and if your company isn’t innovating, you’re missing out, because your competitors certainly are. If you want to find out more about leadership and strong corporate culture, I encourage you to check out my books.

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