Innovation Culture Roadmap: What Works and What Doesn't

Recent McKinsey research highlights that the most innovative companies embed innovation deeply within their core values, creating an environment where employees feel empowered to experiment and take risks. By positioning innovation as fundamental, supporting it with meaningful actions, and establishing consistent practices, leaders cultivate a culture where creativity thrives. Furthermore, providing psychological safety and clear rewards for innovative efforts ensures employees feel secure and motivated to pursue new ideas. Addressing the fears associated with innovation is essential for fostering a genuine culture of experimentation, enabling companies to adeptly navigate future uncertainties.

Overcoming Bureaucracy to Foster an Experimental Environment

McKinsey research highlights that the world’s 50 most innovative public companies place a significant emphasis on innovation, three times more often than other S&P 500 companies. These companies clearly embed innovation deeply within their corporate values, sometimes even describing it as a "moral responsibility."

Leading companies recognize the power of symbols in reinforcing innovation. Actions like CEOs frequently visiting innovation sites and rewarding innovative efforts help reduce fear and emphasize the value of creativity.

To normalize innovation, companies should implement regular practices such as innovation days, hackathons, and meeting-free days. These activities encourage the sharing and discovery of new ideas, often leading to new priorities and projects.

Moreover, innovation can be emotionally taxing, often associated with fear and anxiety. Companies with low-fear cultures, which provide psychological safety and encourage experimentation, are more likely to lead in innovation, as they support employees in taking risks and learning from their mistakes.

However, creating a true culture of innovation is not easy. It requires not only well-structured processes but also a company's readiness for experimentation, rapid failure, and flexibility in decision-making. In this article, I will share my experiences and thoughts on how companies can achieve this balance.

Processes and Experimental Culture

Creating innovations doesn't always mean disruptive breakthroughs; even small improvements require flexibility and an experimental approach. On one hand, big teams must follow clear production processes for a large number of stakeholders and independent teams, while on the other, they must work with uncertainty to create solutions for the future and keep up with changing customer expectations, making decisions based on research and data. This duality helps avoid bureaucracy that can stifle any initiative from the outset.

In a previous company I worked for, we established a culture that encouraged teams to make mistakes and quickly pivot their ideas. We achieved this by promoting early and rapid testing of ideas, making mistakes as inexpensive as possible. This approach allowed us to develop products that met current market needs and maintained competitiveness, while ensuring transparency in key processes for all stakeholders. It struck a balance between bureaucracy and innovation.

Why Companies Need to Innovate

Some might wonder whether it's worth engaging in innovation at all. The answer is simple: yes, it is. In a world driven by innovations like ChatGPT, no one can be certain that almost every industry won’t completely change within a year. It is crucial to understand when and why to change and to be able to do so effectively.

Innovators Within the Company

Every company has individuals capable of generating new ideas and seeking unconventional solutions. These innovators observe trends and strive for improvements. If they are given space to experiment, they can make significant changes. However, many companies create a pseudo-innovative culture where bottom-up ideas do not get through, and decisions are made only at the top. This leads to slow and ineffective updates, leaving the company in a catch-up role.

Signs of a Pseudo-Experimental Culture

Companies with lifeless innovation processes are easy to spot. You often hear phrases like:

“I can't tell my boss I need a month for research—they'll reject it.”

“When that team released their MVP and it didn’t take off, they were fired.”

“We can't delay the release to fix the bug because we've committed to the deadlines.”

These statements indicate a culture of blame, lack of cooperation, and decision-making by leaders without considering data.

Competitive Organization Culture= Culture Of Experimentation

The culture of a competitive organization is inseparable from the culture of experiments. As shown in the diagram, achieving competitiveness requires developing several key elements, such as goal-setting, responsibility, awareness, the right to make mistakes, creative confidence, and self-organization. Let’s explore each of these elements in detail.

1. Goal-Setting: defining clear and achievable goals is the foundation for any successful initiative. In a company striving for innovation, goals should be both ambitious and concrete, allowing teams to focus their efforts on achieving them.
2. Responsibility: innovation requires every team member to feel responsible for the result. This includes not only performing their duties but also proactively participating in finding solutions and suggesting improvements.
3. Awareness: understanding current processes, goals, and tasks allows employees to better navigate their actions and make more informed decisions.
4. The Right to Make Mistakes: in an experimental culture, it is important to allow teams to make mistakes. Fast and cheap mistakes enable quick learning and course correction without losing many resources.
5. Creative Confidence: employees should feel that their creative ideas are valued and can be implemented. This encourages them to seek unconventional solutions and improvements.
6. Self-Organization: the ability of teams to manage their time and resources independently allows them to work more efficiently and make prompt decisions.

Practical Examples

At one of the companies I worked in, there was an internal startup—the online platform team, which became a successful innovation lab. However, after a couple of years, they were disbanded due to conflicts with other departments. I arrived on a scorched field and started building the culture from scratch. We managed to implement unified processes and create new things, but it took another three years.

At another company, our team worked on a unified online platform for three different brands, which seemed a ground breaking way to cut the costs. However, due to a lack of cooperation and a proper decision-making culture, at one point the project stalled. The platform team that wanted to make changes started quitting. It took a great effort to prioritise and adress the real organizational problems and advance the project.

Tips determine the organization's readiness for experiments and changes.

1. Are there instruments that a team can use to help test their ideas, such as accelerators, mentors, etc.?
2. Are there any rituals to tell about new ideas (like an award for bringing new ideas or pitch meetings)?
3. Is there a budget to test new ideas before they are proven to generate revenue?
4. Does the working environment support teamwork (is it easy to find a place to conduct workshops or create prototypes)?
5. Are there any processes or regulations that allow for legally starting a new project with several pivots and some mistakes along the way?
6. Are innovations part of the company’s strategy and the teams’ KPIs?
7. And lastly, but probably most importantly, are the board members interested in experiments?

These questions helped me and will help you to understand what changes are necessary to create an environment conducive to innovation and experimentation. Even if there are no instruments, rituals, regulations or environment, but you do have the management’s support - there is a place to start. What to keep in mind:

• take a small innovation team from those ready for a change.
• The team should be given a mandate to work legally using different principals not bound by the old rules. However they have to have a very clear aim and stages to check whether they are going the right way.
• There should be a very experienced mentor to guide the team through the new process.
• Choose not very difficult to implement ideas for pilot projects.

To show results, use business language in the early stages, not new words unfamiliar to your culture—speak the language of numbers and outcomes. Only after several successful iterations is it time to scale a small culture from a few teams to others who will want to join when they see the results.

These tips have helped me and will help you identify the starting point for implementing an innovation culture in your organization/team.

To make this article a great discussion starter for you, write your answers to these questions in a comment or and send them to me on LinkedIn. Looking forward to it!

1. What challenges and obstacles do you foresee when implementing a culture of experimentation in your organization?
2. What specific steps can be taken to bolster support for innovation and experimentation within your company?
3. Which examples or stories from the article resonate most with your current work situation?
4. How can common pitfalls mentioned in the article, when establishing or strengthening a culture of innovation, be avoided?
5. What roles and responsibilities should be defined within the company to support the successful implementation of innovative ideas?
6. Which tools or methodologies discussed in the article could be most beneficial for your team or project?