In Part 1 of this two-part series, I discussed an interview conducted by Gwen Moran with Jeffrey Phillips, co-founder of OVO. [“How to Develop a Culture of Innovation,” Entrepreneur, 11 October 2012] In that interview, Phillips asserted that innovative companies have an “offensive” mindset (i.e., they are always looking for ways “to deliver a new product or service or feature into the market”) whereas less innovative companies have a “defensive” mindset (i.e., they simply try to defend their market share or customer base). Scott Edinger, founder of Edinger Consulting Group, agrees with Phillips that corporate mindset is where innovation begins. “While many organizations focus on addressing problems,” he writes, “the most successful focus on raising the bar. One of the ways they do this is by creating a culture where innovation thrives. When this organizational strength is magnified, it can become a source of competitive advantage.” [“Don’t Innovate. Create a Culture of Innovation,” Forbes, 20 November 2012]

In Part 1, I also cited an article by Nilofer Merchant in which she insists that organizational size doesn’t matter when talking about fostering an innovative environment. [“Innovation Isn’t Tied to Size, but to Operating Rules,” Harvard Business Review Blog Network, 31 October 2012] Ravi Mattu agrees with Merchant that old arguments about size discouraging innovation (i.e., big companies can’t innovate) have been debunked. He also agrees with Merchant that open innovation is one way to keep large organizations adaptive. [“Collaborate to innovate – size matters,” Financial Times, 31 October 2012] He reports that start-ups and large companies are trying “to work out ways of tapping into the power of the other.” His article is accompanied by a video.

Mattu concludes, “Everyone wants to be able to tap into creativity, but it could be that the process of innovation itself is undergoing the biggest bout of creative destruction.” Many analysts believe that culture is even more important than process. Edinger, for example, writes, “Excellence in leading innovation has far less to do with the leader having innovative ideas; it has everything to do with how that leader creates a culture where innovation and creativity thrives in every corner.” He then asks, “So if that is the conclusion, then what are the things that leaders must do to foster innovation?” He offers several strategies that he believes “make a profound difference”; but he is not alone in offering suggestions about how to create a culture of innovation. Josh Linkner offers seven steps that lead to an innovative culture [“7 Steps to a Culture of Innovation,” Inc., 16 June 2011] and Tony Schwartz claims to reveal “Six Secrets to Creating a Culture of Innovation.” [Harvard Business Review, 10 August 2010] As you might suspect, there is some overlap between the ideas presented by these analysts.

Make Work Meaningful

For example, Edinger encourages business leaders to “focus on outcomes” while Schwartz encourages them to “make the work matter.” Edinger writes that leaders “put a great deal of effort into clearly envisioning and talking about the outcomes in a given scenario, rather than directing how those outcomes would be achieved.” Schwartz writes, “Human beings are meaning-making animals. Money pays the bills but it’s a thin source of meaning. We feel better about ourselves when we we’re making a positive contribution to something beyond ourselves.” He continues:

“To feel truly motivated, we have to believe what we’re doing really matters. When leaders can define a compelling mission that transcends each individual’s self-interest, it’s a source of fuel not just for higher performance, but also for thinking more creatively about how to overcome obstacles and generate new solutions.”

Edinger insists that leaders must paint “a picture of the future and [hold] their teams accountable for how to get there. Clearly, one of the ways that innovation is cultivated is by having leaders who make sure everyone involved knows the outcome and strategic goals of any objective. By focusing on outcomes and results, these leaders free up a lot of energy for the creative process of making it happen.” In other words, innovative leaders ensure that the work matters.

Inspire Passion

All of the analysts agree that leaders must be inspirational. Edinger writes:

“When people feel inspired by a leader they are more inclined to give more effort and go the extra mile on a project. That extra effort and commitment is often what produces innovation. If the goal is easy to achieve, there is not much need to innovate. A trend that I observed [is] that … leaders set stretch goals that [are] very difficult to achieve. Moreover, they [are] able to get members of their team bought in to the power of achieving those goals.”

Linkner and Schwartz assert that inspirational leaders foster passion in their colleagues. Linkner writes:

“‘The most powerful weapon on earth is the human soul on fire,’ says Ferdinand Foch, the early 20th century French military theorist. Passion is the first—and most essential—ingredient for building a creative culture. Every great invention, every medical breakthrough, and every advance of humankind began with passion. A passion for change—for making the world a better place. A passion to contribute—to make a difference. A passion to discover something new. With a team full of passion, you can accomplish just about anything. Without it, your employees become mere clock-punching automatons. One key is to realize that passion alone isn’t quite enough: You must also focus that passion into a sense of purpose.”

Schwartz adds:

“The quickest way to kill creativity is to put people in roles that don’t excite their imagination. This begins at an early age. Kids who are encouraged to follow their passion develop better discipline, deeper knowledge, and are more persevering and more resilient in the face of setbacks. Look for small ways to give employees, at every level, the opportunity and encouragement to follow their interests and express their unique talents.”

Encourage Boldness and Tolerate Risks

Edinger indicates that the innovative people he’s met aren’t “rebels, but they were also not afraid to challenge people higher up in the management chain.” He notes that such people are “fearless” and “that they possess a willingness to take on difficult issues, even when it means expressing disagreement with higher levels in the organization.” He continues:

“They separate issues from people and are able to disagree, without being disagreeable. Doing so cultivates tremendous respect from their colleagues. One peer in particular used the term ‘healthy creative tension’ when describing the atmosphere of meetings led by the innovator.”

Linkner recommends “encouraging courage.” He reports that Netflix tells its employees, “Make tough decisions without agonizing excessively. Take smart risks. Question actions inconsistent with our values.” Another company, a software company in Boston, “gives each team member two ‘corporate get-out-of-jail-free’ cards each year. The cards allow the holder to take risks and suffer no repercussions for mistakes associated with them. At annual reviews, leaders question their team members if the cards are not used. It is a great way to encourage risk taking and experimentation. Risky? Perhaps. Think this company comes up with amazing ideas? Absolutely.”

Of course, taking risks just to demonstrate that you have a high tolerance for failure isn’t smart. If a risk does result in a failure, some value needs to have accrued from that failure — even if it’s just the realization that the path taken was a dead end. Linkner writes:

“The great innovators and achievers weren’t necessarily smarter or inherently more talented. They simply released their fear of failure and kept trying. They didn’t let setbacks or misfires extinguish their curiosity and imagination. Failing forward means taking risks and increasing the rate of experimentation. Some bets will pay off; some will fail. The key is to fail quickly. The speed of business has increased dramatically and every minute counts. The best businesses try lots of ideas and let the losers go quickly and with no remorse.”

Focus on Ideas

All innovation begins with good ideas. Linkner writes:

“Celebrating creativity is not only about handing out bonus checks for great ideas—although that is a good start. It should also be celebrated with praise (both public and private), career opportunities, and perks. In short, if you want your team to be creative, you need to establish an environment that rewards them for doing so.”

Schwartz goes even further. He recommends that creativity techniques be taught so that employees have the tools to generate new ideas. “[Creativity] isn’t magical,” he writes, “and it can be developed.” He continues:

“There are five well-defined, widely accepted stages of creative thinking: first insight, saturation, incubation, illumination, and verification. They don’t always unfold predictably, but they do provide a roadmap for enlisting the whole brain, moving back and forth between analytic, deductive left hemisphere thinking, and more pattern-seeking, big-picture, right hemisphere thinking. The best description of the stages I’ve come across is in Betty Edward’s book Drawing on the Artist Within. The best understanding of the role of the right hemisphere, and how to cultivate it, is in Edwards’ first book, Drawing on the Right Side of the Brain.”

Unleash the Hounds of Innovation

Keeping tight control over the innovative process can be counterproductive. On the other hand, letting go can be difficult for leaders. It involves trust. “Not the garden varieties of trust,” writes Edinger, “but complete and shared confidence in one another.” Linkner asserts that this kind of trust results in giving employees greater autonomy. He writes:

“We all want control over our own environments. According to a 2008 study by Harvard University, there is a direct correlation between people who have the ability to call their own shots, and the value of their creative output. An employee who has to run every tiny detail by her boss for approval will quickly become numb to the creative process. The act of creativity is one of self-expression. … Granting autonomy also involves extending trust. By definition, your team may make decisions you would have made differently. The key is to provide a clear message of what results you are looking for or what problem you want the team to solve. From there, you need to extend trust and let them do their best work. Let them know you are behind them and value their judgment and creativity. If you show your belief in them, you will likely enjoy both the results you were seeking as well as a highly motivated and more confident team.”

Schwartz adds that employees need personal time as well as personal space. He writes:

“Creative thinking requires relatively open-ended, uninterrupted time, free of pressure for immediate answers and instant solutions. Time is a scarce, overburdened commodity in organizations that live by the ethic of ‘more, bigger, faster.’ Ironically, the best way to insure that innovation gets attention is to schedule sacrosanct time for it, on a regular basis.”

Celebrate and Foster Diversity

I’m a fan of diversity. I have repeatedly lauded the benefits of using cross-functional teams when addressing a challenge. New perspectives always provide better solutions. Linkner writes:

“Diversity in all its shapes, colors, and flavors helps build creative cultures. Diversity of people and thought; diversity of work experiences, religions, nationalities, hobbies, political beliefs, races, sexual preference, age, musical tastes, and even favorite sports teams. The magic really happens when diverse perspectives and experiences come together to form something entirely new. … This melting pot approach can drive some of the most creative cultures, thinking, and ultimately business results.”

Empower People

Innovation is mostly about people. Creating an innovative environment isn’t primarily about processes, infrastructure, or technology; it’s about equipping people with the tools they need to succeed. Linkner writes, “Unfortunately, most companies fail to unleash their most valuable resources: human creativity, imagination, and original thinking.” Schwartz adds:

“How well are their core needs — physical, emotional, mental, and spiritual — being met in the workplace? The more people are preoccupied by unmet needs, the less energy and engagement they bring to their work. Begin by asking employees, one at a time, what they need to perform at their best. Next, define what success looks like and hold people accountable to specific metrics, but as much as possible, let them design their days as they see fit to achieve those outcomes.”

Edinger concludes, “A culture where innovation thrives in every corner is exponentially more valuable than a culture which anoints one or even a few people as ‘the innovative ones.’ If you create an environment of innovation, who knows where your next great idea will come from?”