How to Encourage Innovative Thinking in Your Organization

From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

If you ask most corporate executives whether they value innovation, their answer would almost certainly be an unqualified yes. After all, innovation ranks right up there with motherhood and the American way as a core value. But if you look at how those same executives are evaluated at bonus time, it’s typically on the factors that most discourage innovation: cost-control, risk avoidance and profitability.

Why is there such an imbalance between our objectives and our behavior? In the case of large companies in particular, it’s because cultural values discourage risk-taking, which is the soul of innovation. We may give lip service to being innovative, but come review time, we tend to base evaluations on successful completion of objectives, with the emphasis on “successful.” Failure is considered a negative, but failure is intrinsic to innovation. In my view, if less than a third of your new initiatives don’t fail, you’re not trying hard enough.

I’ve seen a few characteristics common to many organizations that I’d define as innovative.

The leadership takes risks – If employees see company leaders avoiding unpopular decisions and always taking the “safe” route, they will quickly learn to emulate that behavior. Innovative companies are willing to pursue untested ideas, even if the odds are against them. And they’re not afraid of admitting failure if they thought the idea had potential. In my experience, leadership example is the most important factor in creating an innovative culture.

They value individual achievement – While everyone recognizes the importance of teamwork, the reality is that innovation flourishes when individual employees are given the leeway to pursue their own ideas. The issue is not recognizing individual successes, although that often helps. It’s a matter of giving people the satisfaction of seeing their initiative result in meaningful improvement. The more potential a person demonstrates for innovation, the more latitude he or she should be given to realize that potential.

They respect their instincts – In his excellent book Blink!, Malcolm Gladwell describes how a person’s intuitive reaction to an event, experience or idea is very often the best one to follow. Yet many organizations research ideas to death, allowing innovation to die the death of a thousand focus groups. Research has its place, but its principal value is to validate good ideas – or at least identify terrible ones – rather than to tell you what to do. Innovative companies are fast because their leaders trust their instincts enough to take action without waiting for the market to give them the okay.

They shred bureaucracy and streamline approvals – Meetings and committees are the enemy of innovation. They lead to consensual decisions, which are usually safe but unimaginative. Managers need a fast-track process to move promising ideas through the approval process. Committees need tight deadlines and time limits on discussion. The more you talk about something, the less likely you are to act on it. Innovative organizations give leaders the flexibility to shortcut committee approvals.

Their performance criteria recognize innovation – Is there an innovation category on your performance review form? Can an employee get an equally good rating for failing to succeed with a risky project as succeeding with a safe one? Does your employee newsletter celebrate great ideas that didn’t work out or just the ideas that succeeded? If you’re not rewarding risk-taking in your own employees, you’re going to breed a play-it-safe culture.

In coming posts, I’ll elaborate on other factors that make companies innovative. Playing it safe isn’t one of them.