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Innovation Culture: the important role of Corporate Culture in driving Innovation

What is innovation culture?

Innovation, creativity and overall success of a company are highly determined by the presence of an effective corporate culture. The most innovative and successful companies of today such as Google, Netflix, or Tesla have been paying great attention to creating a culture that encourages employees to believe in the importance of their role and in the purpose of the company. But why is corporate culture so relevant for a company to be innovative? What are the characteristics of an effective and innovative corporate culture, and how can it be achieved?

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Create the right environment for innovation

Let’s start from the basis: every leader wants his organization to be successful. Although the ideas of success can be different from one organization to the other – it can be measured as growth and profit, as the ability of creating great products, or as being able to bring prosperity and peace to the world - it’s always the leaders’ responsibility to achieve it. 

Today, the ability of organizations to innovate is considered an essential attribute for reaching successful outcomes. In order for their company to innovate, leaders need to develop and follow strategy, which strictly depends on the culture of the organization. Corporate culture, in fact, plays a great role in determining the success of failure of a company. A negative culture can undermine the company’s strategy to success and innovation, while a positive corporate culture encourages it. Innovation is determined by Strategy which is determined by Culture.

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Connection between Culture, Strategy and Innovation, by Really Good Innovation

What is Corporate Culture, and how does it impact Innovation? 

We can think of corporate culture as made of two main components: 

·   values

·   norms

The values are something that the company aspires to. “We can associate the values of a company to the 10 commandments” says in a video John Graham, finance professor at Duke University. The norms, on the other hand, are the living out of the values: they are the actions performed daily by the members of an organization to achieve the values. 

For a corporate culture to be effective and for the values to be respected, norms and values need to be aligned. Other than making sure that the values and norms work together, leaders need to set the example. Great leaders are the embodiment of those norms and values, and they make sure that employees live by the same norms and values of the company.

To foster innovation, it is important that the Corporate Culture of a company embeds a series of values and norms that promote employees’ creativity and encourage them to experiment new paths. This model of corporate culture is also known as: Innovation Culture. 

What is Innovation Culture? 

The innovation culture is a configuration of values and norms that make innovative thinking natural within the organization and encourage innovation activities at all levels. Developing an innovation culture means creating an environment in which new ideas emerge rapidly and organically, new paths and risks are taken, different approaches are tried and employees are given the chance to experiment and learn from their mistakes. 

Innovation culture criteria, by Really Good Innovation
Innovation culture criteria, by Really Good Innovation

What are the general elements of an Innovation Culture?

The main characteristics of an innovative corporate culture include:

-   The presence of innovative leaders and managers

-   The presence of innovative teams and innovative individuals

-   An environment that encourages innovation

-   Connection with the world outside the organization

Innovative leaders and managers

The culture of an organization is strictly dependent on the abilities and personality of their leaders, as well as the relationship that they develop towards their employees. The most innovative organizations, in fact, are led by innovators who believe in their abilities to create great products and change the world. Leaders also have the great responsibility to encourage their staff in the initial steps towards innovation and to challenge it to improve.

According to recent studies, innovation is more likely to develop in corporate settings where there is low-power distance between managers and employees, and with high tolerance for uncertainty from leaders. In working environments where a hierarchical structure is enhanced, employees feel distant from their leaders and managers. In such context, questions and critiques are discouraged, as well as the ability of individuals to express themselves and contribute with their creativity. Similarly, the intolerance towards uncertainty, represses the exploration of new paths and the ability to take risks, which are essential elements of innovation. 

Innovative teams and individuals

Performance and creativity vary from team to team. It has been found that most innovative companies are composed by small teams of individuals with different specializations and abilities. The creativity of the team also depends on the respect of values and norms of the company by its members, by good communication within the team and the ability to trust and help each other.

Another characteristic of innovative companies is the presence of innovative individuals. There are always some people who are more creative than others, who are able to think outside the box, are enthusiastic about their ideas and believe in their ability to implement them. These individuals are the driving source of innovation and their presence is essential to the organization. Therefore, hiring innovative individuals, giving them the confidence and the right space to express their creativity is a great investment for a company. 

Environment that encourages innovation

In general, the ability to innovate highly depends on the working environment and the presence of specific elements such as: sufficient resources, an identified strategy of innovation, the presence of innovation management competences, meaningful work, a good level of challenge for everyone, and motivation to innovate.

Connection to the environment outside the organization

A good relationship with the external environment is key. The outside, which is formed by other companies, stakeholders, shareholders, management, employees and the civil society and nature must all benefit from the innovation developed inside the organization. There needs to be openness, trust and cooperation between the internal and external of the organization. In an innovative company, individuals are connected with the world around them, they understand the needs of society and respond to them. 

What is Netflix's culture?

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One of the companies that has become famous for their innovative corporate culture is Netflix. 

Since its start in 1997, Netflix has grown from a small start-up to being the world’s leading company in the streaming business, changing the way we consume movies and TV content. The company has innovated the entertainment industry disrupting the previous model of content distribution and introducing new standards for others to follow. Netflix, in fact, has been the first platform to provide original and exclusive content, to introduce a subscriber model which provides unlimited access worldwide, the algorithm which predicts the individual’s preferences and personalizes the list of recommendations, and the “binge watching phenomenon” which allowed viewers to watch as many episodes as possible all at once. 

The high level of innovation achieved by Netflix, is in great part dependent on the introduction of a corporate culture which supports creativity and encourages its employees to take risks. 

In 2009, Netflix openly shared a document called “the culture deck”, which communicates how the company operates, what are its values, the behavior expected from its employees, and what in turn the employees can expect from the company. What emerges from these principles that have been made public, is that the company has been able to create an environment in which employees are trusted and made accountable for their actions, in which uncertainty and mistakes are tolerated and risks are taken. At Netflix great space is given to confrontation, failure, feedback and experimentation, which are considered fundamental conditions for allowing the best ideas to surface.

The company also puts a lot of attention in hiring the “right” people, the ones that bring talent and new ideas, that are willing to commit to the culture and the cause of the company, to contribute constructively and efficiently. 

Another aspect of the Netflix culture that has received a lot of attention is the decision of the company to not set a corporate expense policy. Employees are free to spend the money that they desire if they consider it is in the best interest of the company. The idea is that by giving employees this great degree of trust and independence, they become more aware of the cause of the company and they generally make the right choices. 

Read the detailed description of Netflix culture on the official website at:  https://jobs.netflix.com/culture

Factors that encourage an innovation culture, by Really Good Innovation

How to develop an innovation culture?

Companies that are prioritizing innovation into their activities really benefit in terms of productivity, more engaged workforce, they are better able to retain and attract talent and better organizational performance. Other than what it has already been said throughout the article, there are some simple actions that can be integrated into organizations’ strategy towards innovation: 

1. Engage employees and challenge them. 

Asking provocative questions  and challenging individuals to question their position and beliefs can motivate them to think about improvements and changes, in other words, to think more creatively.  

2. Conduct innovation workshops inside the organization.

It is important to consider innovation as one of the top priorities of a company and by organizing workshops and weekly activities focused on improving this aspect, employees will start considering it their priority as well. Also hackathons can be a great way for interaction.

3. Encourage confrontation with external parties. 

Constructive confrontation is a great source for growth and improvement. Bringing employees together with competitors or customers for example, or individuals who might have different perspectives can create precious opportunities for innovation.

4. Use Innovation software. 

The use of Innovation softwares - such as Ideanote - in a company enables employees of different teams and departments to communicate and connect their ideas. Open confrontation within the individuals inside the company is always a great source of inspiration. For more innovation tools check our sub-page: Tools

5. Invest in innovative minds. 

Hiring people who have innovative potential and who want to change things, as well as building teams of people with different skills, backgrounds and ways of thinking are essential factors for creativity. 



Check also this article by the author of "The innovation mode" about some additional aspects of implementing an innovation culture!