The Five Criteria to Develop a Culture of Innovation

culture of innovationIf you ask managers, employees or executives whether they want to work in a company that has a culture of innovation, most will say yes. Why does this sound so attractive? Innovation is associated with rapid success, disruptive innovation and growth, and these days “culture” is often seen as trendy, modern and fun. But despite the consensus that a culture of innovation sounds attractive, the concept remains fairly nebulous.

Once we pin down the meaning of the term and why we need it, then we can unpack the five fundamental building blocks to a culture of innovation.

Culture Versus Strategies

It is common knowledge businesses must innovate to grow, and innovation strategies are the tools and methods used to develop innovative ideas. But a culture of innovation establishes the environment that enables those strategies to work properly.

Building a culture of innovation is similar to growing apples. Leaders have to till the ground and enrich the soil, then water the seeds and prune the branches to help the tree (or the culture) blossom. It takes time to nurture, but without a healthy culture in place, the strongest innovative strategies won’t take root.

Some companies make big investments like hiring strategy experts to teach a systematic approach to innovation. But if there is no foundation, those investments fail. Investing in a culture of innovation—one that supports and rewards innovative behaviors—has to come first.

A company culture includes everyone in the organization. Although we tend to notice only the leaders, like Steve Jobs or Elon Musk, the reality is any successful innovation is a result of strong leadership and team effort. A culture connects people and sets up the conditions that empower teams to innovate together.

So what cultural conditions are required to ensure innovation strategies work successfully?

Echoing Maslow’s hierarchy of needs, there are five criteria that have to be met to develop a culture of innovation: engagement, understanding, trust, collaboration and collective creativity.


Engagement is the foundation of productivity and the prerequisite for innovation. Not only are disengaged workers less productive, but they also drain the energy and productivity of coworkers. And disengaged workers are more common than one might think; according to Gallup, 70 percent of workers in the United States are disengaged.

If a high percentage of employees are disengaged, it is very unlikely that innovative ideas will come to fruition. A culture of innovation requires motivation, interest and curiosity, and it starts with four key factors for employee engagement:

  1. Strong purpose and values
  2. Meaningful work
  3. Clear expectations and realistic goals
  4. Apt, well-trained managers


Engaged employees need to understand their own roles, their team’s structure, and how their team interacts with others in the organization. This includes defining tasks and responsibilities and being aware of the different strengths and personality types within the team. This individual and group awareness enables teams to divide tasks by acknowledging what everyone is best (and worst) at.

Understanding one another also implies knowing more about each other’s lives outside of work. Casual conversations and socializing lead to bonding and building meaningful relationships.


Innovating means leaving the paths and routines we already know. Since we can’t always predict the outcomes once we leave those paths, failure is an inevitable part of innovation.

Microsoft founder Bill Gates once said, “In the corporate world, when someone makes a mistake, everyone runs for cover. At Microsoft, I try to put an end to that kind of thinking. It’s fine to celebrate success, but it’s more important to heed the lessons of failure. How a company deals with mistakes suggests how well it will bring out the best ideas and talents of its people and how effectively it will respond to change.”

We are only willing to take those risks if we trust the people we work with, and we only trust people we know. In a 1999 study, Harvard Business School professor Amy Edmondson defined psychological safety as “the shared belief held by members of a team that the team is safe for interpersonal risk-taking.” Psychological safety is “a sense of confidence that the team will not embarrass, reject or punish someone for speaking up.”

Only when we have confidence in each other are we willing to be vulnerable, take risks and explore new possibilities. We trust that we won’t look silly or damage our reputation when we try something that might not work. That is why trust is a fundamental part of a culture of innovation.

Communication & Collaboration

Group Geniuswritten by University of North Carolina professor Keith Sawyer, explains how collaboration and a multitude of perspectives lead to innovative breakthroughs. Companies that have learned to collaborate in a non-competitive way are better in solving problems, inventing and implementing new ideas. Teams that collaborate well set realistic goals, hold each other accountable, work together and speak openly.

Successful collaboration starts with open communication. Teams in which everyone talks and listens in roughly equal measure are more productive than teams in which someone dominates the discussions, even when that person is a superior or the smartest person in the room. The ability to communicate well and often has proven to be the best predictor of a team’s success.

Communication includes the ability to listen, express thoughts verbally or nonverbally, use emotional intelligence, compromise and find integrative solutions.

Collective Creativity

It is a myth that innovation is the result of an “Aha” moment of an individual genius. Even Einstein did not come up with his revolutionary theory in isolation. Innovation is a social process. Highly innovative organizations like Pixar and Google have developed systems of collective creativity — a collective genius, if you will — and great leaders foster that collective creativity to drive innovation. Since creativity is not just about new products — it includes processes, logistics, and business models — an innovative company is creative across the board.

Key components of collective creativity include team members who are confident in their own creative abilities and know how to leverage each other’s creative strengths and weaknesses. They are comfortable sharing ideas during the vulnerable, early stages and they feel free to share their insights rather than hoarding ideas in an effort to outperform coworkers. These teams aren’t afraid to commit to open-ended projects with unknown outcomes, and they tackle obstacles and crises head on.

A Culture Of Innovation

The history of companies like Apple and Netflix shows that constant innovation can lead to huge shifts and changes. Netflix started out by mailing DVDs. Now that is only a fraction of its business, and it has developed into a major player in movie and TV show production. Apple was once a computer company, but now most of its revenue comes from the iPhone. In a fast-changing world, innovation is a dynamic process. It takes continuous effort to build and grow a culture that fosters an entrepreneurial, open-minded and innovative spirit. And creative leaders need to provide the matching framework and infrastructure. As paradoxical as it may seem, when an organization meets all five of the above criteria, innovation becomes routine.


This article was first published in Texas CEO Magazine.


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