Culture & Innovation Go Hand in Hand: Position Your Company to Excel at Both

 In Culture, Innovation

In the past companies relied on a cut-throat, take-no-prisoner culture to drive success, but research shows that not only is this particular work environment harmful to productivity, it also affects the physical and mental health of employees.

The thinking that stress and pressure pushes people to perform better is redundant, because what the cut-throat approach fails to see is the hidden costs that are incurred. It’s for this reason that the culture of a company is now important than ever, and companies will often tout their culture as one of the benefits of working with them in order to attract employees and even clients. It is essential that companies cultivate a positive the right culture in which employees are not only happy and productive, but also innovative.

Innovation is driven by culture

Research strongly suggests that culture is the main driver of innovation. In order for a company to be successful and thrive, its culture must promote and encourage open communication which will, in turn, allow employees to think more creatively and come up with innovative ideas.

In this comprehensive research of the factors most important for innovation, for instance, the authors found that corporate culture was a much more important driver of radical innovation than labor, capital, government or national culture. That research involved 759 companies based in 17 major markets, which goes to show the universality of corporate culture as a driver of innovation.

According to research by BCG, successfully innovating companies approach innovation as a system and that system is rooted in experimentation, evolving over time as the external environment and internal needs change. Part of that system is the right culture, a culture of innovation. But what does that really mean?

A culture of innovation can be defined as one that encourages reasonable risk and uncertainty in the goal of larger, more profitable products and services.  Jeffrey Phillips, in his piece, Why Corporate Culture is Important for Innovation states that a culture of innovation is one that is based on experimentation and discovery, because many good ideas or insights exist outside the corporate boundaries. Innovative cultures understand that generating and developing new ideas is an iterative discovery process, and they also understand that when failure occurs, innovative organizations extract learning and new insights so that the “failure” leads eventually to a new success. Very importantly also, innovative cultures sustain innovation as a way of operations, rather than thinking of innovation as an occasional, sporadic process.

Why is the right culture important for innovation?

A company’s culture is a construct of its history, the context in which it does business, its corporate memory and the effectiveness of its operations. It is what defines the company and the way it does things. Culture shapes how employees interact with their work, with one another and with the outside world, and it establishes often undefined ‘rules of engagement’ around what is acceptable or unacceptable behavior and risk tolerance. In other words, it is the genetic makeup of a company.

It is no surprise therefore that it shapes the company’s approach to innovation. When a corporate culture is restrictive, it creates an oppressive atmosphere where staff are discouraged from expressing their ideas, creativity or participating in key decisions – the direct opposite of innovation. In such a culture, staff feel as though they don’t matter and a ‘us’ (employees) vs ‘them’ (management) culture takes root, which affects morale, productivity and in the end, the company’s ability to grow or become a leader in its field. With such companies, one is more like to find a thought process that says things like

„I’m paid to meet targets on existing business, not to generate ideas.”

“Our company is too big to listen to my small ideas.“

„We don’t need to change; people will get nervous and cynical if we stop doing things the way we always have.”

A positive culture on the other hand, is open and supportive, giving employees the freedom to do what needs to be done. And one does not need to look too far to see the correlation between successful companies and the fact that their cultures are not just the usual mediocre company culture found in many other companies. Google is the archetype of what innovative companies strive to be. With its informal product development process that give all staff access to the chief executive and co-founders, Googles, staff are encouraged to think creatively and innovation is encouraged, recognized and rewarded. Salesforce is another shining light on the innovation spectrum. With a global staff contingent, employees collaborate and share ideas via Chatter, a social networking app. The application allows employees to compare drafts of documents and share ideas in real time, which eliminates the lag that comes with emails and constant meetings. DreamWorks has a 97% employee retention rate, which is due to a culture that fosters creativity and encourages staff to take risks and engage in spontaneous discussions, while Intuit gives its best business innovators three months of „unstructured“ time that can be used to explore new opportunities, because they recognize that providing employees with the time to experiment with new technologies, products, or processes can catalyze the next big thing.

Attracting the right people

Another reason culture is important to innovation is because it plays a big role in attracting the kind of people who can take your company to the next level. Think back to your parents and grandparents. They found a job that offered security and a paycheck and in turn they gave 20 – 25 years of service, receiving a golden handshake and a gold-plated wristwatch on retirement.  But things have changed since then. Millennials are now the largest generational group in the workplace, with almost 54 million making up the labor force. And what they want from their employer is very different to previous generations. Today a career means so much more and employees are look at the values, the sense of community, and the culture of a company before they accept the job. According to a study by Deloitte University Press, the number one priority Human Resources leaders’ is to nurture culture and engagement. This is simply because any company that wants to thrive in today’s business landscape needs to harness the unique and highly innovative millennial skill set. And to do that, they need to be attractive to that cohort of workers. The same study asserts that employees are now customers, and the power has shifted from the employer to them.  Taken together, these all point to the same thing: that in order to foster a positive succeed, it is necessary to identify what matters to today’s employees, millennials and non-millennials alike.

How then does a company go about creating the right culture?

The first thing to note is that changing a culture is a long term project. It does not happen suddenly. It requires a constant and steady ‘deposit’ into an organization’s ‘culture bank’ before it can see results. The place to start is with creating a shared value that the whole company can buy into, and from that you can begin to develop traditions like what is recognized and rewarded, how employees are encouraged to behave, etc. throughout the process, the leadership must be on board, doing and saying the right things, and demonstrating their commitment in the right way. As the saying goes, “employees don’t leave companies, they leave managers.”  So your efforts at building a positive culture must include the leadership.

Employee-to-employer engagement is essential for any organization that wants to build a culture that celebrates innovation, as ideas can only fly as high as the top echelons allow. If the management is engaged and employees can share their ideas, there is a greater chance of success. Gone are the days when employees were subservient minions that were kept in the dark and told what to do. Or at least those days should be gone, especially for a company that wants to innovate. In today’s Glassdoor era, employees are privy to what was once considered ‘private and confidential’ information and if you want your team to have a vested interest in your company they need to be a part of the decision-making processes. Different points of view, perspectives and ideas must be welcomed and allowed given a chance. Of course, not every one needs to be adopted, but it is important to give people the chance to air those ideas and then engage with the proponents on an intellectual level, on the basis of the viability and value of the idea rather than as a superior who expects to give orders rather than

Recognition is another thing that needs to be brought on board. Employees like to be recognized for their contribution, and when you attribute an idea to its source, that employee is encouraged to continue to think creatively and that is something every company should strive to incorporate into their culture. As ridiculous as it sounds, a ‘well done’ or pat on the back goes a long way in keeping staff happy and motivated. It costs nothing but the results are priceless.

Similar to that is evaluation and feedback. These are critical aspects of building an innovation culture. It is essential to have real-time programs in place to better understand where things are working, what needs improvement and how to make the necessary changes. This goes beyond annual appraisals; it should help employees and managers have a clear picture. It also helps employees understand how meaningful their work is.  Constantly reinforce a culture of feedback and engagement and encourage transparency from all the staff at all times, including management.

The above-mentioned priorities are a good place to start, but the strongest company cultures develop when employees play an integral part in developing it. Which is why it is imperative that any efforts to develop the right culture must be broad-based and carry every one along. One of the best ways to do this it by providing training that covers everyone, not just ‘key’ employees. When a company’s culture reflects the values and beliefs of a team across the board, the result is a positive environment where innovation thrives.


Thre is no doubt that innovation is hugely important in today’s business environment, but as we have seen, innovation cannot stand on its own. Culture is what props it  up and gives it a leg to stand on. Fortunately, a positive culture can be developed with the right training, tools and resources, such as those we offere at Corporate Alchemists. Anyone who thinks investing solid culture and innovation training is a waste of money obviously doesn’t understadn the much higher cost of a high staff turnover brought on by a negative culture. Instead of wracking your brain to come up with the next big idea you might want to consider that you’re probably better off putting your efforts into promoting innovation within your organization. That way, everybody within your organization is potentially the source of the next big idea you’re looking for.

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