5 steps to building a strong innovation culture in your business

Brick Lego Expo. Photo: Chris Ratcliffe/Getty Images.

Excitement has been bubbling across Australian organisations of late, with the feeling Australia is on the verge of a bold new future driven by the promise of innovation. Innovation is being encouraged across the country, from the Turnbull Government’s Innovation Statement to the Victorian Government announcing its new Innovation Expert Panel soon after launching its $60 million innovation fund and LaunchVic, the independent body to look over the fund.

While startups around the state and across the country are eager to reap the benefits of new government support, it’s important for Australian businesses to remember that innovation is not just about commercialising innovation. The starting points of innovation are found within the culture of an organisation, and require business leaders to actively foster such; encouraging teams and individuals to challenge the status quo.

Innovation is an often elusive element — difficult to define, hard to keep hold of and seemingly impossible to instill retroactively. Fundamentally, it’s about people and how they behave, which is why breeding innovation within an organisation is something that is much easier from day one. Not surprisingly, many small businesses and startups are in much better shape than their larger peers.

I’ve spent my career in high tech startups, both in Australia and the US, and have worked with companies at both ends of the age and size range. The following observations are based on my own efforts building, leading and, in some cases, attempting to rebuild teams within the software industry but can be applied to every organisation in every industry.

If you’re coming late to the innovation game there are some serious challenges you will face and a lot of behaviours to change, but it’s a goal that will reap enormous benefits. It does require commitment and leadership, with an emphasis on deliberate and pragmatic efforts to change a number of key behaviours across the entire organisation. It will also require that you stick with these efforts far longer than you might think.

1. Reward intelligent risk taking behaviour

Innovation is about doing things differently. It flourishes in environments where people are willing to take risks and try new ideas. Critically, you need to reward the taking of the risk itself, especially when that risk fails. Merely rewarding the successes and positive outcomes is not going to encourage continued innovation — it may in fact have the reverse effect. Note that the risks can be small and measured — not just “bet the farm” size risks — and can build improvements incrementally.

Foster a culture of learning from the risks that fail. It’s typically much easier to learn from failure than success. When an idea doesn’t work, look at why that might be and build on it from there. Encourage this kind of active learning process, especially in larger companies. Make it easy for people to propose change and then assess whether that change has had an effect. Also consider keeping metrics on risk taken vs failures vs successes. If all you see is successes and no failures then you’re not trying hard enough.

2. Align management and reward innovation enablement

The largest hurdle you’re going to have to overcome in large organisations is culture, and that specifically in middle management where a lot of behaviours are reinforced and a lot efforts to change die a quiet death. Making bold statements from the top that your organisation is going to embrace culture change in pursuit of innovation is not enough.

Choose middle management that have the right leadership skills to embrace and foster change. Bring the right metrics into management’s KPIs and professional measurement, and you will see the culture change throughout the entire organisation. You may also have to drop a few elements from your current metrics regime.

Work across the entire organisation at all levels to talk about the behaviours important to fostering innovation and what each department and level needs. Then bring in serious change management assistance addressing desired behaviours for every level. Follow through and inspect what you expect.

3. Innovation for every staff member, in every department

Many companies fall foul of the idea that innovation happens in a lab, supported by large budgets and a team of creative designers and engineers. In my experience, “innovation labs” are generally a bad idea. They imply that only a small subset of people is allowed to be innovative, missing huge opportunities for incremental change.

For an organisation to be truly innovative the entire organisation needs to be able to think differently; involvement of every staff member is vital. It is this way that you will innovate from the very small – say, a new way to approach a daily process of the accounts team – to the huge, market changing product ideas.

At Zendesk, we have what we call “Lab Day” every two weeks; a full day where the engineering team can work on their own thoughts, ideas and projects. Every engineer is involved and it is respected by the entire organisation, particularly management, so no meetings are booked and no work deadlines scheduled for Lab Day. Dedicating time and resources to innovation and setting it aside is vital, otherwise busy teams won’t find the time or the approval to think differently. This culture of Lab Day entrenches the behaviour of innovation amongst staff and empowers our staff to be innovative.

We also have an annual Zendevian Cup challenge in which the entire company is given 24 hours to work in small teams competing for the best new product innovation. Real prize money plus time off to work on their idea are provided to the winners. And we’ve shipped revolutionary new product features from previous projects, including projects that did not win the prize.

As another example, the Victorian Government teamed up with Code for Australia to host a two part hackathon leading up to the budget, entitled #budgethack. Consider doing such things within your own organisation.

4. Support innovation from the bottom up

Photo: Getty Images.

Innovation works best when it comes from the bottom up; the teams on the ground are most likely to have ideas and know what needs changing. But it is vital to support that from the top down. At Zendesk, I particularly like the allegory “don’t fear the banana” that our CEO Mikkel Svane is so fond of, which is loosely on a study of culture and norms with a cage full of monkeys. It’s a great reminder of encouraging even new employees to question the processes, practices, and frankly plain old habits, which all too quickly can stifle innovation.

A technique I find that works really well for me is flipping the organisational chart upside down. I remember talking about this approach years ago with then Amazon senior engineer and now director of Facebook hardware engineering, Matt Corddry, and discovering that he did the same thing. As VP for engineering and managing director, my role is to put the people and systems in place to best support my team to do what they do. My job is to hire people who are smarter than me and allowing them to find ways of making things better — and actively encourage them to do so every day.

5. Remove the roadblocks

Truth is, most people find that taking risks is scary and with good reason. Lots of excuses frequently emerge that prevent us trying different approaches, especially when the stakes are high. The most cautious among us tend to get the legal team involved at the outset to look at the parameters within which we have to work. This typically sets up hurdles straight away and doesn’t reward risk-taking behaviour.

While looking at the legal implications is necessary, it’s important to create room and oxygen for change and to remove the roadblocks — whether that is legal, security or partnerships — and get those elements engaged collaboratively. Properly aligned, the legal and finance teams can protect the company while also being an enabler in the innovation process.

Fostering a culture of innovation is a big job that in can involve enormous cultural and behavioural change. If you want to benefit from innovation, you need to make change happen. Every day.

Brett Adam is vice president of engineering for Australia and New Zealand at Zendesk.