‘Let chaos reign, then rein in chaos’. This may have formed the title of a seminal 2007 study on corporate longevity, but it could also serve as a maxim for managers trying to foster a culture of innovation in the workforce.

‘Innovation is all about managing various contradictions,’ says Jaideep Prabhu, Nehru Professor of Indian Business at Judge Business School at the University of Cambridge. ‘Innovative firms have the ability to do this. It is a fine balance.’

This will perhaps strike a chord with anyone who’s watched a working-at-Google video on YouTube and seen its laidback, free-thinking corporate culture in action. The company, whose engineers are reportedly required to assign 20% of their time to work on a project idea of their choice, has become synonymous with innovation. But clearly it didn’t become a multi-billion dollar business by letting all of its employees do what they want at work every day. It has found a way of achieving the balance that Professor Prabhu speaks of.

Fundamental to this is embedding a spirit of innovation into the culture and DNA of a company. This means that people not only feel empowered to come up with new ideas for the business, but they also know there is a structure in place to harness and nurture these ideas and, where appropriate, bring them to fruition.

The right attitude

‘The organisations that are systemically innovative in the long term are distinguished by having a culture and attitudes that are committed to innovation,’ says Professor Prabhu. As an Innovation Fellow of the Advanced Institute of Management (AIM) Research, he recently conducted a study on innovation, based on survey and archival data from 759 companies across the globe. ‘Today, corporate culture is the strongest driver of radical innovation.’

As all managers know, corporate culture is incredibly difficult to change. Even if there’s an excellent tier of middle management that encourages innovation on a daily basis, any efforts will be thwarted unless the right tone and conditions are set at the top. Opinion may be divided over the status of innovation during a recession, but any leader worth their salt knows that innovation is the lifeblood of any business – and it’s even more important during a downturn. And innovation is not just about lightbulb moments and new products – there is equally a need for fresh thinking when it comes to organisational structure, business processes, people management and customer relations. 

Reach out to risk

One of the overriding factors in building a culture of innovation is an organisation’s attitude to risk. The AIM research identified the ability to embrace risk rather than avoid it as one of the attitudes and practices within innovative companies that makes them special. In a downturn, inviting in risk is easier said than done. But Jeremy Starling, MD of Involve, which specialises in change programmes that involve a company’s employees, says that leaders must create the right climate for innovation by ensuring individuals aren’t punished if they try to deliver a better customer experience or make business improvements but ultimately fail.

‘Give them a pat on the back for being innovative and say it’s fantastic that they tried,’ he says. ‘Senior management can accidentally sabotage innovation by criticising someone for taking a risk, which sends out a huge signal saying: “Don’t do it.” Team leaders and middle managers are also central to the process because if they don’t embrace this way of thinking, innovation will get blocked and nothing will happen.’

But before employees are given free rein to come up with ideas, there needs to be some direction from management and Starling says it is no good simply telling everyone to innovate constantly on every project. ‘Be incredibly clear about the direction of the business, setting out the why, when and what. Once you think they’ve got it, let them know they’re free to innovate,’ he says. ‘When you start asking and involving your people you’ll get all sorts of clever ideas and answers that were not thought of in the boardroom.’ He gives an example of a Sainsbury’s employee who came up with the idea of suggesting alternative ingredients to customers when a foodstuff was out of stock. ‘This was a simple, free innovation that has made a big impact.’

Wayne Clarke, managing partner at Best Companies Partnership, which advises organisations on how to improve business strategies, agrees that the key is articulating why you exist as a company and where you are going. He adds that managers must also make sure that the individual understands what it means to them and feels sufficiently engaged with the company to want to make a contribution. ‘You can’t force ideas and innovation. A person has got to do it because they want to, not because they feel they have to,’ he says. ‘This is one of the barriers a manager must unlock if innovation is to flourish.’

Of course, getting the workforce on board with a strategy to promote innovation is one thing, but helping them to unlock their creative potential is quite another. However, there are a number of ways that managers can promote this. Aside from traditional techniques such as brainstorming sessions and awaydays, communities of practice and interest can be established to encourage collaboration in a particular area. Internet forums or micro sites can be set up to support these and extend discussion.

One of the practices that emerged from the AIM research is the appointment of product champions. These can lead groups and teams of individuals, providing moral support as ideas are developed. They needn’t be the people who sparked the original idea but may have good communication and facilitation skills to champion and further projects. As Professor Prabhu explains, managers shouldn’t expect that everyone will be a good ideas person, but they can still have a role to play in innovation.

‘Innovation is a complex process and your ideal team will be good at all stages of the process, not just coming up with ideas,’ he says.
‘It’s important that they work collaboratively as this is important in the final execution.’

Encouraging employees to look outside of their department can also be a way of triggering new ideas and ways of working, so encourage this cross-fertilisation of ideas. At Best Companies Partnership, communities of interest and practice are part of the culture, and employees are also encouraged to do one thing a week that breaks with their normal job role.  

A word of thanks

Offering incentives and financial rewards can help to encourage innovation, but Clarke believes that equally as important is recognition of a good idea. A friend of his came up with an idea for processing transactions at the automotive firm he worked for, which went on to save the company hundreds of thousands of pounds. He received a standard financial award, but never felt the level of his contribution was appreciated.

‘So there was a policy in place that rewarded innovation and improvement, but it was a blanket policy that didn’t recognise his individual contribution,’ says Clarke. ‘Had someone from senior management come up to him and expressed their gratitude for what he’d done, it would probably have been enough to satisfy him,’ he says. ‘Managers should take five minutes every Friday to think about who’s contributed during the week and ask themselves if they’ve thanked them.’

Doing something that helps their company through a recession can also act as an incentive in itself to draw out innovation from inwardly focused employees. ‘If you can get across to people that you can save jobs and survive the recession by providing better customer service, it helps take their mind off their own worries and encourages them to do something positive,’ says Starling. ‘People want to make a difference.’

With cost a concern for everyone, managers must have mechanisms in place to ensure the ideas that come through are ones that will bring business benefits to the company. Martin Binks, professor of entrepreneurial development and director of the Institute for Enterprise and Innovation at Nottingham University Business School, points out that the further down the line you get with development, the more expensive it is to extricate yourself from the process if the idea proves a no-go. He believes most innovation theory and business applications place the emphasis on post-concept, such as working out how a product will be designed and marketed, but what’s needed is greater focus on the pre-concept stage.

‘Human beings tend to have knee-jerk reactions to the nearest solution in their experience,’ he says. ‘If you don’t do the pre-concept stage properly, the flow of ideas into a business and the economy could easily be a flow of sub-optimal, knee-jerk reactions that haven’t been well considered, analysed or subjected to all the possibilities out there.’ He advocates ‘analytically stripping down’ a problem to its root cause so you can pinpoint the area you need to address, and the business school offers corporate clients a tool that enables them to do this. The next stage, he says, is to blast it with as much ‘divergent thinking’ as possible.

‘You may even want people from completely different areas of activity to throw in their twopenny’s worth to break out of your paradigm or way of thinking,’ he says. ‘Once you’ve done that and generated waves of ideas – some of which will be ludicrous and outrageous – you then go through a process of sorting and sifting where you home in on a few practical solutions and work out analytically which is the best one. Then you have your concept.’

Among the clients that have used this approach for pre-concept work is smart ticketing company Novacroft. Founder Debra Charles went to Professor Binks because she felt the spirit of innovation within the company was being eroded and stifled by the burden of compliance. The tool takes the form of a set of prompt cards that make you analyse and re-analyse a situation so you arrive at the root cause of a problem, she explains. You can then build a route map to address this and at Novacroft, the approach has been used to find new ways to deal with everything from winning business to disaster recovery.

‘It helps you define the problem and makes you look at all possibilities. It’s a bit like going into a parallel universe and the ideas certainly flow,’ she says.

Charles goes on to explain that in the smart ticketing sector there is a race taking place similar to that which occurred in the video market many years ago with VHS and Betamax, and she is hoping to use the tool to gain competitive advantage. Without giving away trade secrets, she says: ‘What it’s helped us do is take a different approach, which means we change the race to gain competitive edge.’

Outside influence

For organisations that are struggling to hold on to – or even regain – their innovative spark, another option is to parachute in help.
Green Park Interim & Executive Resourcing has been doing this by restructuring and reorganising under-performing companies. 
‘In some cases we find that because of everything that’s happened, innovation has been taken out of the business and no one feels anyone is listening to new ideas any more,’ says Green Park co-founder Steve Baggi. ‘We find that with the executive tier above them gone, managers are more confident to speak up and have direct communication with a turnaround CEO who can start to build the culture again from the bottom up.’

There can be no shortcut to creating a culture of innovation and, as Professor Prabhu says, by its nature it will be fraught with contradiction. One of his co-authors in the AIM research, Rajesh Chandy of London Business School, drew up a list of conflicts that includes: pre-empting the future, but profiting in the present; developing core competencies, but preventing core rigidities; maintaining organisational continuity, but adapting and changing; maintaining standard processes, but fostering creative chaos.

This is indeed a dazzling array of paradoxes that might be enough to make some managers run a mile. But in the spirit of the very culture that managers are trying to create, where there’s a will, there’s a way.