Fostering innovation is a noble and worthy goal for any business, and especially for those who’ve already found success. Startups tend to pivot as a basic means of survival. In their first few years, companies completely overhaul their products, strategies, and culture.
But traditional businesses can gain just as much from innovation. And they often have the resources.
It’s the will that’s missing.
And it begins with culture. In this article, we’ll look at 18 excellent reasons why your business should make build a culture of innovation. Not just a new team or senior manager, but company-wide, and from the inside out.
Let’s begin with the bottom line.
1. It fuels company growth
Undoubtedly the biggest blocker for most CEOs is the fact that innovation is a serious investment. In some cases, it involves thinking about and building solutions that don’t affect today’s customers. And you’d rather have 100% of your resources dedicated to profiting now.
But this is both short-sighted, and usually not true. “When a company has an innovative culture, it’ll grow easily, despite the fact that the creative process isn’t always simple,” writes Forbes. “Tried-and-tested methods may be reliable, but trying out new things is a worthwhile experiment.”
If you’re too rigid in your business model, products, and the markets you serve, you naturally limit your own growth. The company can only go so far.
It’s only once you step outside these paradigms that you’re able to really innovate value, and the business can growth on a whole new schedule. In other words, change the playing field, and the team can truly perform.
2. It stimulates change
This section doesn’t apply to perfect companies. For everyone else, there’s always room to grow and change. And this change should always begin from the inside, with your employees.
Only 6% of employees feel that good suggestions and valid complaints always bring about change. Mostly, they don’t feel heard.
A company-wide culture of innovation – in which staff suggestions are listened to and acted upon – is essential. When your team members feel valued and trusted, they start looking for ways to make positive changes themselves.
And then change can happen organically, as a natural part of doing business.
3. It ensures continuous improvement
When you think of innovation, you probably think of the big game-changers in history. Airplanes, iPhones, and Google Maps. For large companies, these can completely overhaul a business model and create generational growth.
And while a lot of innovation strategies have these blockbusters in mind, small improvements can still have a huge impact.
As Zappos CEO Tony Hsieh explains, “improve just 1% per day and build upon that every single day. Doing so has a dramatic effect and will make us 37x better, not 365% (3.65x) better, at the end of the year.”
This is the positive result of change coming from the insight. If every team member is encouraged to make small improvements to their work habits, this can lead to a huge efficiency gain for the company.
4. It increases the idea pool
For many businesses, inventive culture starts and ends with the innovation team. They’re the ones who’re hired to be forward thinking, while the rest of the business has other things to focus on.
But this limits the range and scope of ideas. No matter how prodigious your dedicated “ideas team,” they only have so many hours in the day. The more you’re able to involve other team members in the process, the greater the potential for new ideas.
In fact, scale is one of the most important factors for a successful ideation project. The more people involved, the better.
Of course, the challenge becomes making sure these ideas are productive and useful. But a shortage of feedback isn’t likely to be a problem.
5. It increases diversity in the workplace
It’s practically gospel that diversity is good for business. If you have different backgrounds and voices in the company, you avoid certain biases that can prevent growth. Your customers are diverse, and your business teams should be too.
An innovation culture supports this goal in several ways. First, if innovation is a priority, you’ll naturally look for unique thinkers during the hiring process. Instead of a cookie cutter lineup, you’ll meet candidates that think and look different.
You’ll also encourage diversity of thought within your existing staff. When everyone knows that their individual ideas are valid and desired, it frees them up to express themselves and reach their full potential.
Finally, you’ll likely have more diversity in your projects and products. Established businesses can fall into the trap of always doing things the same way.
We solve problems like this.
We need more customers. Here’s how we always find them.
While this can bring predictability to your business teams, it almost certainly limits growth. If the strategy is always the same, you can’t expect greater rewards. You can’t afford to get stuck in the same pattern of production, and using the same problem-solving strategies.
When you have a thriving culture of innovation, you prevent this from happening.
6. It identifies new areas for innovation
If you limit innovation to one team, you also limit the range of projects it’s likely to work on. We often think of new products as the main result of innovation, but improvements and updates can be made all over the business.
This may result in smaller, ongoing progress that keeps the company moving efficiently. It could be the HR team introducing a new payroll tool, or sales units trialling a new format for stand-up meetings.
If business units are taught “the right way” to do things and not encouraged to innovate, you’re likely stuck with the status quo.
When the whole company is encouraged to innovate, unexpected opportunities emerge.
7. It helps your business stand out
Every company wants to differentiate itself from the competition. This is one of the main reasons for innovation.
In order to prove that you’re different from the others, you actually need to do things differently.
Innovation has been proven to give companies a competitive edge. And studies show that “knowledge management, intellectual capital, organisational capabilities and organisational culture have significant direct and indirect effects on innovation.”
In other words, when you have a functioning culture of innovation, you actually start to innovate. And this leads directly to your business standing out.
8. It helps you think beyond your own market
Competitive advantage doesn’t end with your current competitors. Or to put it more elegantly, “the light bulb was not invented by candle-makers, and e-mail was not invented by the postal service.”
Your biggest challenge in five years may not currently exist. This is why Uber has to invest in self-driving cars, and why Amazon is testing drone delivery.
Keeping innovation at the heart of your business helps you see these challenges before they hit. And again, the more people involved in this process, the more likely you are to spot what’s coming around the corner.
9. It brings unexpected discoveries
Take this story from Harvard Business Review. One manufacturer needed a better way to inspect the inside of airplane parts. The company relies on innovation ideas to solve tricky issues like these.
A respondent to one of these challenges – an administrative assistant, not an engineer – made the unusual suggestion of sending robot spiders inside the parts to do the inspection.
This idea was inspired by the film Minority Report.
While most thought the idea was silly, the CTO decided to test it out. The inspection – which usually took eight hours – was completed within 15 minutes.
This story illustrates one fact of innovation: you can’t always predict when and where the next great idea will come from. Which is why developing a culture of innovation should be high on your priorities list.
10. It makes the company more adaptable
You may feel that technology has come a long way in recent years. And it has. Social networking, now basically essential for both businesses and private citizens, has really only existed since the early 2000s. In the same time, cellphones became camera phones, which then became smartphones.
And technological progress is increasing exponentially:
This chart from Theemergingfuture.com shows how technology advances by 32x within just five years. Which is amazing, until you increase that timespan to ten years:
While just a model, it’s a pretty stunning illustration of how fast things are moving.
And this is a real challenge for most businesses. Unless you’re constantly adapting and developing new products and services, there’s a good chance that you won’t last the distance.
Blockbuster is a famous example of one such company left behind by technology. Kodak is another one.
A strong culture of innovation makes sure that you’re open to the coming changes and ready to react.
11. It ensures you meet customer needs
What matters to buyers is also certain to change in the next five years. Not only will they have new technology (see above), but their values and goals will have evolved.
For example, climate change is going to impact primary industries worldwide, as well as travel, manufacturing, and even the banking sector. Some of these impacts will be driven by new laws or rising manufacturing costs, but many will come from consumers. Customers will want to reduce their carbon footprint across the board, and businesses will have to keep up.
An innovation culture makes sure that your company identifies these changing values early. Then, it gives you the best possible chance of finding workable solutions to the challenges that are raised.
12. It’s more efficient
As we’ve seen above, innovation (including continuous improvement) ensures that you’re making necessary changes. And these often lead to increased efficiency. If you can find better, faster, or more productive ways to do tasks, that’s always a win.
These adjustments come with a culture of innovation.
But there are also larger changes that a business can make thanks to innovation. Entire business models can transform in the blink of an eye.
For instance, it’s now virtually unthinkable to have a retail business without making online shopping available. Customers demand it, for one. But it’s also usually more efficient for the business, which can serve more customers from a central depot.
If a company doesn’t stay open to these sorts of changes, it misses serious opportunities to become more efficient. It even risks going extinct.
13. It attracts better talent
Most companies are looking for innovative team members. These people take action, test things, and are always looking for a problem to solve. For all the reasons we’ve already discussed, these are the skills and attitude your business needs to survive.
And innovative people want an innovative environment. Would the next Edison or Isaac Newton go to work for the public library? More likely, they’d be looking for a job where they can explore, express themselves, and make important changes.
This simply isn’t going to happen in an inflexible organization. And they know it. Which means that you need to make innovation a company priority if you want to find the best talent.
In short, you won’t hire innovators unless you can show them a culture of innovation.
14. It helps you retain talent
Keeping good employees around is a major challenge. Gallup found that only 15% of employees are engaged in the office, and 51% of them are actively looking for new jobs.
One key aspect of this is personal growth. Only 42% of employees feel that they’re frequently learning at work. If a team member doesn’t get to build skills and discover new talents, it’s natural that they’ll feel switched off in the office.
So your ability to retain talent depends on how often your team gets to flex their innovation muscles. The more they’re able to test new ideas and learn on the job, the more satisfaction they get from their work, and the more engaged they’ll be.
And conversely, the more engaged your team is, the better your innovation process becomes. You need everyone suggesting and evaluating new ideas to walk away with the best new products and processes.
15. It improves your employer brand
This is particularly true among young people. An innovative culture is one of the key things that millennials and Gen Z candidates look for, alongside flexibility and the chance to do meaningful work.
This is one reason why the tech sector is seen as a desirable industry to work in. Tech companies are deemed to be innovative by their very nature. And modern employees want to be at the cutting edge of new developments.
But of course every company has room to innovate, regardless of its industry. What matters to people is that they feel like their work makes a difference, not just keeps the factory line moving.
This gives them ownership. Because “employees need to feel like they have a tangible stake in their company.” (Forbes)
And word gets around. When your employees are happy, it makes the whole company a desirable place to work.
16. It offers tax incentives
Innovation has another positive effect on the bottom line. And not just when successful innovation leads to a best-selling product.
Governments around the world make it worthwhile for companies to make breakthroughs.
For example, companies in the United States may be eligible for the Research and Development Tax Credit, “one of the most valuable credits leveraged by companies.” The credit can include a dollar-for-dollar reduction in federal and state tax liability.
In Europe, Russia, France and Belarus lead the way in terms of R&D tax help for businesses. They offer even higher tax incentives than the USA, as compared with GDP.
This is a significant incentive to most businesses, and an excellent reason to invest in innovation.
17. It’s the way that modern business is done
You shouldn’t run your business like everyone else’s. We’ve already given 17 reasons why you should try something different. At the same time, conscious innovation is becoming the norm. At least, most businesses would like it to be.
Strategies like the Blue Ocean Shift are so prevalent now that you really can’t afford to ignore them. And if you want to have a first-rate, world class company, you need to incorporate these principles.
As we’ve seen, a culture of innovation helps you grow, attract great talent, and future-proof your business. And if you’re the only one not thinking outside the box, you really don’t stand a chance.
18. Without innovation culture, there’s no innovation
We’ve already discussed the importance of and desire for transformation in modern businesses. Companies want to be groundbreakers, to lead their industries and inspire their customers.
But innovation isn’t an on/off switch. You can’t just decide to make new, game-changing products.
Instead, says Corning’s Dr Waguih Ishak, your teams need “roots and wings.” They need to know that there are real expectations of them – that something productive (and hopefully revolutionary) must come from their work. And then they need freedom and discretion.
This is the rule for innovation teams, but the principles should extend to the company as a whole. Budgets and deadlines are necessary, but too much emphasis on these will “kill ideas before they get off the ground.”
Now to develop your culture of innovation
This article should serve as inspiration. If you’re thinking of updating your company values, you now have 18 more reasons to do so.
And as is hopefully clear, innovation doesn’t always mean let’s blow things up! As Deloitte explains, “innovation should not be only about experimenting with new technologies or focusing on product features and performance. Innovation must be embedded into the DNA of organizations.”
If you want to grow in new and expected ways, hire better talent (and keep them around), and truly thrill your customers, you need to innovate everywhere. Nothing is sacred, and everything can be improved. And by everyone.
The deeper you develop this culture of innovation as a core company philosophy, the better your chances of truly innovating.