Innovation and Organization Culture

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One of the myths about Innovation is that it necessarily needs to involve the Eureka moments of inspiration and creative insights. While those are important, it is possible that Innovation can be treated as a management discipline with structured and systematic approaches, processes, and methodologies defined and implemented. There is a lot of literature on this topic, my personal favorite being the writings of Peter Drucker. In this article, I present seven steps that can be followed by any organization to foster a culture of innovation across an organization.

Fostering an Innovation Culture: Recommendations

 1.Formulate a systematic, structured approach to innovation

Once the methodology is established, it is important to identify areas to focus on for innovation initiatives. One technique for doing this, along with a set of recommendations, is available in an earlier blog post:

The first step is to define a formal methodology that will be followed for innovation initiatives. Invariably, this involves mechanisms for the entire innovation lifecycle including idea generation and capture, idea evaluation and shortlisting, business planning and market validation, engineering investments, sales and marketing, and  installation & support. Most important is to follow a phased approach and invest accordingly. Here is one example a formal methodology we have put together for innovation initiatives at Happiest Minds, and that we recommend for our customers. You could of course, devise whatever works for your context.

2.Focus on both incremental and radical innovation

Incremental innovation is about efficiency improvements: How to do the same thing differently (faster, better, cheaper). Radical Innovation is about doing something different. A part of any organizations innovation methodology should be a plan for dividing the portfolio of innovation initiatives into incremental and radical ones. The percentage split for the two vary based on the organizations risk appetite radical innovation requires much greater risk (with correspondingly higher returns). For example, a product company might have a 30% – 70% ration for incremental and radical innovation, whereas a services company might have precisely the inverse.

A separate write-up on this topic is available at:

3.Link Innovation initiatives to Business Priorities

A critical success factor for innovation initiatives is to have direct traceability to business priorities. It is this linkage that can drive investments;create greater risk appetites;help to develop a better understanding of long-term returns; and encouragepatience if short-term (quarter on quarter) returns are not encouraging.

4.    Project reports,Reviews, Meetings to include a section on innovation

In any organization, reports and review meetings are common mechanisms to track progress. To move towards and innovation based culture, one enhancement to project weekly status reports, reviews and meetings would be to have a specific section on innovation. For example, during a weekly team meeting, each team member can share one example of something innovative they did as a part of their work. Experiments along these lines could yield interesting results.

5.Spread Innovation Literacy

To establish an innovation culture, another key success factor is the awareness about innovation across the organization. Awareness needs to be not only at the level of understanding what Innovation means, but also a deep appreciation of how important innovation is to the long-term survival and success of the organization. One example of the need to spread Innovation Literacy is the myth that innovation is something we need to do apart from, or over and above, our regular work. This results in a culture where the approach is Let me finish my assigned tasks first, and then I shall see whether I can do anything on the innovation side.

Every organization has a department or function for learning, competency building, training, talent development, or some similar name. The focus usually is on subject matter expertise. For example, in the IT industry, the coverage is usually on technical, domain or soft skills. Enhancing this coverage to include innovation in the course content is one way to spread innovation literacy across the organization. Another way could be to organize regular talks on innovation by senior management personnel.

6.Link Innovation to a tangible rewards / incentive program

Rewards and Incentive programs are well established at most organizations. One surprising aspect is that the coverage and importance given to innovation related awards is sometimes on the lower side (in some cases, absent). From a logical perspective this is not surprising since it reflects the mindshare and importance traditionally given to innovation. Extending the same logic, an innovation culture can be encouraged and accelerated by providing significant incentives and rewards to people who contribute to innovation initiatives.

7.Identify ownership: at highest management levels

From an organization structure perspective, innovation initiatives are often the responsibility of a mid-level manager and his/her team. While this is important, what is also necessary is to identify a formal executive sponsor for innovation at the highest levels of management. Ideally, besides an executive sponsor, a full-time role is what is needed. Several organizations, recognizing this, have created the role of a Chief Innovation Officer reporting directly to the CEO.


The importance of innovation, for any industry sector, cannot be underestimated. Innovation for companies today is not just about growth any more, but of survival. Innovation should not be something we do over and above our regular work, but needs to be ingrained in organization culture. One way to achieve this is to treat innovation as a management discipline, and put in place a formal and structured methodology to drive an innovation culture across the organization.

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