Insights Blog

How to Create an Environment Where Innovation Thrives

By Deborah Kiers

In today’s digital age, radical or disruptive change has become the norm. As technologies increasingly become information-enabled, established industry players are frequently falling victim to leaner start-up businesses. Just look at the impact the arrival of Uber had on the taxi industry, itunes on the music industry and smartphones on camera and maps. In fact, experts predict that in the next ten years, 40% of Fortune companies will no longer exist.

Few industries are immune to disruption and once information starts flowing, the pace of change can be rapid. The question isn’t when it will happen, but how best to prepare your business for the inevitable disruption. In my mind, one of the critical capabilities organizations old and new should harness in this time of radical change, is innovation. But how do you create an environment for game-changing innovation?

As my colleagues and I have witnessed working alongside clients, it doesn’t necessarily start with an ambition to innovate, even though it may seem that way. It starts with creating an environment where innovation can flourish. It’s about generating a sustainable culture of responsibility where innovation becomes almost inevitable, because people become so accustomed to performing at extraordinary levels with extraordinary agility.

For example, my colleagues and I worked with Yarra Valley Water in Melbourne, Australia in recent years as the water utility produced an award-winning string of innovations. These included implementing an award-winning hardship program for customers in need, introducing new water recycling methods to drought-proof 100,000 properties, and launching Australia’s first stand-alone, profitable waste-to-energy facility. In recognition of their achievements, they were included in the prestigious Australian Business Review Weekly’s “Most Innovative Companies” list — a first for a utility in Australia.

Yarra Valley Water did this by bucking the status quo and creating an environment where new ways of thinking could flourish. But the shift didn’t emerge directly from a drive to innovate; it emerged from a drive to build a sustainable work culture where high performance and innovation would consistently be the norm. The key takeaway: their leadership managed to frame their organization’s collective mindset in a way that would get people out of the ‘drift’ of everyday thinking and operating and motivate them to take Yarra Valley far beyond what they thought was possible.

We consistently see that a culture which fosters innovation is one where a larger sense of purpose, an expanded view of what is possible is motivating people. But there’s much more to it than that. Even if people are highly motivated, their drive can become mitigated by factors such as fear of making mistakes. People have to be willing to take risks and even fail — sometimes over and over again. The bigger the potential and drive for innovation, often the bigger the risk required.

So: As a leader, how do you create an environment where people are willing to take the risk required to innovate? These are the dots to connect.

  • If you are after real innovation, your focus needs to be creating an environment that fosters innovation.
  • This environment is produced by a culture of accountability committed to high performance.
  • In this kind of culture, fearlessness trumps risk avoidance. Disappointments lead to discovery.

Or to reverse the logic:

JMW Innovation culture

Understanding these steps is only the beginning.

First, the organization needs to build culture of accountability in a way that allows for people to be motivated beyond their fears while allowing for failure. Put yourself in the shoes of someone who’s already considered a high performer: Within the current status quo, why risk your status? It’s human nature to avoid failure. But if that same person is inspired by a possibility sufficient to feel and take on accountability for the organization delivering on its aspirations, this will open the door to risk-taking, even potential failure — as well as great innovation. When you can inspire people to rethink their view of the future in a way that reframes their view of failure, the braver they become — and the greater their chances of generating something new and extraordinary.

How you go about generating a collective sense of accountability is an article (or book) in and of itself, but it starts with a strong leader willing to take a stand for something larger than themselves — an aspiration for the organization that people literally can’t resist. In the case of Yarra Valley Water, top leadership galvanized people at all levels of the organization around a very ambitious “2020 Strategy” which ultimately gave people license to step up and take risks not only in the name of the organization, but also the future of the entire Australian water industry. And with that huge motivation, they simply wouldn’t let anything get in their way.

Once you have established a culture of accountability and consequently an environment that fosters innovation, all bets are off — in the best of ways. Innovation becomes the status quo. The embedded capacity to innovate positions the organization to be agile in an ongoing, sustainable way. And with this agility comes a new level of resilience and ability to pivot and adapt in the marketplace in the face of the unexpected — whether shifting market conditions, competitive challenges, or other possible threats to success.

Getting there is a genuine process that requires unfailing commitment from leadership. Even more significantly, it requires leadership willing to adapt and evolve — not just sometimes, but always.

The rewards can be astounding. In this kind of environment, setbacks become launching pads for invention. Failures lead to discoveries. People put aside pressures and distractions and focus on what’s possible. It begins with a commitment to a culture of responsibility; it advances with ongoing agility — and it can lead almost anywhere.