In Accenture’s 2015 US Innovation Survey, 84% of business executives polled considered their future success to be very or extremely dependent on innovation—and additional research shows they aren’t wrong. A study published by MIT Sloan, which looked at several different businesses, found that the more innovative ideas employees generated and that management adopted, the better the chances of company revenue growth annually.
But how do you know if your company is a true “innovator” or not? Sure, your company might have some good ideas or a couple of outstanding thinkers, but is that a fluke or the result of something systemic? After all, studies show that the latter is essential to a company’s ability to consistently produce trend-setting and profit-making ideas.
Clearly, innovation is not a simple idea—in fact, there are many types of innovation. The three main types most companies pursue are:
- Product Innovation: the development of new and improved products and services
- Process Innovation: changes in operational procedures or tools
- Business Innovation: a company’s transformation of its role in the market
The catch is that success with product or process innovation doesn’t necessarily imply your company is a business innovator. And, while some loose metrics exist to measure the connection between innovation and ROI, there isn’t one standard tool of measurement because no business’ goals or path to innovation is the same.
The result is it can be hard to be sure a company is making strides in the innovation category or if it needs an extra push, especially if you’re an employee without access to sensitive business data. All that being said, these are three indicators that an organization has what it takes to be a business innovator.
1. There’s a Company-wide Consensus on What Innovation Means
One of the most important steps to underscoring as a company value—and eventually reaching your innovation goals— is to have an agreed-upon definition of innovation from upper management to entry-level employees. Are you looking to innovate the way you deliver your services, the way an actual product works, or transform consumer perception of your brand on the market overall? All three of these goals could qualify as innovations, but they all require different strategies.
As the Harvard Business Review reports, “To manage innovation in a systematic way, you have to have a widely understood definition of innovation. Without this, it’s impossible to know how much ‘real’ innovation is going on and whether it’s paying off. Just as critically, you can’t hold leaders responsible for innovation if no one can agree on what’s innovative and what’s not.”
Once innovation is defined for the company, actionable steps can be laid out for everyone to get behind, but not until.
2. You Hire for Innovation
Take a look around. Who is being hired and promoted? This says a lot about what a company values, especially when it comes to innovation.
“Innovation doesn’t happen around incurious people,” writes Forbes. “The point is to collect people based on their curiosity, their drive to learn more and their love of continually bettering themselves. These are the makings of an innovative company.”
Unfortunately, hiring for innovation isn’t all that simple because, again, there isn’t one background or educational history that makes for an innovative person. In fact, whereas companies used to favor those with higher education previously in the pursuit of creative minds, certain companies, like Microsoft, are taking emphasis off of that requirement as a metric for innovation, as they’ve found it isn’t necessarily an indicator and often hurts diverse hiring—a major impetus of creativity.
These days, though, even leading tech companies like Microsoft are taking another look at education as it applies to high-quality employees. We’re seeing a trend of hiring workers more for their soft skills than for their years at school. – Forbes
To hire for innovation—particularly if innovation doesn’t come naturally to the company—the hiring process must go against what they’ve always done. As we mentioned in a previous article, it’s imperative that companies with innovation goals design hiring processes that take the emphasis off one upper manager’s bias, attend to diversity, and assess a candidate’s mix of soft skills, and more. This also includes promoting existing creative and bold staff.
3. Leadership Encourages Innovation
Any true innovator knows: Not every experiment is successful. The difference between companies that have occasional innovative ideas and innovative companies is that they don’t let failure define or deter them. Of course, this sort of resilience takes understanding and tenacious leadership who are coached to understand the true nature of innovation in order to encourage it.
According to Harvard Business Review, meeting innovation goals means holding management accountable to certain benchmarks. But, “it makes little sense to hold leaders accountable for innovation if they haven’t been trained and coached to encourage innovation within their own teams.”
For a leader, this means things like: An ability to use innovation tools, creating opportunities for staff to brainstorm, creating employee development opportunities, rewarding unconventional ideas, and celebrating “smart failures.”
Recognizing the value of failing is especially important, because if reprimanded for putting themselves out there, employees are less likely to take more risks, try new things, and learn from their mistakes—which are the makings of a company that consistently generates fresh ideas.
There’s the secret to innovation. If you are saying to all your employees, ‘Innovate, innovate, innovate,’ but you give the Employee of the Month parking space to the person who never screwed up and you give the bonus and the vacation to the person who doesn’t make mistakes, you are not serious about innovation, and your team knows it. – Seth Godin
This “dare to fail” culture needs to be supported by processes that reward innovators who take such smart risks. Not only do you need to create psychological safety, but you have to create system-level ways to evaluate and reward people, as in measuring innovation and doling out financial rewards like promotions and raises accordingly.
With innovation as a priority, a company is set to grow, profit, and perhaps even dominate its industry. As Entrepreneur reports:
“Innovation helps you gain more customers and grab a bigger share of the market. Innovation also makes it easier to grow whatever may be the size and type of your business. You may have a small startup, but with innovation, there are so many more chances of growth in the business. The same applies to a company that is listed in the Fortune 500 as well. If a large company innovates, it can take on a larger market share.”
Many object that ongoing, company-wide innovation is too elusive. But we do know that an innovative company usually lives and dies by its organizational culture. By zooming out to examine cultural indicators of consistent innovation—including whether a company has defined innovation for itself, hired curious minds, and coached leadership to effectively encourage ingenuity—anyone can take reasonable stock of a company’s potential to transform a product, process, or industry.