Creating a Culture of Innovation

Laurel Kjersten

Gallup Consulting

gallup.com

Topic: Leadership

Since the Industrial Revolution, two main business innovations have ruled the marketplace. The first -- neoclassical economics -- helped drive a supply-and-demand economy. The second -- business process improvement -- occurred in the 1980s and 1990s when companies used process improvement to drive profitability and growth.

Today, these models no longer provide the competitive advantage they once did. A third major business model needs to become the new driver of innovation. The model for achieving this is the behavioral economics model.

To build a culture that fosters innovation through behavioral economics, an organization must hire for innovative talent, build teams that are diverse in talent, and fit individuals to the right role to drive success. To execute this effectively, firms must have six keys in place.

1. Innovation assessment

By studying your best people, you can identify the roles employees play in the innovation process, and then hire others like them. The roles to look for and hire for include:

• Innovators: those who generate ideas
• Innovation drivers: those who align ideas with strategies, allocate resources, and build supportive constituencies
• Market drivers: those who commercialize and execute market-facing activities

2. Onboarding and training

When an employee joins your organization, ensure that he or she knows how they compare to others in their role in the innovation process. By giving this feedback, employees will know which innovation role they play on the different teams they work with. On one team, an employee may be a highly talented innovator; on another, he or she may be best suited to drive innovation. Ensure that your new employees know where they stand. 

3. Innovation index

When you compare your organization to others, do you know how it's performing relative to innovation? Do you have an index that is broad in scope (e.g., companies, industries, and countries) that allows you to compare your progress?

4. Customer metrics

Customer feedback is critical to the innovation pipeline. Are you able to identify your best and worst customers and gather feedback from both? Are you able to take this feedback and constructively use it in the beginning stages of idea generation?

5. Employee metrics

Employee engagement has been linked to increased levels of innovation. Engaged employees share their ideas more often, generate more ideas, and generate better ideas. Employee metrics, if done right, allow senior leaders to look across the organization and quickly spot managers who may be hindering the innovation process. 

6. An innovation scorecard

It has been said that "what gets measured gets done." All organizations should build a scorecard to track and measure the innovation progress.