How to encourage innovation

Make it easier to find the next big thing

Innovation makes money. Why are some organizations naturally good at it? It's because they help people’s ideas to become reality. We’ve found that three things make innovation flourish: leaders who create the right climate, people who are free to make decisions, and strategies that reward innovative behavior.

How to create a culture of innovation

People are full of ideas. So in theory, organizations – which are just collections of people – should all be great innovators. In reality, of course, some are better at encouraging innovation than others. This is because the real challenge is to turn that eureka moment into the ‘next big thing’ – a new product or a new way of doing things.

Achieving this means setting the right conditions for innovation to flourish. It can be a complex task but there are rich rewards for organizations that get it right.

Our research shows that innovation starts at the top. It’s leaders who set the tone, not only by creating a climate that encourages it but also by making it possible for people to put forward new ideas without fear of failure. In our experience, innovative cultures  happen when organizations pay attention to three things: 

  • Leadership skills. We've identified particular leadership styles that encourage innovation. The good news is that your leaders can develop all these skills. 
  • Organizational structure. It’s important to empower individuals and teams to make decisions at the right level. 
  • Reward. If you want to encourage innovation, you need to measure people on how they’re achieving it and reward them for success.

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