The number one online magazine for innovation management practioners

AIM-article # 005-2011

How
to create
a culture
that
supports
innovation?
by
Dirk Loop
Co-Founder & Director of CIPOC Ltd.

Ymer&Partners AB All rights reserved.

www.innovationmanagement.se
ISBN: 978-91-86829-15-5
 EXECUTIVE SUMMARY
The mission of any executive or innovation manager should be the enhancement
of a culture of innovation. Innovation depends less on tools and processes but on
people. Tools and processes have never been substitutes for visionary leadership.
Since the planning of innovation typically leaves lots of question marks, nobody
involved should expect too much reliability. Instead, patience is what is required and
the willingness to take risks and to except failure.
Although projects promoting the spirit of innovation often follow a top-down
approach, every employee can improve his personal skills, pertaining to trust,
teamwork and commitment, and therefore becomes a role model for others (bottom-
up). Hybrid approaches have shown here to be most effective.

KNOWLEDGE IN PRACTICE
We at CIPOC often work on projects on behalf of others, mainly larger companies.
Many times teams we have been delighted to work with suffered from strict corporate
process frameworks. Of course, working as external project managers do not free us
from these rule-sets but it is much easier to question or even to ignore certain parts
of these. It is easy to get people to talk (about their private lives) and thus to build up
trust, especially when you are new just temporarily deployed in a company. This way
we typically identify innovation and improvement potential within a few days. Many
consultancies use this knowledge to sell new projects. We, for our part, found that our
clients are generally more pleased if permanent employees can be encouraged to take
over the lead of their own ideas.

2 AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
 How

ABOUT THE AUTHOR

DIRK LOOP
Having studied national economics, Dirk Loop is also educated in
banking, highly trained in effective leadership & communication
skills and a PMI-certified Project Manager. He offers fundamental
interdisciplinary knowledge, and more than ten years of relevant work
experience in various industries and professions - from corporate
controlling to public relations, from ip-management to software
development. Loop is a co-founder and director of CIPOC ltd (http://
www.cipoc.com), a consultant firm focused on innovation and quality
management for telecommunication, energy and banking.

Best practise killing

the innovative spirit
It is unfortunately easy to ensure that innovation
never occurs in a company. Many companies show
excellent practise in this discipline:
1. Never listen to anyone. No matter if you are
dealing with an employee who comes up with
an idea or a customer complaining about a
service. The notion is taken that the employee
or the customer will be wrong, so it would be
a waste of time listening to them.
2. Be aware that everybody wants your job. So
do not trust anybody. Instead, keep everybody
around you inferior and voiceless.
3. Absolutely rely on processes and organisational
hierarchy. The design of both has probably been
very expensive, so they have to be the ultimate
solution.
5. Last but not least, change strategies and
processes, say once a month, or even better, at
random intervals. Ensure that nobody knows
about it. This might be the most important
rule of these, because this is how to ensure
that nobody can actually do anything.
Everybody sticking to these five simple rules will
probably never have to deal with any innovation at
all. If this is your intention, you do not need to go
any further and read on. You can stop right here.
99% OF ALL STATISTICS ARE WRONG
Many companies and even a greater number of con-
sultancies use Benchmarking to measure innovation
processes, cultures or outcomes. Some of them also
use Benchmarking to set up improvement plans.
This, however, leads into a a dead end. It will never
lead to innovation.

4. Try to avoid a bird perspective. Always have
a detailed perspective on everything. Do not
burden yourself with independencies, other
business units or market demands. This will
only distract you from really important tasks.
Typical projects coming out of Benchmarking work
like this: You identify todays industry leader, evalu-
ate what creates his leadership and set up a five-year
program to close your gap. Following this path, in
five years time you will be as good as the industry

AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se 3
How
leader is today. However, you will still be five years
behind todays industry leader as well as other com-
petitors. In addition, copying is the antipole of in-
novation and therefore a bad start to become more
innovative.
The following recommendations should neither be
understood as a blue print nor as a strict map to suc-
ceed in innovation. Nevertheless, their consideration
will certainly help to avoid threats and instead help
find opportunities to become more competitive.
Top-Down steps to leverage
a culture of innovation
TRUST YOUR PEOPLE
Innovation requires freedom in many ways: The
freedom to think out of the box, to explore and ex-
periment, to venture and most importantly to fail.
If you give people freedom to innovate, (...) then
you must also give them the freedom to fail. Accord-
ing to Deepak Seethi of AT&T, the organization of
tomorrow will demand mistakes and failures. It is
only by trying lots of initiatives that we can improve
our chances that one of them will be a star. (Sloane,
2006: 95)
Innovation is built on freedom and freedom is built
on trust. Without trust an enterprise will never be
able to create an innovation culture (Please see fig-
ure 1: Charting a Top-Down approach to leverage
a culture of innovation). But trust, in this concept,
is a two-way street: Bottom-Up, employees need to
trust their management. They need to be sure, that
lateral thinking and opposition is not fundamentally
a bad thing that gets them a pink sheet. They need
to know that management is open-minded and fair.
On the other hand, management has actually to be
open-minded.
4 AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
HOW TO CREATE A CULTURE THAT
SUPPORTS INNOVATION?
This in-depth article is divided into two parts: The
first part, Top-down steps, gives recommendations
to line managers. In this context a manager is defined
as someone who leads a team, has organizational au-
thority and has access to budget. The second part,
Bottom-up steps, focuses on the individual worker
or project member who has limited formal power,
but some opportunity to change the culture of an
enterprise from the inside.
What makes things even more complicated is that
leaders witness their employees fail once, or more
than once, but still need to keep up trust and motiva-
tion. Leaders should consider the wise words of J.K.
Rowling, single mother and mega-bestselling author
of the Harry Potter series: It is impossible to live
without failing at something, unless you live so cau-
tiously that you might as well not have lived at all.
(Rowling, 2008)
Leaders should do anything to avoid distrust, fear
and pressure. Instead, executives should get to know
their employees better. Not in a classic fraud preven-
tion context (Previous employment, education, cer-
tificates claimed, references to pre-hire drug screen-
ing), but personally. They can do this for example by
walking randomly into their employees ofices and
engage in small talk or by spontaneously crashing
into project meetings. If they get to know the person
behind the position beter then building up mutual
trust will be much easier.
DO NOT TRUST YOUR PROCESSES
Tools & processes might be great, but they do not
guarantee innovation, and in some cases they might

Figure 1.
even provide a false sense of security. They can help
but they are not sufficient. Innovation is fundamen-
tally influenced by people in need of not only being
managed but also to be led. Yet processes are no sub-
stitute for visionary leadership.
However, my experience is that especially larger com-
panies often rely on processes, because strict processes
deliver predictable results. They need predictable re-
sults for board meetings and shareholder announce-
ments. Unfortunately, this belief in organizational
structures promotes smaller improvements and incre-
mental innovations, avoids breakthrough innovation
and therefore becomes a risk sooner or later.
An example: Two managers apply for their portion
of the budget. Manager A says: Ive got a great idea.
We dont know how much money we will have to
spend till we know that it really works and at this
point we do not have a marketing strategy, but we
AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
How
think it might change our whole industry. Silence.
Now its manager Bs turn: We will take our existing
product x and bundle it with our successful product
y. We will use our existing advertising and distribu-
tion channels to sell it to our existing customers.
Look at the spread-sheet, this will be the end-year-
profit. Whose budget will be approved first?
Best advice is to learn the process, execute the pro-
cess, and then (to) lead within it (Jacoby, 2011). If
this means that lines have to be crossed, so be it.
BE PATIENT
Many project or portfolio management processes
follow strict rules. They start with workshops in
which stakeholders (typically Marketing units) ex-
press their ideas and requirements, ending up with
highly defined schedules and planning spread-sheets
of product lifecycles and revenue forecasts. Starting
an innovation project leaves a lot of question marks
5
How
because innovation as opposed to improvement
is unpredictable.
Best example is the first tablet computer Newton,
from Apple, the first of its kind. Ten years ago, Ap-
ple stopped the Newton in 1998. Some say it was
a commercial flop because the tablet had been to
big for a pocket and the 90ies-man, tend to buy
gadgets, was not willing to carry handbags. Others
believe that Apple stopped its development because
the product devoured a billion dollars (MacNeill,
1998). But the tablet returned, and on January
18, 2011 Apple announced it had sold 7.33 mil-
lion iPads during its fiscal 2011 first quarter ending
on December 25, 2010 (Apple, 2011). As men still
tend to buy more gadgets than women, it looks as
if men at least changed their minds on handbags
significantly.
No one becomes impatient when a scientist cannot
tell, within a few weeks spent experimenting, how
to build a simple, cheap and safe spaceship, say for
vacations on Mars. This would take at least anoth-
er ten years or so. But once an invention is made,
many stakeholders expect development and deliv-
ery to be less complex and revenues to be safe, or
at least predictable. In most larger innovation proj-
ects many events take a different course to what was
originally planned. In order to manage expectations
better, timelines and profits should not be promised
or assured. This only leads to disappointment and
impatience.
Perhaps the best advice is to be prepared that ex-
pectation will probably not be met. However, this
might not necessarily be a bad thing. Sometimes
outputs also overachieve the original scope planned.
Take Percy Spencer as an example. While he was
conducting a radar-related research project with a
new vacuum tube, he realized that the candy bar in
6 AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
his pocket began to melt. He then put popcorn into
the machine, and when it started to pop, he knew he
had made a revolutionary invention on his hands:
the microwave oven. (MIT, 1996)
Another good advice is to consult rather than con-
trol. If every stakeholder knows that innovation is
unpredictable and that timelines are more likely
estimates based on a bulk of assumptions, nobody
will confound it with a strict rollout-plan, which
can actually be controlled by hard figures. Leading a
team with good advice and useful hints will increase
motivation, and the spirit of innovation, much more
than dead-lines and finger pointing.
There is a German proverb that says: If a train runs
in the wrong direction, each station on its way will
be wrong. In my opinion this is the best way to
check if an innovation train is still going towards
its goal: To look at the stations, not the train or the
tracks.
DO SOMETHING
Every innovation project requires the willingness
to take charge and make it happen. Obvious? Not
at all! We live in a world of memos, emails, work-
shops, reviews, boards, meetings and discussions
about memos, emails, workshops, reviews, boards
and meetings. There is at least one complaint on ev-
ery idea and there is always a good reason to have
another discussion.
It has shown that the easiest way to stop excuses is
to start some kind of prototype, at least something
that gets people to think: Well its not perfect, but
its a smart idea. This could be a success. I should get
involved. This prototype, however, might not even
be close to a beta-version. Its only purpose is to stop
people complaining and get them involved.

Bottom-Up steps to leverage
a culture of innovation
IMPROVE EVERYTHING
Thomas Alva Edison is often quoted as saying: I
readily absorb ideas from every source, frequently
starting where the last person left off. In my opin-
ion, this is a key element of innovation. Nothing, at
least no invention, is ever totally new. New knowl-
edge always emerges out of existing knowledge.
This is why people visit schools and universities,
and why nobody should stop listening and learning
even after years of work in the same office at the
same company.
Where do great ideas come from? In 2001 I co-
founded a company, that surveyed and evaluated
hundreds of patents a year. The focus was to show
the economic value of inventions in order to get
a basis for investments. What we have seen over
the years was that the story of the eremite inventor
who comes up with a billion-dollar idea is a myth.
Great discoveries typically emerge from a hive
mind (also see e.g. Kelly, 2010; Johnson, 2010).
And there has been a significant increase in patent
values when underlying inventions were close to
their market needs.
The logic consequence is that the success rate of
innovations will rise when the right people are in-
volved, and listened to. In most cases this will be
customers or co-workers. The ideas of salesmen and
call-centre agents have been especially proven to be
valuable as they get the unfiltered feedback of the
customer experience.
BUT NOT AT ONCE
From the invention of fire, to steam engines, to nu-
clear energy, people have tried to make their lives
safer, easier or at least more convenient. But it took
one step at a time to get there.
AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
How
In a big corporate environment changes are often lim-
ited by complexity. Business units for example find
themselves involved in drafting different, sometimes
even opposite requirements, but want, to reach the
same goal. Software application developers are chal-
lenged with bulks of internal and external interfaces
and interdependencies, not to mention running con-
tracts with customers, unions or outsourcing compa-
nies, and statutory regularities and obligations.
Small businesses, especially start-ups, usually do
not have to face such a level of complexity and are
therefore much more flexible. This allows them to
try things more easily, experiment and change entire
business models within a short period, if required.
Assuming that big corporations have major prob-
lems with extensive change, anyone who is willing
to change anything is well advised to concentrate his
other efforts on feasible project sizes within existing
processes. Successful innovators are not high-risk
takers. They choose what they perceive to be moder-
atly difficult challenges. (also see Pellman; 1999: 81)
This is also because ideas projecting too far into the
future are sometimes less valuable. Not only, com-
panies but also people in general, are able absorb
only one small step at a time. For example, Gregor
Mendel formulated his ideas about genetics in 1865.
But it took another 40 years until three later scien-
tists were able to understand his work and to this
day, not all that Mendel had had in mind has been
incorporated. (also see Kelly, 2010)
TRUST YOURSELF
As discussed above, trust is a key element of the cul-
ture of innovation. And this does not exclude the
individual. The best salesmen are those who actu-
7
How
ally use their products in good faith. Nobody trusts
a bold hairdresser who sells hair-restorers. So the
best question any executive could ask his or her em-
ployee, coming up with a new idea, is: Would you
invest your own money in it? And the best answer
an employee could give is an honest Yes.
It is actually crucial that the person who sells an idea
is committed to it. It often takes months to get a slot
in a board meeting to present a project. And it may
even take a longer time to obtain a decision.
But anyone who chooses this path should be aware
of its strengths and weaknesses. A good social net-
work and personal (not necessarily organizational)
authority within a company will help make things
easier. And what also helps is being a specialist in a
certain discipline, ones expertise being underlined
by publication or external speaking engagements.
Another good advice is not to disregard daily busi-
ness especially it has no direct link to innovation
projects. Being smart at everydays work helps not
to provide targets to enviers and to raise self-confi-
dence. However, it should be considered that there
is just a fine line between self-confidence and hubris.
THINK OF THE WHOLE PICTURE
Although an idea may be great and market opportuni-
ties look right, following these might not be the top pri-
ority of an enterprise at that specific point in time. Oth-
er topics or projects may be more important or have a
better alignment to the companys overall strategy. For
example, if a companys current cash flow depends on
just one customer, it may be a good idea to attract new
prospects in order to reduce this dependency. But it will
almost certainly be a bad idea to put the current in-
come at risk before identifying a reliable new source. In
the end, these decisions have to be trade-offs between
safeguarding the present and the future.
Bottom-up innovators often forget to consider inter-
dependencies and complexity. Companies in grow-
ing markets particularly force such challenges be-
cause organizational structures often follow current
8 AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
demands more so than planned strategies. So, even
very small changes within their organization cause
the companies unforeseeable impacts.
A closer look at todays software development proj-
ects illustrates the above: In software development
projects, timelines and amount of new functional-
ities to be deployed often are ambitious. As a result,
source code of new software is often littered with
hot-fixes and workarounds. The end customer will
probably not notice, since everything seems to work
without a problem. But programmers working on
upgrades or additional features have to consider ev-
ery line of code and its impact on the others.
Not only does complexity increase efforts, it also
increases costs. This should become evident when
business cases are made. If it does not, then wrong
expectations are raised that will most likely lead to
disappointment. Infamous examples can be found
unfortunately to no surprise in todays software in-
dustry. But just because complexity is complex, it
should never be an excuse not to start. Start at a lower
level, e.g., with a pilot and take one step at a time.
BUILD A TEAM
The myth of the lonely genius who creates a fortune
out of inventions he has made in his basement still has
a strong lobby. In reality, teams are generally more ef-
fective not only in generating ideas but also in bring-
ing them to life. An idea from one person often lead to
several more ideas from others. Ones complaint may
be another ones solution. A task that is too big for a
single person might be a small thing for a team.
It is no secret that the effectiveness of a team emerg-
es with its commitment to a certain goal, sharing the
same vision. And it is generally helpful to involve
people who are enthusiastic and excited about an
idea, because they are more likely willing to spend
additional effort, often extending into their own
spare time. (also see Pellman, 1999: 82)
To create not only an innovation but also a culture of
innovation it is necessary to give credit to the achiev-

ers wherever possible. In his book, The Journey is
the Reward (1988), Steve Jobs tells how it was the
team that created the Apple Macintosh. He recog-
nized their efforts and contributions by casting their
signatures on the inside of the casing. (Sloane, 2006:
100) Generally I think crediting should start much
earlier. In my opinion it is a question of manners.
Who should be part of a team? Valuable team mem-
bers should bring along with them the skills required
for certain projects as well as their enthusiasm. In
some cases the question of required skills is not that
simple. Especially at the start of an unpredictable
project, requirements and hence the scope, activities
and skills needed might be unclear.
Another experience we have had over the years
is that teams are often more effective when they
fight, fighting in a contextual sense, of course, is a
good thing. It shows that people are committed, and
Figure 2.
AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
How
whith this commitment come extraordinary results.
The worst for an innovation team is to remain silent.
This normally shows a sign of a lack of interest.
When a team has been created that is enthusiastic
and ready to make things happen, someone should
be in charge to keep the team together. An easy way
is to hold periodic meetings. Another is to divide and
address responsibilities and tasks, and track and re-
port them as often as possible.
STICK TO THE PROCESSES
As elaborated above, it is often a good idea for in-
novation projects to depart from the usual paths
and processes. But this is not a free ticket. A famous
quote by Edison that should be mentioned in every
article on innovation is that Genius is 1% inspira-
tion and 99% perspiration. In order to use these
99% of perspiration wisely, it should be considered
to follow specific rule-sets and processes.
9
How
Many tasks within an innovation project are not so
innovative, but still have to be done. These especial-
ly, should be managed properly. Classic project man-
agement methods like PMI or SCRUM have shown
to be extremely helpful for managing sub-projects of
innovation topics.
Concluding remarks
Most companies employ a top-down strategy to en-
hance a spirit of innovation. They dedicate some bud-
get to innovation, call on someone to be in charge
and acquire some expensive software tool intended to
help them manage innovation projects and ideas. Web-
portals designed, fancy cards and posters printed to in-
cite employees and customers to take part in idea con-
tests that are often more lotteries than real contests.
Out of question, there have been efforts like this
shown to be surprisingly helpful. But in most cases,
the results are unused ghost intranet websites, dis-
appointed employees and de-motivated people who
are told to be innovation managers but never have
had any organizational authority to actually change
anything. In other words, many companies still see
Mistakes we learnt from
We at CIPOC do not only work on client projects but
also on projects on our own behalf. We set out without
any processes and simply focused on the execution of
ideas. This was a bad idea still a lot to be desired. So
we took our knowledge and project management skills
and set up sophisticated processes. The result, however,
was to produce a large overhead that actually stopped
the executing efforts. So we choose to balance process-
es on the one hand and execution on the other, instead.
This has proven to be a much better approach.
On a larger scale we have found similar challenges
in many of our customers corporate environments:
10 AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
If you are not sure whether you have got what it
takes to transform a company bottom-up, shed a
light on it by using figure 2: Ask a flow-chart.
innovation more or less like a hobby or freestyle ex-
ercise, as something to do for fun, and if the daily
business allows it.
I think that this attitude is a mistake. As Peter
Drucker, the evangelist of Marketing, puts it: Ev-
ery organization not just business needs one core
competence: Innovation. (Drucker, 1999: 119) This
is why I advocate a different strategic approach to
innovation and a generally different self-image of
innovation managers. The core mission of any in-
novation manager should be the enhancement of a
culture of innovation. Innovation depends on people
and their personal skills, trust, teamwork and com-
mitment. Anybody improving these skills directly
and indirectly helps enhance a culture of innovation.
Good ideas and projects blocked due to organiza-
tional and procedural overhead. Valuable time to
market lost in board meetings and their preparation.
Where this is the case, and where we were able to es-
tablish larger pools of projects that could be bundled
into programs, we succeeded in expanding and re-
defining processes within the program management
offices, e.g. easily re-allocate budgets or human re-
sources between projects. These agile entities with-
in companyies strict frameworks have been much
more successful and delivered many more project
rollouts in time, quality and budget.
 How

Managerial implications
MANAGERIAL IMPLICATIONS MANAGERIAL IMPLICATIONS WHEN
WHEN YOU WORK TOP-DOWN: YOU WORK BOTTOM-UP:
1. Trust your people 1. Improve everything but not at once
Know your people Listen to every complaint and every suggestion
Reward opposition Always think of the customer experience
especially if the customer is a co-worker
2. Do not trust your processes Concentrate on feasible project sizes
Lead, dont just manage Improve yourself

3. Be patient 2. Trust yourself

Expect failure as an outcome Know your strengths
Consult rather than control Trust your strengths
Fight for your idea
4. Do something
Stop talking start building 3. Think of the whole picture / Be an entrepreneur
Know that although your idea might be great,
other things will be more important
If innovation is not your job, make sure your
daily business runs perfectly
Make sure your numbers include independencies
Start small but start

4. Built a team
Know your weaknesses
Find a team to compensate your weaknesses
Never trust a team that never fights
Do everything to keep the team together

5. Stick to the processes

Follow the rules. Not everything about them is
wrong
Try not to lose interest in your topic

AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se 11
How

References and
recommended reading
Apple Inc (2011) Apple Reports First Quarter Results

Drucker, P.F. (1999) Management Challenges for the 21st Century

Jacoby, R. (2011) Leading Innovation: Process Is No Substitute

Johnson, S. (2010) Where Good Ideas Come From: The Natural History of Innovation

Kelly, K. (2010) What Technology Wants

MacNeill, D. (1998) Why did Apple kill the Newton?

MIT - Massachusetts Institute of Technology (1996) The inventor

of the week: Percy L. Spencer, The Microwave Oven

Pellman, R. (1999) Intrapreneuring in Action: A Handbook for Business Innovation

Rowling, J.K. (2008) The Fringe Benefits of Failure, and the Importance of Imagination

Sloane, P. (2006) The Leaders Guide to Lateral Thinking Skills: Powerful Problem-
Solving Techniques to Ignite Your Teams Potential (2nd Edition)

Welcome to the forum

The InnovationManagementForum.com provides a platform and channel of
communication exclusively dedicated to innovation management. You are invited
to discuss questions that you might have about how to implement the knowledge
presented in this article in your organization. This is a valuable opportunity to
exchange experiences with the like-minded and with colleagues from around the
world. The author of this article will also take part in these discussions.

www.innovationmanagementforum.com

12 AIM-article #5-2011 is brought to you by InnovationManagement.se Ymer&Partners AB All rights reserved. To order please visit www.imstore.se
The number one online magazine for innovation management practioners

To order please visit

www.InnoavationManagement.se

For general enquiries, please send us an e-mail:

info@innovationmanagement.se