How Great Companies Innovate

By Kathryn Stanley, PhD, Chair, Organizational and Leadership Psychology Department October 05, 2015

Kathryn Stanley, PhD, Chair, Organizational and Leadership Psychology Department

Stewarding great ideas into innovative new products and services that succeed in the market is an important competency for companies today. Leaders have a lot of influence over their organization’s culture and the value placed on innovation. There are three key factors that leaders can focus on to help their employees and teams have the space to conceive of new products and services but also get them to market. 

Tips for Leaders 

Creativity is a key to innovation. Leaders need to communicate the importance of learning and creativity throughout their organizations. The best way they can communicate this value is to provide time and resources for employees and teams to be creative. Google gives each employee one day or 20% of their time at work to focus on projects of their choosing. From this program, many successful innovations have been created and implemented including Gmail. Another way to emphasize the value of learning and creativity is to align rewards and recognitions given to employees, teams, and supervisors who conceive of and design innovative new products, services or internal procedures and policies.

Tolerate risk. Leaders can also create an organizational culture that tolerates calculated risk. Risk tolerance is evident if when a department or team fails at something they still feel secure in their employment. Trial and error is involved in all new inventions. Thomas Edison made over 10,000 attempts before he was successful at making the light bulb. Creating an organizational culture that values learning from failure versus on blaming is critical to fostering an environment that supports creativity and innovation.

Open communication. The ability for employees to communicate throughout their organization is also a key factor in supporting innovation in companies. Companies where employees feel comfortable talking to the leader two levels up or to employees in different groups have a higher degree of innovation than companies that don’t. Leaders who encourage informal communication build companies that also have higher retention and lower turnover rates. These types of companies are simply better places to work and foster the conditions that allow innovation to thrive.