How to Create a Culture of Innovation

Create an Innovation Culture


How do organizations revolutionize their products and services?

Is it possible to create a culture of innovation?

Is organizational culture linked to innovation and competitive advantage?


Soren Kaplan, Ph.D. answers these and other questions in his new book,Invisible Advantage: How to Create a Culture of Innovation. After reading his book, I had the opportunity to ask him some questions about his research in the area of innovation, disruption, and corporate culture. Soren has been recognized as a Thinkers50 Global Thought Leader. He’s a keynote speaker, a consultant, and an author. You may have read his previous book, Leapfrogging.


“Competitive advantage is temporary.” -Soren Kaplan


What is Missing from Culture Discussions

Organizational culture has been the rage in discussions for quite some time. What have many of these discussions missed?

People have been talking about organizational culture for years. But few discussions on the topic have explicitly linked culture directly to innovation.  Even fewer focus on the integrated set of things that leaders can do that directly create a culture of innovation in a truly systematic way.

It’s one thing to create rewards for example. It’s another to look at how rewards, metrics, processes, and storytelling can all be used together to change culture for the better. The problem is that most leaders do things that both support and contradict a culture of innovation all at the same time, like telling people they want innovation but then not giving people time to innovate.

To many executives, culture has become a complex and mysterious topic.  Business and leaders have lost sight of the fact that organizational culture is actually pretty simple.  Here’s how it works:  Employees have experiences in organizations that are influenced by leaders’ conscious and unconscious decisions and behaviors. Experiences shape assumptions about what is both desirable and undesirable behavior.  Assumptions, in turn, influence and reinforce behavior.  It’s an ongoing cycle. That cycle can be either virtuous or vicious and can lead to innovation or stagnation.


Why Culture is a Sustainable Advantage

Share a little about your thinking of culture as a sustainable competitive advantage.

The Invisible AdvantageThe first reality in today’s disruptive world is that competitive advantage is temporary. Products, services, and even business models become commodities over time. If organizations do not continually invent and reinvent their competitive advantage, they risk being disrupted into obsolescence.  Given all the disruption out there, this fact is the no-brainer.

As a result of the commoditization of just about everything, culture becomes the only sustainable competitive advantage. Culture represents the norms and values that drive behavior.  When it’s focused on and reinforces innovation, it becomes the invisible secret sauce that drives employee engagement, business growth, and continuous reinvention.

The bottom line is that the soft stuff is the hardest stuff for competitors to copy.  The goal is to create an “invisible competitive advantage,” something I call your “Invisible Advantage.”


“The only defensible competitive advantage is your culture.” -Soren Kaplan


In what ways can culture stifle innovation?

Creating a High-Trust Culture for High Performance


How to Increase Trust


Why is culture so difficult to change?

Why are so many employees disengaged?

What should a leader do when she arrives at a company that is struggling?


The founding director of the Center for Neuroeconomics Studies recently wrote a book, Trust Factor: The Science of Creating High-Performance Companies to answer these and other questions. Paul J. Zak, PhD, is also a professor at Claremont Graduate University. He recently answered some of my questions about his extensive research into trust. His book is fascinating and contributes to the body of work on trust and organizational culture.


Survey of 200,000 employees: 71% of companies have mediocre to poor cultures.


Spot the Signs of a Low-Trust Culture

In one part of the book, you tell a story of walking into an office full of cobwebs, old furniture, and a struggling culture. What are some of the signs of a low-trust culture?

Distrust drains employees’ energy, so people move slow, think slow, and lack a passion for their jobs.  Organizations with low trust also have lower profits, so offices often look out-of-date, even while new employees show up as turnover tends to be high.  We have also shown that people take more sick days when they work at low-trust companies, so one sees empty desks.  All these factors are signs of a low-trust syndrome and a downward cycle of productivity, innovation, and profits.


“High-trust companies invest in employee health and productivity.” –Paul J. Zak


Why Healthy Cultures are Based on Trust

trust factorWhy is a healthy culture based on trust so vitally important to its success?

Companies are, first and foremost, people. As social creatures, we naturally form teams to accomplish goals together.  Extensive research shows that teams are more effective when they have a clear objective and when team members are trustworthy. Trust reduces the frictions that can arise in teams so getting things done takes less effort and as a result more and better work is done.  By measuring brain activity while people work, we’ve shown that people are more relaxed when they trust their colleagues. They innovate more and shed the stress from work faster than those in low-trust companies.  Creating a culture of trust provides powerful leverage on performance because it harnesses what our brains are designed to do: cooperate with others in teams.  And the neuroscience I’ve done shows how to create a culture of trust in a system so it has the maximum effect on brain and behavior.


Workers in high trust organizations are paid an average of $6,450 more.


I love the biological explanation of the Golden Rule. Explain the connection between oxytocin and trust.

Answer the Call to Exceptional Leadership

Leading the Unleadable

Taking a management job is not the same as answering the call to exceptional leadership. That’s what Alan Willett’s new book is all about: how to create a culture where people are able to perform in an extraordinary way.

Often new managers think that those following them are unengaged, cynical, or otherwise difficult. And that can be true, but many of these symptoms are a result of the manager not knowing how to lead, how to challenge, how to create team-wide expectations.

Alan Willett offers practical ways for managers to take on these challenges. Alan is the president of Oxseeker, a leadership consultancy with clients ranging from Oracle to NASA. His new book is Leading the Unleadable. I recently asked him about his work on exceptional leadership.


“Exceptional leaders have a personal, passionate mission that goes beyond results.” –Alan Willett


Set the Right Expectations

There are so many aspects of your book to discuss, but I want to focus on expectations. How important is the leader’s expectations?

It is amazing how even people that seem “defiant” are working to meet the expectations of the leader. When leaders are setting the wrong expectation it will have negative impacts – and the leader can do this without even knowing it.

I have seen many leaders consistently tell their teams that they want the “most aggressive schedule possible.”  Of course the projects with the most aggressive schedule possible are invariably late. Along with being late, there are many negative aspects that can include quality problems and morale issues since team members feel they are failing. Many leaders who set these expectations later ask me, “Why are my teams always late?”

What the leader really wants in these situations is for the team to have the “smartest” plan possible and a commitment that the team can definitively meet or beat that plan. Setting those expectations correctly will get leaders who they really want.


“Exceptional leaders are fearless in setting expectations in clear language.” –Alan Willett


How a Leader Sets Goals

It seems that you can set the bar too low and not challenge the team or be “so positive” that you demotivate everyone. What’s the best way to set the goal appropriately?

Set clear motivating goals for the team, but also leave out some specifics, leave them a little vague. Then challenge the team to make it more specific and meaningful to them. In doing this the team members almost always grumble about the lack of precision. They then get to work to make the goals better. The team then creates the goals that are that high bar you refer to. Since the team set those specific goals, they are committed to achieving them.


“Action is the foundational key to all success.” –Pablo Picasso


I have worked this method with leaders over 300 times, and it never fails to inspire the team ownership and commitment. Leaders are often stunned at what the teams can really accomplish.


Expect Excellence Every Day

Become the Leader Your Team is Waiting For

Become a Good Authority

What if chasing balance was actually making us unhappy?

What’s the true purpose of work?


“Change the game, don’t let the game change you.” -Macklemore


Personal and professional growth. We often think they’re different. We live our lives as if the personal and professional are in neat little silos, as if one didn’t affect the other.

I’ve often said that leaders help people with the personal, not just the professional. And sharing a little of the personal may make a big impact in the professional.

The two are interrelated.

And so, when I read Jonathan Raymond’s new work, Good Authority: How to Become the Leader Your Team is Waiting For, I was excited to find a book that explained why this is…and how to use it to become a better leader. Jonathan is the former CEO of EMyth and now the owner of Refound, an advisory firm that offers leadership training and coaching. And I think his take on “good authority” will have you nodding along with what we want from the very best leaders.


“When you make peace with authority, you become authority.” –Jim Morrison


Own Your Contribution

Contrast good versus bad authority. What are a few attributes you would think of?

I’d say the first attribute is in the willingness to own your role as an authority in the first place. I see too many modern leaders try to abdicate that responsibility, either outright or in subtle ways, and try to be nice at the expense of giving people the boundaries they need to grow. The main attribute of bad authority is when a leader doesn’t own their contribution to a stuck dynamic or problematic situation. For example, a leader who hasn’t provided a reasonable timeline to reach a goal and then blames the team for not delivering on it fast enough. Good authority is the art of owning your contribution, being transparent with your team, and then moving forward in a collaborative way.


“Our strengths are not our own until they are freed of the burden of having to heal the past.” –Jonathan Raymond


Would you share a little about the concept of “borrowed authority”?

Borrowed authority is the idea that until we investigate the beliefs about authority we inherited from our parents and teachers – not to mention the business culture in general – we’re still borrowing our leadership style from the past instead of discovering the one that genuinely expresses who we are today. In Good Authority, I offer that the opposite of Good Authority isn’t bad authority, it’s borrowed authority. What I mean by that is that most leaders have good intentions, but until we do the work, we’re bogged down by ideas and beliefs about what it means to be the boss that hold us back and create pain and confusion for the employees in our care as a result.


“You’re only as young as the last time you changed your mind.” –Timothy O’Leary


Make it About Relationships

I want to ask about organizational culture. You say, “Nobody sets out to make their employees overwhelmed, stressed-out, and miserable.” I have to say that I read that and laughed, thinking, “If Jonathan only met one of my bad bosses, he’d think differently!” You’re right, of course, but people are overwhelmed and stressed. What’s are some ways to change a culture into one that is positive, empowered, and driven?

Good Authority CoverThis may sound odd, but the first problem is bad math. One of the things I ask leaders to do is to add up all the time they’re spending (1) doing re-work for a struggling employee, (2) mediating their interpersonal conflicts, (3) answering questions that they should be able to answer themselves, and (4) complaining to their spouse, partner or friends about how frustrated they are. The pivot is incredibly simple and goes against our conditioning, which is why we typically avoid it. The key to create a positive, empowered and driven culture is the exact same thing that will get you out of being overwhelmed and stressed. Repressing what you see and feel leads to emotional, mental, and physical problems, and it keeps that data away from the one person who needs to hear it in order to grow.

There’s an art to talking about work in a way that feels personally relevant to your employee, but it boils down to this: Give them feedback not about tasks and projects but about how they’re showing up as a human being. Make it about relationships, feeling their impact on others, how they avoid taking risks—those are the things that people will immediately see as helping them get better at work and at life at the same time. There’s a whole new type of organizational culture that opens up from that simple shift.


Leadership Tip: More Yoda, Less Superman


How to Become a Great Listener

What are some techniques you use to help coach someone who has problems with listening? How can we all learn to be better listeners at a deeper level?

Before we talk about the deeper cut, one simple technique that’s often used in mediation applies well in the workplace in general. Have the person you’re trying to help repeat back what they heard before responding. Highlight for them what the gaps are between what was said (and, even more importantly, how it was said) and what they heard and how they interpreted it. There’s a lifetime’s worth of personal growth work there.


“We teach best what we most need to learn.” –Richard Bach


At a deeper level, and this is something I work on every day, is to re-examine what we think our value is as leaders. That’s a lot of what Good Authority is about: to learn how the highest value we can add to our teams, and in the rest of our lives, is to put our thumb on the side of the scale that’s about creating the space for others to discover that next better version of themselves, as opposed to tending to fill that space ourselves. I love leaders and have so much respect for anyone who throws their heart into a problem with no guarantee of success. The pivot is to see how not everyone works that way, and that to create the organization that can do more than you can on your own, you have to listen for those other voices.

Finally, it comes down to not shooting the messenger. I can’t tell you how many organizations I’ve seen, in fact I’ve never seen one where this isn’t true, where one person becomes a scapegoat for the cultural dysfunction and is moved out (fired or pushed into quitting), and the message they were carrying never sees the full light of day.  It’s a basic rule of group dynamics, but I see CEOs do it all the time, moving out the ‘disgruntled’ employee instead of leaning into the conversation and discovering the most powerful brand ambassador they’ve got.


Tip: Focus more on who people are and less on deadlines and tasks.


Let Go of the Past

How about letting go of the past? What advice do you give to someone who is letting the past limit their future?

Find a way to get in relationship with it. Meaning, when you notice yourself re-hashing or cycling in an old story, imagine a friend was telling you that story, what would you tell them? It’s a life’s work for sure, but learn to reframe our past in terms of how it made us the person we are today. I heard this phrase again recently that I absolutely love: “The past didn’t happen to us, it happened for us.”  To be clear, I’m not suggesting people try and transcend or gloss over traumatic or otherwise difficult personal experiences, only that we hold a bit of double-vision about them. Let yourself feel whatever there is to feel about whatever it is that you feel it’s holding back. Cry, laugh, roll up the car window on the freeway and let out a yell from the depths of your soul. By giving yourself permission to let it be what it is all the way, only then do you open up the room to see it in a new way. The paradox is that you don’t have to do any additional work to do this. It’s the process of giving yourself permission to feel that brings that higher mind back online, and you can move forward with confidence and a sense of self that might surprise you.


“Shake it off.” –Taylor Swift


How to Increase Accountability

How Great Firms Prosper Through Entrepreneurial Thinking

Develop an Entrepreneurial Mindset

Why are some businesses more vulnerable to disruptive change than others?

Should big companies engage in entrepreneurship?

How do you stay ahead of the competition?

In Achieving Longevity: How Great Firms Prosper Through Entrepreneurial Thinking, Jim Dewald provides advice on how to create a culture of entrepreneurial thinking. He offers a method to combine the strength of a strong, established business with the innovation of a startup.

Jim is the Dean of the Haskayne School of Business at the University of Calgary, a former CEO and entrepreneur.


“To improve is to change, so to be perfect is to have changed often.” –Winston Churchill


Prepare Yourself for Real Disruptive Change

What makes businesses vulnerable to disruptive change?

There are 2 main messages in my book.

First, that while we think the world is changing rapidly, in fact, we continue to rely on a platform that arose from the invention of 3 general purpose technologies in the 1870’s: the internal combustion engine, the light bulb, and the telephone. Even with the computer and the Internet, we have spent decades boxing in this amazing new technology to fit our paradigm need for a faster, smaller, cheaper phone. So, while we think we are in the midst of rapid change, the western world is in fact obsessed with ensuring we stick with the old world and reward refinements of tired mature ways of doing things. When real change comes, will business leaders be prepared? I don’t think so.Dewald_AchievingLongevity

One of the reasons why we won’t respond well when real change comes is that while ideas are abundant, small start-up ventures lack the resources – people, money, physical assets — to launch these ideas. They also lack the credibility, networks, access to customers, suppliers, government officials, etc. This limits their ability to move these ideas forward, no matter how great they may be. At the same time, existing companies are flush with people, money, networks, customers, and, most important, credibility and brand value. But what they lack is an entrepreneurial mindset. To move forward, companies need to resist the rhetoric of finding and sticking to a narrow form of sustainable competitive advantage, and instead adopt a model of strategic entrepreneurship that promotes transformational growth and longevity.

The fundamental impact of disruptive change is that our organizations are not built to manage change very well. Through principles such as sustainable competitive advantage, we tend to use fixed mindsets that build a sort of impenetrable armor around the firm’s processes and procedures, instead of being flexible and adaptable. When disruptive technologies or business models present an alternative, firms resist. Indeed, even customers often resist, as we remain stuck in our paradigms formed as noted above. However, in time, customers adapt because they do not have the level of sunk investment in the old ways that companies often do. Time and again, rigid non-entrepreneurial firms fall by the wayside.

There are many very extreme examples of this phenomenon. Think of Kodak, which is a firm that actually pioneered digital photography, but in the end was unable to adapt to this powerful disruptive technology.


“Progress is a nice word we like to use. But change is its motivator. And change has its enemies.” –Robert Kennedy


Embrace a Spirit of Entrepreneurship

How can large organizations embrace a spirit of entrepreneurship?

I emphasize the importance of adopting three points:

  1. Recognize that opportunities are developed at all levels of the organization.
  2. Build a culture that embraces and supports entrepreneurship.
  3. Consciously develop support for entrepreneurial initiatives through effectual processes or bricolage.

The key is leadership, not only in words, but in action. It is imperative that the CEO endorse an entrepreneurial culture by example – championing new ideas. In fact, a failure or two is good because it demonstrates that even the CEO recognizes that not every entrepreneurial idea is destined for success, and it is important to manage your investment and ensure that no one new venture will take down the ship.


“Culture eats strategy for breakfast.” –Peter Drucker


The Key Elements of a Good Corporate Culture

What are the elements of a good corporate culture?

There are many theories on this question, and I included quite a few in my book. In the end, the key elements are:

  1. Provide open opportunities for opportunity development – these include group time (because we know that mixing people with diverse expertise and background can lead to innovative solutions), plus unstructured open thinking time (such as 3M’s famous “tinkering” time).
  2. Adopt a learning culture – growth mindsets are essential, pursuing what could be as opposed to why this won’t work.
  3. Accept failure, and the importance of learning from failure.
  4. Adopt bricolage (known outcomes, with unknown ways of getting there), or effectuation (building on invention, experiment, and science) as frameworks for pursuing each entrepreneurial initiative (purposefully).


“The only sustainable competitive advantage is an organization’s ability to learn faster than the competition.” –Peter Senge


Encourage Creativity at all Levels

How do leaders encourage creativity at all levels of the organization?

The first thing I would say is that leaders must recognize that organizations need time to change. This is not an overnight process and will require considerable and repetitive actions and wins to change. And failure is a key component – an organization can move far closer to being creative and adopting entrepreneurial thinking by showing that a person with a great idea that failed in implementation is celebrated as thinking outside the box, rather than penalized for failing.

Researchers have studied the importance of story-telling in organizations, and how a lasting culture can be built around well-known, maybe even legendary, stories that come from the history of the organization. The dimensions of story-telling I describe in my book include equality (versus inequality), security (versus insecurity), and control (versus lack of control). Through story-telling of actual events that happened in the organization’s history, employees are able to gauge whether the organization will endorse or shun creativity at all levels.


“Successful innovators are..not risk-focused; they are opportunity focused.” –Peter Drucker


Middle management is often ignored in the leadership literature. What role do they have in this type of change management?