How to build a culture of innovation

“Part of the path to success is to learn from mistakes, so to move forward you have to take risks,” says Enel’s Silvia Mendez. “We see innovation as an opportunity to evolve.”

“Innovate or die.” In business, the famous quote attributed to influential management consultant Peter Drucker has proven true time and again. Innovation is what gives companies a competitive advantage over those who won’t let go of the old ways of doing things. Those who don’t embrace innovation get left behind.

But innovative companies don’t just happen. Building a culture of innovation requires time, careful deliberation and a willingness to embrace risk. There also needs to be a commitment from the top to establish practices that foster an innovative culture among the entire staff. All that work pays dividends: companies with innovative work cultures tend to have more engaged (and retained) employees, higher productivity and increased revenue.

Here’s how to foster innovation at your workplace.

Find an innovative partner

It may feel a bit like Goliath asking David for help but partnering with the right startup venture allows larger companies to adopt or invest into cutting-edge solutions without having to start from scratch. A partnership can be pivotal for helping a company stay ahead of disruptions.

“Corporate partners often come to MaRS to understand what’s at the leading edge of, for example, 5G or carbon capture technology. They want to get insights from startups that can actually inform their corporate strategy,” explains Ian McCarter, director of corporate innovation at MaRS. “By the time something hits the news, it’s already too late for a lot of the companies to start thinking about.”

Getting to a deeper understanding of their own objectives is essential for a corporation who wants to partner with a venture. “A lot of startups go from pilot to pilot without having a strategic partner who’s actually going to take on some of the technology risks with the organization, and that’s more what the venture is looking for,” says McCarter. “Being aligned with that upfront is critical.”

Helping the corporate partner and the venture understand each other’s objectives is essential, McCarter says. “It’s a fundamental mind shift,” he adds. “Some corporates come to us saying, ‘What’s in it for me? How does this impact my return on investment?’ But by taking a venture-first lens and understanding that these are small companies trying to prove out a technology, the ROI will return in dividends.”

Scout new ideas

About six years ago, Enel, one of the largest utility companies in the world, shook up its business model by establishing innovation hubs around the world. Working toward having an electricity generation mix that’s entirely derived from zero-emission sources by 2040, the company wanted a way to identify promising solutions early on. It now has 10 hubs around the world. “It was a way to scout startups and to become part of local communities — to be around every single actor that has a voice in the innovation community,” says Silvia Mendez, manager of Enel’s hub in Boston. “The talent is everywhere, so we have to be there.”

To Enel, success comes from working with the best external players and transmitting innovations to its business lines worldwide. “It’s a win-win collaboration,” Mendez says. “We want to provide startups with our knowledge, experience and facilities, and then get into commercial agreements with them. Everything is centred around collaboration, co-creation, co-development.”

Since the hubs were created, Enel has supported more than 545 startups and more than 125 scale-ups in developing pilots. “If you want to see innovation, you have to be where the brilliant people are,” she adds. “If you want to brainstorm, you have to be part of the community.”

Make space for innovation

To foster innovation in the workplace, support from the top is essential. Enel’s innovation hubs were the brainchild of Ernest Ciorra, the chief innovability officer, a unique job title that underscores how innovation is a key component of achieving sustainability. And management involvement in day-to-day operations has been constant ever since. “That’s super relevant,” says Mendez. “It needs to be a priority.”

It’s also a mindset shift. Making room for innovation may mean curbing risk-averse tendencies and leaning in more to learning — not always the easiest for a large corporation. There are other challenges, too. For one thing, there’s the internal sell — stakeholders must be on board with trying new things. “Cautious governance processes make it easy for stifling bureaucracies in marketing, legal, IT and other functions to find reasons to halt or slow approvals,” one McKinsey report notes. “Too often, companies simply get in the way of their own attempts to innovate.”

Enel has implemented a fast-track procurement process for ventures it works with, sidestepping the usual time-consuming and bureaucratic process. “We understood from the beginning that one of the main constraints for startups and small and medium-sized enterprises was the cash flow,” says Mendez. “We have to have more of a sense of urgency — we can’t deal with a company with 10 employees in the same way as with an Amazon.”

Fostering innovation also requires supporting a company’s own in-house innovators. Indeed, if there was one thing the COVID-19 pandemic made clear, it was that companies who were nimble and innovative fared much better than those who didn’t. Even a once-traditionally run company like Prodigy, which produces an online educational game for schools, had to pivot to remote work and flexible schedules.

“We have a really big mission: to help every child in the world love learning,” says chief people officer, Sarah-Jayne Lehtinen. But connection to that greater purpose — one that was fuelled by visits to classrooms and interactions with students and teachers — suffered during the pandemic.

To keep staff creative and inspired, Prodigy introduced new health and wellness initiatives — yoga and fitness classes, speakers and more — and tracked the response through regular experience surveys. The company also created “epic weekends,” adding an extra day off to five long weekends during the year. “If people don’t have time away, they don’t have that headspace to really get creative, to innovate, to connect concepts,” says Lehtinen. “That’s the biggest piece.”

Be open to learning

Openness to learning, tempering risk aversion, staying abreast of trends, creating a top-down to bottom-up culture of innovation — all are essential. So is a willingness to make mistakes and learn from them. For instance, not all partnerships are runaway successes. One of MaRS’ corporate partners connected with a venture and invested in a pilot project. While the two companies decided that the partnership wasn’t a fit, “There were a ton of learnings that came out of that pilot for both parties,” says McCarter.

As Mendez says, “Part of the path to success is to learn from mistakes, so to move forward you have to take risks. We see innovation as an opportunity to evolve. The world has always evolved based on change.”

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Photography: iStock