Why a culture of innovation is required in an era of digital transformation

There are few items which should rank higher than building a more innovative culture in the enterprise. Essentially, innovation guides organisations through uncertain times, helping them adapt to new market conditions with the flexibility and agility needed in today’s business ecosystem.

Indeed, modern business demands more innovation than ever before. In fact, recent research from McKinsey1 indicates that companies have significantly increased the pace of digital transformation throughout the pandemic. What was considered “best-in-class” in 2018 became slower than average last year, while companies with the best technology talent, leadership, capabilities, and resources are operating at an exponential pace.

The reliance on hybrid workplaces has resulted in many businesses rethinking their IT infrastructure and finding ways to apply enterprise automation and artificial intelligence (AI). This frees up time for employees to focus on important matters such as innovation and excellent customer experiences.

Since 2020, there has been an enormous shift in how people work, shop, and spend their leisure time. Therefore, companies are having to adapt their practices and technology to align with this. With many companies adding more hybrid working solutions and e-commerce to their technology stack, they have introduced technologies such as Edge computing platforms and IoT devices to generate more data than ever before. This is data which can be analysed to create even more value for stakeholders.

The companies that have successfully navigated digital transformations have one thing in common: a culture of innovation. Budgetary constraints, a lack of vision, and inadequate executive support can all stifle cultural change. There are numerous roadblocks to cultural innovation, and there is a big difference between companies that want to build innovative cultures and those actually doing it.

Building an innovative culture and keeping pace with modern business expectations

It is important to encourage employees to try new things, and celebrate them regardless of whether or not they succeed. By letting employees experiment with ideas, and making it clear that it is okay to fail at first, employers can encourage employees to use those failings as learning opportunities. There is no better way to help employees find meaning and value in their work than to empower them to solve problems.

By implementing dedicated intrapreneurship programmes that encourage all employees to contribute ideas without fear, enterprises can put this mentality into practice. By creating a programme whereby employees can submit innovative ideas for products or concepts outside the company’s typical business, for review at any time, everyone can feel welcome to shape the next generation of cutting-edge business technology.

Essentially, organisations will know they have built a culture of innovation with measurement. However, not in the way many traditionally measure success. Instead, organisations will need to rethink measurement relative to their innovation approach.

The importance of measuring success

If the end goal is to build an innovation culture which encourages digital transformation, organisations must measure two things. The first is the concept of culture, and the second is digital innovation itself.

Traditional culture metrics track aspects such as turnover or employee sentiment through surveys, but there are also qualitative metrics. On the innovation side, many organisations often rely on the Innovation Quotient2 survey, which measures innovation across six dimensions. These assessments highlight the degree to which measuring soft variables is exceedingly difficult. There is also a small handful of quantitative innovation metrics, such as research and development (R&D)-to-product conversion, and the degree to which new products contribute to revenue.

There is no denying that innovation and culture feed into one another. If employees are given the chance to leverage their own creativity, their employers will see massive increases in job satisfaction. As a result, the business landscape becomes more collaborative, compassionate, and focused on collective values between human innovation and automated processes.

The ultimate testament to building an innovative culture is incorporating ideas from fail-first programmes into new or revised product offerings. Good ideas can come from anywhere, and often arise from an earlier project that never quite took off. A telltale sign of success is when these ideas and programmes come to fruition through the collaboration and ideation of individuals.

The bottom line is, innovation starts when creativity and a passion of your people is unleashed, giving them the tools to leverage analytics, navigate change, and ultimately help build agility into the business. Building an innovative culture means that innovation never ends, and that is how it should be.

1) https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-new-digital-edge-rethinking-strategy-for-the-postpandemic-era 2) https://sloanreview.mit.edu/article/how-innovative-is-your-companys-culture/