What Is Innovation Culture? The Six Components and How to Measure Them

Innovation culture is a special, collective mindset that encourages the exploration of novel ways to improve business outcomes. That is how I define it in Innovation Mode 2.0, where I also describe it as “a delicate construct that reflects how people perceive the innovation process and how they feel about it collectively.” Also called a culture of innovation or an innovative culture, it is not a program, a lab or an event calendar. It rests on six components: trust, safety, openness, curiosity, purposefulness and healthy competition.

• Collective, not individual: it describes the dominant attitude across the organization, not the enthusiasm of a few, and it begins to form when a critical mass of people use the innovation function to pursue the organization's purpose
• Driven from within: nobody has to schedule it. “In truly innovative companies, this force of improvement, the propensity to novelty, comes from within, from the collective state of mind.”
• An attitude to change: it shows in how people react to change and in their willingness to try new things that serve the organization's purpose
• Three names, one idea: innovation culture, a culture of innovation and an innovative culture describe the same collective mindset; the book uses the first two interchangeably
• Built on six components: trust, safety, openness, curiosity, purposefulness and healthy competition, each strengthened or damaged by everyday decisions
• Measurable: directly, by asking people, and indirectly, through behaviors such as participation and experimentation; see how to measure innovation culture

Innovation culture matters because it is the one ingredient of corporate innovation that a company cannot buy. Corporate innovation needs knowledge, strategy, technology, processes and culture. Knowledge can be hired and technology licensed, but “culture is the only one that cannot be acquired; it must be developed through a long process of inspiration and leadership powered by authentic messages and real examples that link innovation with the company's purpose.” Without it, innovation programs stall, whatever they cost.

• It decides whether programs work: “Without a strong culture, even structurally sound innovation programs face resistance from people that undermines their potential.”
• Culture outweighs other drivers: in a study of 759 firms across 17 major economies, “corporate culture is the strongest driver of radical innovation across nations,” ahead of national labor, capital, culture and policy (Tellis, Prabhu and Chandy, 2009)
• It feeds itself, for better or worse: a poor culture creates a negative loop in which limited outcomes trigger skepticism, and skepticism lowers engagement in the next effort
• It supplies the pipeline: where the culture is healthy, ideas surface from routine work and not only from workshops, so opportunity discovery does not depend on the next event
• It makes risk-taking possible: people test promising but risky ideas only where failure is handled as learning, not as a blame game
• It protects the investment: labs, hackathons and platforms turn into innovation theater when people do not believe in them, which is why culture needs the full attention of leadership

Innovation culture is the part of organizational culture that governs how people treat new ideas: whether they share them, test them and help them move forward. Organizational culture covers everything else about how a company works, and the two can pull apart. A company can have a strong culture of execution, stability or internal competition and still be hostile to new ideas. In the most innovative companies the gap closes: “innovation is not a distinct process and does not happen as part of a special program or workshop; it happens naturally.”

• Internal competition: rankings, bonuses and promotions drive short-term wins but can make people secretive and defensive about ideas. “There is a tradeoff between internal competitiveness and innovation culture.”
• Stability and bureaucracy: strict hierarchies bring predictability, but they also tend to bring low morale, resistance to change and slow decisions, because everything has to go through strict protocols
• Delivery pressure: under deadlines, managers may read disruptive innovation as a disruption to the smooth execution of their projects, so a culture that is strong on delivery can still block new ideas
• Where innovation culture starts: it can grow inside a larger culture that is not yet innovative, beginning with the people who already behave like innovators and act as role models for others
• The direction of travel: the Innovation Maturity Index ends at Innovation-native, where innovation talent is embedded in every team and innovation is no longer a separate program

A strong innovation culture has recognizable characteristics: people pursue opportunities without being asked, anyone can contribute, critique flows in every direction, failures are discussed openly and leaders take part. As I put it in Innovation Mode 2.0, “You can tell that the innovation culture is present when there is a willingness to pursue new opportunities and readiness to disrupt the status quo with the intent to create value for customers, the company, and the world.” The warning signs are just as recognizable.

• Proactive people: people spot, frame and pursue opportunities that serve the organization's purpose and goals, without waiting for a program to ask
• Beyond the job description: “The most successful innovators I've worked with are self-motivated, proactive individuals who go beyond their job descriptions and demonstrate a growth mindset”; see what an innovation mindset looks like
• Anyone can contribute: ideas come from every team, discipline, level and location, not only from the innovation team or engineering
• Critique flows both ways: people question ideas from senior leaders, and senior leaders ask for critique of their own
• Failure is discussed: leaders present projects that were stopped early and what was learned, and honest negative results do not hurt careers
• Leaders take part: executives join ideation sessions and reviews, and they tell the stories of ideas that became real business opportunities
• Warning signs: ideas left in a queue for months or parked without assessment, template replies, managers who refuse time for workshops, and early contributors who quietly stop

A good example of innovation culture is an ordinary working day in which innovation is part of the routine. In Innovation Mode 2.0 I describe such a day inside a truly innovative company, a “fictional yet realistic scenario” of how people there work and think. My answer to what happens on a typical day is simple: “The short answer is business as usual.” The difference is that business there includes seeking, validating and pursuing opportunities, and people treat even routine moments as a source of ideas.

• The morning stand-up: routine meetings are enriched with market intelligence and fresh ideas, and people know that even a routine chat or a heated debate can frame a problem that goes into the company's opportunity discovery process, where others can find it
• A shared picture: summaries of business news and competitive insights reach everyone, performance is visible on live dashboards, and the purpose, vision and innovation agenda tell people which problems matter most
• Between tasks: alongside emails and status reports, people submit just-in-time ideas for business experiments, discover recent achievements and volunteer to collaborate, wherever they work
• In the meeting rooms: between planning and review meetings, a cross-functional team prototypes a new concept while a distributed team pitches its idea to stakeholders
• On the live product: product teams run their products with innovation and growth in mind, testing hypotheses with in-product experiments and deciding on evidence
• In the leadership suite: between budget meetings and strategy sessions, executives interpret market signals, review high-potential opportunities and keep the opportunity portfolio and innovation agenda current
• The mindset behind it: none of this is a special program or workshop. It happens naturally, because people see spotting and pursuing opportunities as part of their work

The six components of innovation culture are trust, safety, openness, curiosity, purposefulness and healthy competition. In the words of Innovation Mode 2.0, “The culture of innovation is a mindset that evolves on top of the following six principles.” Trust lets people share ideas and knowledge. Safety lets them voice unusual ideas and criticize any idea. Openness makes innovation accessible to all. Curiosity keeps the search for opportunities alive, purpose points it at what matters, and healthy competition rewards contribution as well as winning.

• Trust: in four directions: employees trust leaders, leaders trust employees, innovators trust each other, and everyone trusts the innovation process
• Safety: people can share controversial or seemingly ‘crazy’ ideas, ask tough questions and constructively criticize any idea, whoever it comes from
• Openness: innovation is inclusive by design, open to every team, discipline and level, and to introverts as well as extroverts
• Curiosity: people go beyond how things work and ask why, and turn their questions into hypotheses that research and data can test
• Purposefulness: a clear, ambitious purpose gives innovation meaning and points creative effort at the problems that matter
• Healthy competition: people are rewarded for their own innovation achievements and for helping others innovate, under fair and transparent rules
• How they connect: the components depend on each other: healthy competition needs trust in the system, and curious minds challenge the status quo only where they feel safe

Innovation culture depends on trust because innovation is a collective effort, and people pool their ideas and expertise only when they trust each other and the process. Great ideas need combined expertise and cross-disciplinary talent to become innovation. Innovation Mode 2.0 describes trust in four directions: employees trust that leaders believe in innovation, leaders trust employees' judgment, innovators trust that their contributions are credited, and everyone trusts the innovation process. “Trust sets the basis for an organizational mentality where ‘one team’ collaborates toward a bold purpose.”

• Employees trust leaders: people believe that leadership sees innovation as a means of achieving the organization's vision and purpose; real stories of ideas that became business opportunities are what convince them
• Leaders trust employees: they trust people's business judgment and give them more autonomy, resources and flexibility in how they invest their time and energy
• Innovators trust each other: “Innovators know they eventually get the credit and recognition they deserve for their contributions.”
• Everyone trusts the process: people know the opportunity discovery and innovation process is transparent, objective and reliable, which is what consistent assessment criteria are for
• What breaks it: ideas left in a queue or parked without proper assessment, template replies instead of feedback, and credit that goes to the wrong person
• What it grows into: trust lets networks of innovators form and grow organically into an inspired innovation community

Psychological safety is the shared belief that it is safe to take interpersonal risks at work, such as asking a naive question, admitting a mistake or challenging a senior colleague. Amy Edmondson defined team psychological safety as “a shared belief held by members of a team that the team is safe for interpersonal risk taking,” and her study of 51 work teams linked it to learning behavior. Innovation depends on it, because every new idea is an interpersonal risk, and people need to feel safe to engage with the creative process.

• The fear it removes: “The fear of being criticized or ‘exposed’ to upper levels of the hierarchy often excludes people and filters out ideas that could otherwise prove to be valuable.”
• Critique in every direction: people hesitate to give candid feedback on ideas from senior leaders or perceived authorities; a safe culture expects justified critique of every idea, whoever proposed it
• No courage required: in a safe, innovation-friendly environment, sharing a controversial, thought-provoking or seemingly ‘crazy’ idea takes no courage at all
• The research behind it: in Edmondson's study, “learning behavior mediates between team psychological safety and team performance”; in 47 German companies, climates for initiative and psychological safety went with better firm performance and shaped how much process innovations paid off (Baer and Frese, 2003)
• Safety is not comfort: ideas still compete, and some lose. Safety means an idea can fail without its originator losing standing, which is why it goes together with accountability for results
• Reinforced by recognition: sharing, contribution and constructive feedback count as innovation behaviors when people are recognized, so safety shows up in what the company rewards
• How to build it: leaders ask for critique of their own ideas, every idea gets a real answer, and early failures count as learning; see how to create psychological safety for innovation

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People must feel safe to ask tough questions and even constructively criticize an idea, regardless of its originator.

George Krasadakis, Innovation Mode 2.0 Copy

Innovation should be open and inclusive because good ideas can come from anyone, and a process that only some people can reach wastes the rest. Openness is one of the six components of innovation culture: “innovation should be inclusive by design,” open to every team, discipline and level, and to every kind of character. As I put it in Innovation Mode 2.0, this is “one of the core principles I have been applying throughout my career: innovation should be open and accessible to all.”

• Access for all: people can reach the innovation process whatever their team, discipline or level in the hierarchy
• Every kind of character: introverts and extroverts, individual contributors and team players are all encouraged to join the community of innovators
• Diversity of thought: the book argues for “multidisciplinary teams, with a diversity of thought and a plurality of perspectives,” and research backs the multidisciplinary part: a meta-analysis found a small positive link between the variety of functional backgrounds in a team and its creativity and innovation, strongest in design and product development teams (Bell et al., 2011)
• How openness fails: quietly, through the belief that innovation belongs to engineers and technologists, which discourages whole groups from taking part
• Hidden barriers: limited bandwidth and time-zone constraints exclude people as effectively as rules do; asynchronous processes and more lead time for workshops and hackathons fix much of it
• Remote and hybrid teams: digital tools let distributed teams collaborate, but in-person innovation sessions are where people build trust and stronger personal connections

Curiosity and purpose drive innovation together: curiosity supplies the questions and purpose points them in the right direction. Curious people challenge the current state and ask not only how things work but why. “When curiosity is there, openness to change rises, and fear of failure drops.” Purpose gives that search meaning: a well-framed, ambitious organizational purpose acts as the guiding star of innovation and inspires people to engage. Without it, people stop contributing beyond their job descriptions.

• Curiosity keeps discovery running: businesses stay innovative through an ongoing opportunity discovery thread, which needs people who ask why and state hypotheses that research and data can test
• Curiosity suits experimentation: curiosity matches the experimentation mentality and the fail-fast, fail-safe approach behind product experiments
• Curious people shape the culture: in a safe and open environment, they ask tough questions, set new patterns of behavior and become role models and influencers
• Without purpose, innovation feels empty: “In the absence of a clear purpose, innovation may look ‘empty,’ fuzzy, or even meaningless.”
• Purpose can live at any level: organization, group, product or team; commercial or societal; a product vision, a customer promise or another long-term goal clear enough to trigger the creative process
• Purpose must be repeated: it has to be communicated clearly and systematically, and an innovation agenda that lists the problems worth solving is the practical tool
• Purpose needs clarity: across about 500,000 employee survey responses, purpose alone was not related to financial performance, but firms with both high purpose and clarity from management performed better (Gartenberg, Prat and Serafeim, 2019)

Healthy competition is internal competition that rewards contribution as well as winning. Most companies compete on productivity benchmarks, bonuses and promotions, which drive short-term wins but can also make people secretive and defensive. Innovation Mode 2.0 widens what counts: inventiveness, willingness to share, ability to execute and eagerness to contribute. “In this setup, people are rewarded both for individual innovation achievements and for helping others to innovate.” Healthy means fair, transparent and respectful.

• The idea that stays hidden: in a strictly competitive environment, an employee with a great idea but no time or skills to drive it keeps it private, for fear that others will copy it without attribution
• The originator is credited: in a healthy system, that employee shares the idea through formal channels and is recorded as its originator, recognized if the idea is ever built and succeeds
• Many ways to contribute: people can be recognized for contributing to ideas driven by others, and a team can be rewarded for executing an idea submitted by another team
• Invalidation counts: “Even invalidating an idea may be acknowledged as a significant contribution.” It saves the company from investing in the wrong thing
• Measured, not guessed: individual innovation performance covers inventiveness, openness, ability to execute and contribution, which can be combined into an Innovation Contribution Score; a smaller company can start with a simple record of who contributed what
• It rests on trust: people accept the competition only if they trust the system and its processes to be fair

The Healthy Competition Protocol is a set of 12 principles in Innovation Mode 2.0 that let people compete on ideas and still collaborate. It opens innovation to everyone, respects every idea while accepting that some are better in context and that great ideas can still fail, welcomes critique, separates ideas from ownership, spreads decisions about an idea's future, and keeps the rules transparent and free of politics. The result is respectful competition: there are top performers, and credit flows along the whole chain of originators and contributors.

• Open and respectful (1 to 3): “Innovation is always on and open to all.” “People show respect for others' ideas.” “There are no ‘bad ideas.’”
• Realistic about ideas (4 and 5): “Some ideas are better than others in a given context.” “Great ideas can still fail.”
• Honest critique (6): “Critique is constructive, meaningful, justified, and welcome.”
• Credit without ownership (7 and 8): “Ideas do not have owners; they have originators and contributors.” “Ideas are free to reuse; attribution is required.”
• Shared decisions (9 and 10): “There is no single decision-maker for the future of an idea.” “Originators may not be involved in the execution of their ideas.”
• Fair rules (11 and 12): “Rules and resulting decisions are transparent and consistent.” “There is no space for corporate politics.”
• Putting it to work: publish the protocol in the Innovation Playbook, apply it in every idea review and event, and let the recognition program reward the behaviors it describes

Innovation culture is measured in two ways: directly, by asking people through surveys, interviews and focus groups, and indirectly, through behavioral metrics such as participation, churn and experimentation. “A good process should be able to utilize both sources.” Innovation Mode 2.0 defines 11 culture metrics and summarizes them in an Innovation Culture Score, most effectively computed from a short Innovation Pulse questionnaire. The score becomes the Culture component of the company's innovation performance scorecard, next to Impact, Output and Public Image.

• Community size and activity: the innovation community size, the active community size and community churn, the number of active innovators who become passive or opt out; rising churn is the cue for surveys, interviews or focus groups
• Reach: employee representation, the share of employees in the innovation community; low values point to limited awareness, weak communication or a process that is less inclusive than it looks
• Sentiment: innovation morale, how people feel about innovation and the inspiration leaders provide, and the perceived innovation ability of the company
• Behavior: experimentation attitude, sharing and collaboration attitude, and team synthesis, openness and dynamics, tracked through experiments proposed, contributions to other people's ideas and how teams form
• Engagement: innovation events engagement and innovation content engagement, from participation and satisfaction per event to visits to educational content
• Why both sources: self-reports flatter. In a meta-analysis of 104 studies, team variables showed “considerably stronger relationships with self-report measures of innovation compared with independent ratings and objective criteria” (Hülsheger, Anderson and Salgado, 2009)
• Start small: none of this needs a platform on day one; a short pulse survey and a simple count of who took part in what cover the core, and the Innovation Culture Score summarizes the dominant mindset toward innovation

An innovation culture assessment should test each of the six components, plus whether people believe the company can innovate. Innovation Mode 2.0 recommends measuring before improving, through an ongoing pulse survey that captures people's “level of inspiration, motivation, and sense of purpose.” The starting set below turns the six components into statements rated from 1 (strongly disagree) to 5 (strongly agree). Score each component separately, compare the scores by level and function, and start improving where the lowest score sits.

• Trust: when I share an idea, I trust that it will be assessed fairly and that I will get the credit for it
• Safety: I can question an idea from a senior leader without worrying about the consequences
• Openness: anyone here can take part in innovation, whatever their team, level or location
• Curiosity: my team regularly questions why we do things the way we do, and tests new approaches
• Purposefulness: I know which problems the company most wants to solve, and how my ideas could help
• Healthy competition: people here are recognized for helping other people's ideas succeed, not only for their own
• Belief: the book's direct question, “Do you think that the organization is able to innovate in meaningful and high-potential ways?”