How to Build a Successful Innovation Department

7 minute read

Fostering an open innovation culture in the company

We are living in the midst of great change. Technological change is happening at unprecedented speed and digital technologies are introduced to the market at ever-faster rates. Companies must future-proof themselves for the 21st century as the world is changing much faster than their organizations. 

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Innovation is the key. As an essential tool to sustain business success, innovation can no longer be confined by the borders of the company. On the contrary, in a world of distributed knowledge, companies should be open to new perspectives, insights, and inspiration from both internal and external parties. In other words, embrace the new concept of open innovation. 

Opening-up the innovation process will play a crucial role in achieving a competitive advantage in this globalized world. The best way to start is by putting in place mechanisms and a culture that encourages new technologies, rekindling the passion for knowledge, and eases barriers to creativity. 

In this article, we will discuss why open innovation is important, explain how to foster an open innovation culture in the organization, and provide 5 suggestions on how to approach the concept of open innovation in the organization. 


The new paradigm shift: Open innovation 

The term innovation began taking root in the nineteenth century when it was closely associated with technical inventions that signaled the rise of modern industry. Over time, with the rise of technology, corporations, and capital, the term shifted its common understanding to "bringing to market a new technology." 

During the 1960s and 1990s, innovation was mainly confined to researchers in R&D departments and laboratories within the company’s boundaries. However, starting in the 1990s, this closed model began to be disrupted by the emergence of new digital technologies, knowledge flow, venture capital, etc. Closed innovation models could no longer keep up with the pace of innovation and paved the way for a new, open model. 

The new, open innovation model was first coined by University of California, Berkeley professor, Henry Chesbrough. He argued the importance of collaboration between companies, individuals, and public agents who share risks and rewards, with the aim of developing innovative products and services

As compared to traditional internal corporate innovation, open innovation is much more than opening up the innovation processes to external parties - it is a transformation process within the organization. More precisely, a transformation of the internal organizational culture in the direction of encouragement and promotion of innovation from every available source. Primarily, its employees and their contribution to achieving strategic goals. 

In the era of open innovation, every opinion and idea of any employee in the firm regardless of his/her position is of paramount importance to the progress and growth of the business. This brings along benefits in both the short and long- term. In the short-term, it can lead to the emergence of new, fresh ideas. and in the long-term, it can serve as an employee engagement strategy to motivate employees and boost the development of their skills. 

Besides the human side of open innovation, the model brings significant time and cost savings, time-to-market acceleration, innovation risk reduction, the possibility for new revenue streams, etc. As stated in a Deloitte report about open R&D models, organizations pursuing open innovation were three times more likely to achieve late-stage success.

Rocket Model


Bringing the new model to the office 

Building organizations is hard, but building exceptional organizations is even harder. But as the saying goes, “Rome wasn't built in a day”, it takes time to get to the top of the hill.  Moreover, Rome did not build itself either, as it was more than just a collection of buildings. It was a society, an empire, a government, and a culture. Each organization is a Rome for itself, with a vision, plan, environment, and people of its own. Partnering and collaborating with startups is one way of introducing new business models. Changing the course of action in the organization implies a profound revolution of the company’s business processes, backed by management’s strong vision and leadership. If these steps are put in place, the open innovation model can become a powerful value creation engine for the organization. 

Shared office spaces are also an inspiring option for startups especially. If you rent an office space in Atlanta for instance, you will get a space for innovation ready made for you, without having to invest in building one from scratch.


Bring innovation into your strategic agenda

Innovation is not only a value of corporate culture; it is a key ingredient to corporate success. Without a doubt, the shift towards an open approach to innovation requires the direct involvement of top management. It is up to top management to align the strategic agenda of the company with innovation and make it a core part of the company’s DNA. Designed to serve as an explicit roadmap for the desired future, the innovation strategy will also help companies create an effective culture of innovation in the workplace. More importantly, it is imperative that companies make sure everyone is on the same page with regard to the company vision and strategy by taking as much time as needed to explain these concepts. 


Nurture an innovation culture 

Innovative cultures start with a philosophy, a mindset that begins at the top of the organization and permeates every level. McKinsey & Company likens innovation culture to good parenting. According to McKinsey, creating an innovation culture is about striking the right balance between providing “roots” and “wings” for employees. Giving them a reason to care, while giving them autonomy to think independently and find new ways to solve problems. Building an innovation culture from the ground up isn’t easy or fast, nor is improving upon what already exists. But it is worth the effort - every time. 


Innovation is everyone’s job

Forward-thinking organizations have one thing in common. They rely on all its employees to think out of the box, by creating and nurturing an innovation culture in which everyone is entrusted and empowered to innovate. Innovation is no longer expected from a chosen few. From interns to senior management, great ideas can emerge from anyone inside an organization. 


Accept failure and make it the norm

For every example of a world-changing innovation, there’s a whole pile of failed ideas. Therefore, failure is an unavoidable element of the innovation process, and from failure comes learning, iteration, and adaptation. However, in order for people to take risks and push the boundaries, they need to exercise a certain level of comfort with failure and it is up to the management to embrace learning from failures and protect those who fail to fuel innovative thinking necessary to succeed. Hence, it is only by creating a safe failure environment that companies can move forward, change, and thrive. 


How to turn the organization into a factory of ideas 

As technology evolves and connectivity increases exponentially, the need for corporate innovation will only grow stronger. The necessity to innovate, disrupt, and reshape business processes is inevitable. But innovative ideas do not come overnight. So, how can organizations set the stage for innovation?


Innovation checklist


1. Create space for innovation

Space affects all of us deeply, our moods, our behaviors, our ability to connect with people and be productive. Science and experience agree that there is a strong correlation between the physical workplace and a culture of innovation. At present, architects are asked to rethink the office experience in a way that creates communities, facilitates collaboration and makes chance encounters happen. Add here an element of play, nature, and healthy habits and you have the perfect workplace. When it comes to keeping employees productive and efficient, companies such as Google lead the way. Google’s unique workspace designs are well known to boost productivity, inspiration, and motivation. In other words, the future of the office. 

2. Hire the right people 

Creating a culture that has a thirst for and thrives on innovation is the holy grail of business today and it all starts with hiring the right people. There is a new method in recruitment science lately and it’s called company fit. Forget past experience or expertise, it’s all about future potential and learning ability. These individuals align with the company’s unique culture and values, the company’s environment, and work style. Zappos, the online shoe and clothing retailer is known for its hiring philosophy. If candidates are not a good fit with the Zappos Family Core Values then they just don’t make the cut. The company goes even that far to offer new hires $4000 to leave Zappos to ensure everyone is 100% integrated into the culture. 

3. Dedicated time to innovation

All game-changers ever released began as someone's idea. But if employees are kept chained to a desk,  companies will never be able to access the full potential of their creativity and imagination. Sometimes, harvesting the untapped creativity of the employees can lead to unprecedented benefits. For example, Google’s policy on encouraging employees to devote 20% of their time to side projects is seen by many as one of the reasons why it remains one of the most innovative companies in the world. Encouraging employees to think about innovation on a daily basis is also a policy of 3M. The manufacturing giant gives its employees a 15% time allowance every day for constructive daydreaming.  

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4. Invest in idea generation

Employees are the company's greatest assets and if the company wants to hear their voice, it needs to provide them a way to do it.  From a digital suggestion box to a creative retreat, the choice is quite diverse. For example, one of the most simple and effective ways to kick-start a new project at the workplace is by organizing a corporate hackathon. Serving as a playground for exploring possibilities, the sprint-like event mobilizes all the employees in a fun way and empowers them to proactively propose and test new ideas. The very nature of the hackathon process stimulates creative juices to flow, as team members put aside their regular tasks and co-create the next big product. Facebook is one good example of how a company has leveraged the power of hackathons to its advantage and brought ideas to life. It was an internal hackathon at Facebook that led to the creation of one of its most widely used features, the “Like” button. 

5. Reward innovation

People will go the extra mile when they feel respected and recognized. Therefore, an essential part of the innovation process is to reward and recognize employees for contributing their ideas. Small tokens of appreciation given at the right moment not only provide well-deserved acknowledgment—they can keep employees engaged and motivated.  Although an extra check is rarely unwelcome, many more creative options exist to reward employees in a meaningful way, such as perks, prizes, promotion, role expansion, professional development, etc. Or companies can follow Netflix’s example and offer employees unlimited vacation days, within a reason. 

[Related Article - 6 Ways to Leverage Innovation Within Your Organization]


The time is now

Change is incremental. With the open innovation model expected to become the dominant innovation model in the 21st century, it is more than imperative for companies to begin the transition period. With the number of benefits it offers, companies will surely move forward and drive change and innovation in their respective industries.

Valuer utilizes a data-driven process that facilitates easier and comprehensive company decision making. By having a greater understanding of the latest trends and technologies gaining traction in the industry, and possibly forming partnerships, will ultimately strengthen your companies' positioning in the competitive marketplace. 

The vision is to help firms discover, analyze and connect with new companies that can help boost their innovation activities and take their company to the next level.

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