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4 Things You Need To Build An Innovative Culture

2017 February 22
by Greg Satell

In the late 1960’s, Gary Starkweather had a serious spat with his boss.  As an engineer in Xerox’s long-range xerography unit, he saw that laser printing could be a huge business opportunity. His manager, however, was focused on improving the efficiency of the current product line, not looking to start another one.  

The argument got so heated that Starkweather’s job came to be in jeopardy. Fortunately, his rabble rousing caught the attention of another division within the company, the Palo Alto Research Center (PARC) which wasn’t interested in efficiency, but inventing a new future and they eagerly welcomed Starkweather into their ranks.

Within a decade, Xerox’s copying business declined sharply, but the laser printer took off and soon became the firm’s main source of revenue. In effect, the work that was squelched in one culture, thrived in another and saved the company. We tend to think innovation is about ideas, but it depends on people even more. Here’s how you create an innovative culture.

1. A Focus On Problem Solving

When you think about an innovative culture what probably first comes to mind is a bunch of fast moving hipsters guzzling down energy drinks and pulling all-nighters, pausing only to play a quick game of foosball or frisbee. Or maybe Steve Jobs on stage with a devilish grin just before he wows the audience with “one more thing…”

Yet in researching my book, Mapping Innovation, I found that very few of the organizations I studied looked like that. Some were fast moving startups, but most of the successful ones were led by executives that were mature and thoughtful, not brash or erratic. Others were large corporations and world class labs that tended to be fairly conservative.

The one thing I found in common in every fantastically innovative place I looked at was a disciplined passion for identifying new problems. Unlike most organizations, which are content to struggle with everyday issues, the enterprises I studied had a systematic method of finding new problems to work on that would take them in new directions.

The approaches vary considerably. IBM creates grand challenges, like building a computer that can beat humans at Jeopardy. Experian set up a Datalabs division to find out what’s giving its customers “agita” and launch new business off the solutions they build. Google’s “20% time acts as a human-powered search engine for new problems.

We tend to think of innovation as fast moving, but the truth is that it usually takes 30 years to go from an initial discovery to a measurable impact. So the “next big thing” is usually about 29 years old. If you want to innovate effectively, don’t chase the latest trend, find a problem your customers will care about and solve it for them.

2. Create Safe Spaces

In 2012, Google embarked on an enormous research project. Code-named “Project Aristotle,” the aim was to see what made successful teams tick. They combed through every conceivable aspect of how teams worked together — how they were led, how frequently they met outside of work, the personality types of the team members — no stone was left unturned.

However, despite Google’s nearly unparalleled ability to find patterns in complex data, none of the conventional criteria seemed to predict performance. In fact, what they found mattered most to team performance was psychological safety, or the ability of each team member to be able to give voice to their ideas without fear of reprisal or rebuke.

Interestingly,  highly innovative teams can be safe for some ideas, but not for others. For example, two of the scientists at PARC, Dick Shoup and Alvy Ray Smith, developed on a revolutionary new graphics technology called SuperPaint. Unfortunately, it didn’t fit in with the PARC’s vision of personal computing, the two were ostracized and eventually both left.

Smith would team up with another graphics pioneer, Ed Catmull, at the New York Institute of Technology. Later they joined George Lucas, who saw the potential for computer graphics to create a new paradigm for special effects. Eventually, the operation was spun out and bought by Steve Jobs. That company, Pixar, was sold to Disney in 2006 for $7.4 billion.

Xerox PARC is now a shadow of its former self. As it turned out, anything that didn’t have to do with the researchers’ vision for the future had no home there. So if you want to innovate consistently for the long term, you need to create a “safe space” for all ideas, not just the ones that fit with your initial mission.

3. Foster Informal Networks

In 2005, a team of researchers decided to study why some Broadway plays become hits and others flop. They looked at all the usual factors, such as production budget, marketing budget and the track record of the director, but what they found was that what was most important was informal networks of relationships among the cast and crew.

If no one had ever worked together before, both financial and creative results tended to be poor. However, if the networks among the cast and crew became too dense, performance also suffered. It was the teams that had elements of both — strong ties and new blood — that had the greatest success.

The same effect has been found elsewhere. In studies of star engineers at Bell Labs, the German automotive industry and currency traders it has been shown that tightly clustered groups, combined with long range “weak ties” that allow information to flow freely among disparate clusters of activity results in better innovation.

So before you embark on your next reorganization designed to “break down silos” you might want to think about how informal relationships develop within your enterprise. The truth is that innovation is never about nodes. It’s always about networks.

4. Promote Collaboration

All too often, we think of innovation as the work of lone geniuses who, in a flash of inspiration, arrive at a eureka moment. Yet the truth is that research shows that the high value work is done in teams, those teams are increasing in size, are far more interdisciplinary than in the past and the work is done at greater distances.

Just as importantly, there is growing evidence that it is crucial how these teams function. A study done by the CIA performed after 9/11 to determine what attributes made for the most effective analyst teams found that what made teams successful was not the attributes of their members, or even the coaching they got from their leaders, but the interactions within the team itself.

In another, more wide ranging study, scientists at MIT and Carnegie Mellon found that high performing teams are made up with people who have high social sensitivity, take turns when speaking and, surprisingly, the number of women in the group. There is also a wealth of research that shows diverse teams outperform more homogenous units.

So the evidence is both abundant and clear, if you want to make your organization more innovative, don’t go searching for hard driving “A” personalities spouting off big ideas and interrupting others, but rather seek diversity, empathy and to network your organization so that teams interact more effectively.

As MIT’s Sandy Pentland has put it, “We teach people that everything that matters happens between your ears, when in fact it actually happens between people.”

– Greg


An earlier version of this article first appeared in

10 Responses leave one →
  1. Kristen Witte permalink
    February 26, 2017

    Excellent synopsis of what is really key – will leverage for my work with my company Cargill. thank you. kristen

  2. February 26, 2017

    That’s great to hear. Thanks Kristen!

    – Greg

  3. Kirbie Earley permalink
    February 27, 2017

    These are great. I would add one – don’t overcomplicate the process. In an attempt to become more innovative, a global client I had attempted to develop an innovation “system” within their organization. They brought me in to evaluate the system they wanted to put into place.

    The idea was great – foster innovation – open the doors between departments – let everyone have a chance to collaborate and input ideas.

    The problem was they wanted to still control everything and had put system “checkpoints” in place which would have roadblocked their entire process. Of course, they didn’t want to hear this – well – upper management didn’t. The poor kid I was working with knew exactly what I was talking about and he got it…but his boss was, to the best I could tell, afraid of being ‘shown up’ by underlings and wouldn’t let go of the controls.

    I was never actually hired to do the project because they never got past proposing the poor idea (thankfully). I checked in every few weeks for a while but the kid was hamstrung by a less-than-confident leader.

    Don’t overcomplicate and don’t let your lack of confidence in yourself impede innovation. Step aside and lead the way a leader should – by trusting your team and being the one to give them the tools you’ve mentioned above to do their jobs…

  4. February 27, 2017

    That’s a very good point Kirbie. I think the root of the problem is that many organizations fail to understand the importance of informal networks. Once you try to formalize them, you end up impeding network creation.

    – Greg

  5. February 28, 2017

    Two things I’d like to mention that came to mind as I read your excellent article Greg;

    First off, this story has many parallels with the tale of Kodak (and possible Nokia too) – who patented the first digital camera (donkeys years ago) and then in around about 2001 launched (then folded) what was in effect the first social media (and photo sharing) site.

    Next, about your point on fostering informal networks. I have a friend who runs a very successful tech firm and he’s firmly in this camp. In fact, he tends to recruit only friends of existing staff – or when that’s not possible – include his entire team on the three month assessment of new employees.

    Seems like the old adage of not working with firneds could not have been more wrong…

  6. February 28, 2017

    Good point. I’ve always encouraged people to recruit friends and I think it really helps improve the working atmosphere and culture. The only thing to watch out for is that it can lead to a lack of diversity, but that’s correctable if you are vigilant.

    – Greg

  7. Stefano Tempesta permalink
    March 3, 2017

    Interesting point. I was advised not to hire friends, instead. You don’t want to mix business and friendship. Friendships may die over business conflicts. Can you really fire a friend?

    Greg, how would you manage situations like these ones?


  8. Stefano Tempesta permalink
    March 3, 2017

    I like your point about creating a safe space. In my opinion, the greatest ideas hardly come from an innovation lab. They hardly even come from using time away from work (the alleged Google’s 20% off rule).
    They come from busy people who had ideas while doing their day job, stayed late, and tried things without getting permission.
    They don’t come from companies that celebrate innovation as a benefit to their employees. But they come from companies who allow their people to try new things and fail without consequences. They come from companies that have the right climate for employees to be creative. They come from people who do those things that allow them to generate great ideas.

  9. March 3, 2017

    Ciao Bello!

    Hiring your friends can be tricky to work for you can be tricky. However, I’ve always found that encouraging your employees to recruit their friends is great for the culture.

    Besides, if you run into a problem with an employee who becomes a friend, you can always get rid of them by marrying them off to an Italian or something:-)

  10. March 3, 2017

    Good point, Stefano. Innovation needs exploration!

    – Greg

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