Create a work environment where innovation thrives

Innovation is a process — and it should be repeatable. It’s not something you do once or on occasion. Rather, it’s something your organization and people should be prepared to engage in continuously.

MIT Sloan senior lecturer Kate Isaacs and associate dean for innovation Fiona Murray discussed how to build this kind of innovation-ready organization in a recent webinar.

The pair will teach in the new Innovation Executive Academy course from MIT Sloan Executive Education. Senior lecturer Phil Budden, who facilitated the discussion, is the course’s executive director.

Here’s what Isaacs and Murray recommended doing to set your organization up for innovation:

Define what “impact” means to your organization. “Innovation is the process of taking ideas from inception to impact,” Murray said. 

Determine the impact your company wants innovation to have. Examples include profitability, annual recurring revenues, or staff efficiency, she said. High-innovation organizations focus on their core capabilities, define their impact priorities internally, and know when to change tactics in order to meet them.

Consider your outside ecosystem before engaging in internal innovation. Before embarking on a new, big idea fueled by a strong internal purpose, you should also consider external forces. 

That includes the needs of many stakeholders, including shareholders, customers, employees, and the community. This isn’t a nicety; it’s a necessity tied to business performance.

“If you don’t think about the regulatory stakeholders that are in your ecosystem, or the community stakeholders that might put up a fuss around the new innovation that you’re about to put out there … you’re putting yourself at risk,” Isaacs said.

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Implement a clear innovation structure with three types of leaders. Companies require organizational frameworks as they stretch beyond their cultural comfort zones toward innovation. Often, culture is hard to change — Isaacs called it an “amorphous concept” that’s often blamed when risk-taking fails.

“It’s important to break apart ‘What do we mean by culture?’ Typically, it’s a lot easier to change structures than it is to try to convince people to do something different, to behave differently. Start with structural changes and incentives to nudge people into behaving in different ways, which ultimately does change mental models,” Isaacs said.

To change culture through structure, innovative organizations require three types of leaders.

Senior leaders who become architecting leaders. These leaders design the game board for innovation and create strategic clarity. They monitor the innovation portfolio and serve as the eyes and ears of the organization while keeping tabs on changing markets, technologies, and the stakeholder ecosystem. They also build trust throughout the organization when new ideas evolve.

“Architecting leaders know that the innovation game depends on people’s ability to trust the technological innovations that they’re driving,” Isaacs said.

Middle managers who become enabling leaders. These leaders translate an abstract innovation into a concrete idea, acting as the organization’s communicative glue between architects and entrepreneurs.

NASA offers a good example of this, Isaacs said: In the 1960s, the agency wanted to explore space and advance science. Its leaders translated this as “Put a man on the moon by the end of the decade.” In this way, an abstract, innovative idea became a concrete — and exciting — goal.

Entrepreneurial leaders who are on the front line. “They’re the people who bring innovation to life day by day, providing interesting ideas that come from all corners of an organization,” Isaacs said.

As she has explained elsewhere, effective entrepreneurial leaders generate new ideas. They inspire trust through technical expertise and reputational credibility and earn it by demonstrating that they have the best interests of their colleagues, employees, and customers at heart.

Listen to all of your employees. Some people are good at early iteration; others are better at scaling. All of them are valuable.

In other words, good ideas can come from anywhere. “Walk the floors of your office, factories, Zoom, and ask people, ‘If you had a breakthrough idea today, whether it’s incremental or radical innovation, how hard would it be for you to get support to take that idea and run with it?’” Isaacs said. 

“We need to think about the power balance — and to make sure that we have the ability to hear from people with different kinds of experiences,” Murray added.